There is still no shortage of people moving to the Triangle. As the region continues to remain a boomtown, builders across Raleigh-Durham are working tirelessly to replenish a depleted housing inventory. New developments are springing up around the Triangle, including up-and-coming towns in its halo communities, which means it’s a great time to consider purchasing a home — particularly new construction.
In fact, it’s not just a great time to consider purchasing new construction. It’s a great time to consider purchasing a pre-sale on a new construction home. Pre-sales, or pre-construction homes, are sold before the home is built or while construction is happening. You’ll still put down a deposit when you sign the contract, which outlines the price and timeline. But you won’t begin paying on your mortgage until the home is complete. And that’s just one of the benefits of purchasing a pre-sale home.
If you’re intrigued, you’ll want to keep reading. The following are five more advantages of purchasing a pre-sale home, which may help you determine whether this is a good option for your needs.
Competition may be lower
When the market is hot, new construction is often the answer to finding the right home for your family. You might have to be creative to see the vision for a home that hasn’t yet been constructed or is in its early construction phases. Yet that’s one of the benefits you may get from purchasing a pre-sale because those who can’t see the vision won’t be fighting for the home.
Typically, when you purchase at a pre-sale point, it also means there isn’t negotiating that happens. And you won’t get into a bidding war. Competition for the home just isn’t there. If you’re on a timeline that you can deal with on a home that has yet to be completed, the stress involved in competing with other potential buyers is non-existent. This can be a huge benefit to a pre-sale.
You may be able to hold down your mortgage rate
If your builder has a preferred lender, it may be beneficial to work with them to see if they will lock in your mortgage rate to ensure you get the best rate possible. It’s important to note, however, that a mortgage isn’t finalized until the home is complete. If rates are higher when it’s time to close, locking in that rate ahead of time may be beneficial. If rates are lower when you close, you can always lock in the lower rate at that time.
However, it’s smartest to shop around for a mortgage. Even if your builder has a preferred lender, you may want to consult with a trusted local lender like Towne Mortgage of the Carolinas or North State Bank to get advice and explore the right loan for your needs.
The closing timeline is typically extended
If you’re purchasing a pre-sale home, you won’t close on the home until the build is complete. That means, depending upon what stage of construction the builder is in when you make an offer, it could be a couple of months before you close on your home, or it could be as long as a year. It’s important to talk to your builder for clarity so you know what to expect.
The good news is that once you pay your initial deposit for the pre-sale, you won’t begin paying on the home until closing. That means you may have additional time to save up and put more money down on the home if that’s what you choose to do. And because you’ve already made your offer, even if housing costs go up around you, your price remains the same. That extended timeline is a great benefit to purchasing a pre-sale home.
You may get greater customization
Depending upon what phase of construction your builder is in when you buy, you may have customization options that are available to you. If you’re buying a pre-sale home that hasn’t yet been built, you may be able to choose from a selection of floor plans and home styles. If the home is close to being completed, you may have a few selections that you can make on the home.
You and your real estate agent will want to work closely with your builder to determine how customizable your home can be. But if you can sign to close on a pre-sale earlier rather than later, you’ll have more say in what your home looks like when it’s finished.
You will start gaining equity immediately
As previously mentioned, when you purchase a pre-sale home, you’ll get locked into a specific price. But as home sales continue increasing across the Triangle, housing remains in demand. That means even before you’ve finalized the paperwork on your home, it’s likely you’ll start building equity.
Even with equity building in your home, you’ll only pay the original offer price. And if you’ve been able to save additional money from the time you made the offer to the time you close, you may be in a great position to have a lower-than-expected mortgage when closing happens. Increased equity is also a great way to increase your net worth and build your assets for the future.
Things to remember
If you’re interested in a pre-sale, don’t forget to work closely with an experienced agent who serves as an advocate during the purchase and can keep construction on track. You’ll also want to talk to the builder about their preferred lenders and whether you must use that lender or if you can shop around for the best rates. And keep in mind that a pre-sale might take a bit of time for closing to go through. But if you have the flexibility to wait on construction, a pre-sale home may be a great way to go.
The Jim Allen Group provides access to information on this blog/website as a public service for educational purposes only. Although reasonable efforts have been made to ensure that all of the information made available is current, accurate, and complete. [read more]