If you’re in the market for a new home, you may have taken a look at a new development. Your agent and the homebuilder probably walked through the model home with you, explaining all the features you could have in your new home and showing you all the perks of the community. At this point, you may have fallen in love with the home.
It’s perfect – it has new appliances, great features and the ideal backyard. You want to make the purchase, and the builder seems to be willing to sell, too.
Selling the model home can benefit the builder in several ways. First, if the model home is sold, it will prove to bankers that the new development will be successful and encourage them to invest in the project, according to the Wall Street Journal. Second, it can be used as leverage to justify price increases for future home sales in the same development. Finally, if the development is filling up fast with few other homes to sell, the builder may want to sell the model because he or she no longer needs it to showcase home possibilities. The American Homeowners Association noted the builder may even be willing to sell it at a discount at this point.
There are benefits for the buyer, as well. However, for every upside, there is a downside to accompany it. It’s up the the individual purchaser to decide whether the model home is the right buy or not.
All the nice features
What draws many people to buying the model home is the craftsmanship and all the nice features they envision for a home. The model has all these for a purpose, of course. The model home is built as a marketing tool above all else. It’s supposed to capture the attention of prospective buyers.
The builder may be willing to sell the furnishings at a discount, which can be helpful to the buyer who doesn’t want to haul heavy furniture into the new home or is ready for an upgrade.
While all of this sounds great, there are potential downsides, too. First, the house, as a marketing tool, has been walked through by potentially thousands of prospective homebuyers. The carpet has been trampled and won’t ever look brand-new again. The appliances may begin to wear out, too. The Wall Street Journal explained it’s a good idea to see the warranties on all the appliances and check to see when they expire. If they expire before your move-in date, make sure to ask if the builder will warrant them for a longer period of time. Also, the AHA advised to make sure all warranties on workmanship and structural defects are effective from your purchase date – not the date of construction.
If you don’t mind acquiring somewhat used but high-end features, then buying the model home might be worth it. But make sure you actually want all these special additions, and that you aren’t just succumbing to the model home’s attractive design. The Wall Street Journal suggested thinking about your ideal home from a blank slate. Would you opt to add on many of these features? If not, you might want to rethink the purchase.
Timing is everything
Other buyers in the development may have to wait a while for their home to be completed, yours is ready to go. This is a perk of buying the model home. In fact, it may even already be furnished, if you want to buy, and the builder wants to sell, the furniture in the home.
Although, the fact that it’s already built can have other advantages, too, especially if you don’t need to move in right away. Some builders will sell you the home, then lease it out for a year before you move in for marketing purposes or to keep the office they likely have in the home for another year. These costs can usually make a good dent in closing costs or mortgage payments.
It’s also important to keep in mind that the home wasn’t just built first, it was also built fast. Funding the construction of a development depends on sales, according to Michael Oliver, an associate real estate broker for Tucson-based Long Realty. This means that builders complete these model homes fast, so they can begin selling as soon as possible. In the flurry of building a feature-filled home fast, builders may not do their best work. The AHA warned that it is easy to overlook small design flaws during a home tour, but they will become more apparent once you move in.
Ask the builder if he would be willing to repair some of the structural issues or the damage incurred through repeated home showings. Some might be willing to repaint the walls or replace the carpet, the AHA explained. Also, ask if any defects discovered can be repaired. If the builder agrees, be sure to get it in writing. Realty Times advised to ask directly what repairs will be addressed before you move in, if any. It’s important you and the builder are on the same page. Finally, be sure to get an inspector to look over the model to find any hidden problems that could surface a few years down the road.
Model homes are meant to impress future buyers. If you choose to go with the model instead of a newly built house in the same development, be sure you want everything included and that any defects can be addressed by the builder.
Sources:
http://www.wsj.com/articles/SB10001424052970204616504577173211009038308
http://www.ahahome.com/non/articles/98/113098.html
http://realtytimes.com/consumeradvice/buyersadvice1/item/24232-19981002_modelhomes
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