How to Answer Homebuyer Questions About New Homes

Happy mature Couple in Meeting With Advisor at home
Your clients probably have questions about purchasing a newly built home. You can help them understand the benefits of a new home.

Buyer preferences vary from one client to another and depend in part on the availability of new construction and resales in your area, but many prospective buyers are willing to look at both types of property.

Research by Builders Digital Experience (BDX, the parent company of New Home Source) and Hanley-Wood in 2013 shows that 35 percent of buyers are equally interested in newly built homes and resales; another 19 percent prefer new homes over used homes.

If you’re selling both newly built homes and existing homes, there may be times when you recognize that a new home will meet your buyers’ needs better than a resale. If you’re working with buyers that are open to both types of housing that makes it easier, but the BDX-Hanley-Wood research shows that 48 percent of buyers prefer used homes. Realtors need to learn how to explain the benefits of newly built homes, particularly to those clients who may be resistant or fearful that a new home wouldn’t fit their budget.

What Are the Benefits of New Homes?

Newly built homes offer the advantage of being designed to meet today’s design trends, such as open floor plans, plenty of natural light, high ceilings and super-organized storage spaces for clothing, kitchen items and other possessions.

“Everyone loves the fact that a new home is clean and has never been lived in,” says Andrea Pietrinferno, an associate broker with Long & Foster Real Estate in Cherry Hill, N.J. “The second thing buyers mention is that they’re excited to make it their own and design it the way they want.”

Many buyers worry about the cost of buying a home, however, a newly built home offers them the added security of knowing that roof and the HVAC are new and under warranty, says Jennifer Lewis, a Realtor with The Papasan Team with Keller Williams Realty in Austin, Texas.

“Another benefit is that newly built homes are super eco-friendly, which makes a big difference, especially in Texas when we need to run our air conditioning nine months of the year,” says Lewis. “New homes have utility bills that are about one-third of the bill of resales.”

Pietrinferno says she explains to buyers that even if you upgrade the HVAC in a resale you won’t get the same energy efficiency as a new home because newly built homes have better window seals, ductwork and more that are all designed to work together for maximum impact.

Many buyers are attracted to the amenities of newly built master-planned communities, says Lewis.

“In today’s market, when inventory of homes is so low, builders in our area are consistently increasing their base prices,” says Karen Kitzmiller, a Realtor with Century 21 Real Estate Consultants in Charlotte, N.C. “It’s a great value for buyers to lock in a base price now because they will have built equity before they even move in.”

How to Overcome Buyer Resistance to New Homes

Even buyers who recognize the advantages of new homes typically are concerned about two issues: time and money.

“Some buyers worry that new homes are more expensive, but I point out to them that when they buy a new home, they’re only paying one time to get what they want,” says Pietrinferno. “If they buy a resale, then they buy the house first and then pay again to remodel it to have it updated and the way they want. Maybe you pay a premium to buy new, but I explain that at least they’re only paying once.”

Newly built homes are not so far off in price from resales in some areas, so buyers get excited when they realize they can afford new, says Lewis.

“The problem sometimes comes up in Austin that newly built homes are farther out of town and the few new homes that are centrally located in the city are more costly,” says Lewis. “If location is of prime importance to buyers, sometimes there’s no other option than a resale. But in East Austin, a hip area that’s popular with younger buyers, the newly built homes run about $20,000 to $30,000 higher than resales. Once I explain that you would spend almost that much to replace the roof or do other remodeling, they can see that a newly built might be the better choice.”

Buyers who must sell their home in order to buy the next can sometimes find the timing and financing a new home tricky, says Pietrinferno. “I look for financing options to make the transition,” she says. “Some builders will even accept a contract contingent on the sale of their current home or a lender can come up with a plan that allows the buyers to find the money for the deposits before their home sells.”

Kitzmiller says that clients who must move within 30 to 60 days believe they can’t buy a new home because they can’t wait for one to be built, but she says sometimes she can find them a quick delivery or spec house that can meet their needs.

“Some people are wary of the process of building a new home and think it will be too hard to make all the decisions,” she says. “I explain that I can help them because I have the expertise to walk them through every decision and even to go to the design center with them. I set expectations that I’ll be there for all the inspections and get them all the information they need.”

Pietrinferno says that some buyers are concerned about being the first residents in a brand new community, but she explains the advantage of pre-construction pricing that allows early buyers to pay less and build equity more quickly.

Why Buy New?

Even when buyers don’t have specific objections to buying a newly built home, sometimes Realtors need to spend time explaining why buyers should at least consider both options.

“I always recommend newly built homes to buyers who are nitpicking about everything and not willing to accept any home that doesn’t meet every single desire they have,” says Anthony Gibson, a Realtor with Keller Williams Realty in Austin, Texas. “A newly built home is so much better for buyers like that because they can choose everything for themselves.”

Newly built homes in some areas are similar in price to resales or only slightly more costly.

“Sometimes if buyers are looking at a specific town and they’re flexible on the location, I can show them newly built homes that offer more value because they might be able to afford a larger home or a larger lot in new community,” says Pietrinferno.

An important distinction between newly built homes and resales is the cost to maintain the home, particularly in the early years of ownership.

“Not only do buyers benefit from the warranty offered by builders, but if the builder is still working in the community, the buyers can rely on the company to fix things if anything goes wrong,” says Gibson. “That’s so much better than dealing with repairs on your own, which sometimes come up immediately when you buy a resale.”

New homes appeal to buyers who appreciate today’s high standards for quality construction and design.

“In a side by side comparison, new homes are always more attractive because they’re updated and no one has lived in them, so buyers are often willing to make some compromises in terms of location or the price to be able to buy new,” says Pietrinferno.

About the author 

Michele Lerner

Michele Lerner is an award-winning freelance writer, editor and author who has been writing about real estate, personal finance and business topics for more than two decades. She writes for regional, national and international publications in print and online for a variety of audiences including consumers, real estate investors, business owners and real estate professionals. Her work has appeared in The Washington Post, The Washington Times, Urban Land magazine, NAREIT’s REIT magazine, National Real Estate Investor Magazine and online at Bankrate.com, HSH.com, The Motley Fool, DailyFinance.com, Insurance.com, Fox Business, MSN, Yahoo, Investopedia.com, MoneyCrashers.com, GetRichSlowly.com and in numerous state and local realtor association publications.

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