Real Estate Tangent

New builds are the Angelina Jolie of home buying: glamorous, alluring, sexy and perfectly-coiffed, but at the same time, inscrutable, unpredictable, prone to man-stealing and potentially not worth the high paycheck. When you first see them all dressed up for the Oscars looking like the unattainable fantasy of all men (and 75% of women), those model homes are hard to resist. It’s important to keep in mind, however, their history of wearing blood in a vial on a necklace and that time they passionately kissed their brother at a televised award show. These things can influence your decision, is all I’m saying.

Here’s how a visit to the new build models has a tendency to go:

The large colorful signs and banners draw you in on your way home from lunch Saturday afternoon. You may not even be seriously considering purchasing a new build. You might not really be in the market for a new house. That won’t seem to matter when you glimpse the circus-like atmosphere of the model home center. It’s inviting and fun. They’re begging you to stop by. Why not just take a look?

You walk in the door to the sales office and are immediately inundated with floorplans, color choices and a subdivision layout all over the walls. There’s a smiling, friendly salesman who acts so familiar you wonder for a split second if you already know him from somewhere, but you don’t.

You’re struck dumb. It’s sensory overload. You know these houses and the things in them must cost money, but you don’t see prices anywhere. You become tense at the possibility that it’s wildly out of your price range. What if you ask about the prices and they’re embarrassingly far out of your financial universe? That would clearly be humiliating and should be avoided at all costs, you decide.

You throw out a test question: Do you have a list of what’s available? The smiling agent turns to you and pauses. You see a deadness in his eyes. The silence is just long and awkward enough to make you realize how stupid you are for asking something like this. The answer must be utterly obvious, but you don’t know what it is. It was a terrible, stupid question. The sales rep finally answers, Well, why don’t you tell me what you’re looking for and I’ll let you know what we have that would work for you. This is where you conclude you should just let the agent tell you what he wants to and avoid all uncomfortable conversations.

By the time you’ve left the new build office, two hours later, you think you’ve agreed to something, but you’re not sure what. You registered and signed your name on some document, but it was only presented to you long enough for you to scrawl your signature and then was whisked away. You remember remarking that a 6 bedroom, 8 bath home with a basement and both and indoor and outdoor swimming pools was a nice house and you wonder if you’ve agreed to buy it. The agent seemed really excited when you said you liked it. And you’ve got free bottles of water in your hands. That has to mean you’ve purchased something.

It doesn’t have to go like this. Don’t be afraid to ask the sales agent specific questions. He’s the dumbass, not you. To help you navigate the reality of buying a new build house, I put together a list of 10 questions you should never be afraid to ask.

1.    What is the average build time?

This will vary depending on the builder, the market and the availability of materials, but you can expect an answer of anywhere from 90 days to 8 months.

2.    Do you have any available specs?

A spec home is a newly built house that’s already had everything in it picked out by the builder and constructed. These are also referred to as ‘inventory homes’. They are usually ready to close in 30 days and they have a set price.

3.    Is there a lot premium?

New build pricing can be ridiculously confusing. There is usually a price range each floorplan ‘starts at’ (the range is for the different elevations), and then the upgrades increase the price from there. With some new builds all of the lots will have a cost or a ‘lot premium’. This will be higher if the lot is larger or in a better location. With other builders only the really great lots have a lot premium.

4.    What is the average amount people are spending on upgrades?

The builder isn’t going to be able to tell you how much you’re going to want to spend on upgrading the counters and the flooring and what have you, but usually the sales rep can give you an estimate of what other buyers have spent. This is sometimes in the form of a percent. So, if they tell you the average buyer is spending an extra 10% on upgrades, and the house you’re considering ‘starts’ at $300K, then expect to be up between $330K and $350K when all is said and done including upgrades and lot premiums, elevation and the like.

5.    How much earnest do you require?

Every builder will have a different amount required at the time of writing the contract to secure the lot and start the building process. This is usually not a negotiable figure. It’s also not usually refundable once building has begun.

6.    What are your incentives?

Most of the time (just to further confuse things) the builder will have some sort of incentive program that takes money off of the price. This is usually fairly convoluted and difficult to understand. Make sure to ask as many questions as it takes to feel like you are comfortable with what the incentive is and how it can be used. Sometimes they will have a $25K incentive to upgrade options that cannot be taken off the price. So you need to realize that you will have to use all of the money at the design center to get it. You can’t reduce the base price using the incentive.

7.    Does your preferred lender have any incentives?

Sometimes the preferred lender of the builder will have additional incentives for using them. Make sure you get all of the rules on this as well.

8.    What are your HOA fees and what does this include?

This seems like an obvious question, but you often get caught up in the whirlwind of all of the other info and forget to ask this one. It’s an important one.

9.    What is standard with your properties?

Different builders have wildly different base standards. With a KB home, you often start at a pretty low price, but that price includes 8 foot ceilings and laminate flooring with gold metal transitions to the carpeted areas. With a Blandford home, your base price is going to feel high, but you’ll usually get granite counters, 18 inch tile and lovely plumbing fixtures without spending a dime extra. It’s important to know where you’re starting. Ask the sales rep for a tour of the model and ask which things are standard with that model and which are upgrades. You’ll probably be shocked. Much of what’s in the model isn’t even available for the actual buyer.

10.    Is landscaping (front or back), appliances, blinds or paint included?

This is another one that will vary from builder to builder. Front landscaping is pretty commonly included, but still often not at all. Meritage had an EI package at one point that stood for ‘Everything’s Included’ (blinds, landscaping, appliances). Sometimes these things are not included, but can be added as an upgrade at the design center.

Or hey, better yet, call your agent and she’ll run interference with the sales rep. Your agent will be happy to meet you out there at a moment’s notice. She doesn’t get paid unless she goes with you the first visit. And it’s nice to see the sales reps get a little nervous when they’re evenly matched. If I’ve learned anything, it’s that deadeyes are countered with a steady gaze, an eyebrow raise and a head tilt.

You’ve seen 87 houses:

53 were horrible, disgusting homes you were fairly certain should be condemned

7 were nice but backed to a major road, giant electrical lines or a Walmart

20 were almost right, except the floorplan wasn’t Feng Shui

5 totally would have worked except you found too many dead scorpions and/or cockroaches for your comfort

1 seemed perfect until you researched the sex offenders in the area and realized a child molester lived next door

But one house was THE HOUSE. One house has everything you’re looking for. The master has his and hers closets. The kitchen has an island with room for four barstools. The downstairs guest room has its own bathroom for the in-laws who can’t make it up the stairs. The backyard has a pool with a margarita table in it. There’s a closet under the stairs that’s totally big enough to house an orphaned magical nephew you would prefer to pretend doesn’t exist, if you needed to. The house is close enough to an elementary school the child molesters can’t legally live within a respectable distance. It’s the house you can see you and the hubby and kids living in for the next 20 years.

So now what?

Now you come to me and say, OK, we want to make an offer. Can we go in $30K low? It’s a buyer’s market, right? I mean no one can afford houses right now, so we should be able to get this for a steal, shouldn’t we?

This is where I cradle my head in my hands and try to decide if wine at lunch is acceptable if I put it in a sippy cup.

I’m not saying I don’t understand where you’re coming from. I remember when Jason and I bought our first house, way before I had even considered diving into the shark tank that is the life of a professional Realtor. I had no idea what the house was ‘worth’; I just knew it seemed like a rip-off to pay asking price. It felt like in Rocky Point when you want to buy a piece of jewelry from the street vendors; only the suckers pay full price, right? And then the locals laugh at you behind your back.

I’m here to tell you: Buying a house is not like bartering for cheap junk in Mexico. I know, it’s a revelation.

There are three things you need to take into consideration when making an offer on a house. That’s right, only three things. It’s not scary and complicated if you can boil it down to three things. And this works in any market. You don’t need to consult a stock broker or a weather girl or even a tarot card reader if you just consider the three following things:

1.    The listing price in comparison to the recent sold comps.

2.    How long the property has been on the market.

3.    How bad you want the house.

Yep, that’s it. That’s all of the information that should go into what offer to make on the house. Let me walk you through an example so you can understand how it works.

Example 1:

Perfect house A is listed at $250,000. The comps show other similar houses in the neighborhood have closed escrow for between $227,000 and $268,000. House A seems to have better upgrades and amenities than most of the sold comps.

Perfect house A went on the market 2 days ago.

Perfect house A is the perfect house! You reallyreallyreallyreallyreally want it!

The analysis of this data shows that you should make an offer at or slightly above list price. House A’s value is supported by the other houses that have sold. House A just went on the market, so they are unlikely to accept a low offer and could potentially have competing offers. You can’t afford to let House A go because you superalot want it. You need to make a strong offer.

OK, you say, I get it that if I really want a house and it hasn’t been on the market long then I need to make a good offer. But you’re a Realtor and you always want me to offer more money so I can get the house because it’s not your money. Show me how this system actually benefits me.

Yes, let’s do another example.

Example 2:

House B is listed at $279,900. Neighborhood comps have closed in the $240,000 to $270,000 range recently, but House B seems to need a lot more work than any of the comps did.

House B has been listed 48 days with no offers yet.

You like House B and it would definitely work, but it needs all new floors and a kitchen remodel, so for it to be worth it you’d need to get it at a really good price. Otherwise you’re OK with moving on.

Ah, so House B is an excellent candidate for a lowball offer. The seller doesn’t have anything else to go with and you’re not going to be devastated if you lose out on the house. The comps support a lower price. In this case, there’s no harm in going in fairly significantly low.

Are we all on the same page now? Alright, I won’t break out the wine yet.

I’ve had a post brewing in my brain for about a week. So far I’d held back from unleashing it on the world because I didn’t want to hear all the bitching about how I’m a Scrooge and a Grinch and various other nefarious cartoon characters who eventually turn into saps at the end of the movie. Don’t hold your breath, People, I’m not going to grow a heart anytime soon.

But I think my blogging idea canal is clogged with this post and I just need to write it and get the pathway cleared so the other blog topic ideas can start flowing again. Or possibly I need some fiber. One of those two.

The point is: The Winter Holiday Season, and specifically, Christmas, is the worst. AmIright? Don’t answer it. I don’t want to hear about how you love how this time of year brings out the best in people and makes you feel all cheerful and cozy and loved. It’s THE WORST.

(Edited to add: I started this post last week and I think I must have been in a seriously rotten mood. I’m posting this because I still agree with the general content, but wow. Not maybe quite this strongly. Wouldn’t you love to be married to me? #moodinessrulz)

Top Five Things That Suck About Christmas:

1.    Holiday Card Pictures – You know what I’m talking about. Everyone has to dress up in coordinated outfits, assemble at a specific time and place and smile at the same time. In theory, it should take 10 minutes tops. In reality the outfits you spent an entire day trolling the mall to find only fit 3 of the 5 people you purchased them for. In reality you have to bribe the youngest with enough sugar to fuel a space shuttle to Mars to get him to stand there and attempt a smile. In reality, the only picture where everyone in your family looks halfway reasonable and sort of like they might be smiling, is the picture where your second chin is most visible and you look like you have a lazy eye. And that’s what you end up sending out so the people who haven’t seen you in a year will know how you’re doing. That’s the mental picture they’ll have of you.

2.    Holiday Lights – I’m pretty sure the manufacturers of these stupid things are in a secret alliance with the National Association of Divorce Attorneys. Every year after the holiday ends my husband tests each string of lights and carefully winds them individually and puts them neatly away, but every year when he opens up the box labeled ‘Christmas Lights’ they’ve morphed into a seething, tangled vat of mostly dead bulbs, as if they have a mind of their own. That moment when my husband unearths the holiday lights of horror, is when he turns into a cantankerous, angry, holiday hating beast. I can see in his eyes that I turn into the bossy shrew who forces him to endure the light torture every year. It’s a wonder we’ve stayed married through nine holiday seasons so far. I’m convinced it’s an intentional plot.

3.    That person everyone knows who’s ‘all done!’ with shopping and all other holiday prep the day before Thanksgiving – Oh really? You’re all done with everything? Wow, good for you! You know, I have a special prize for you for being the first one to finish up the eleventy million tasks associated with this holiday. It’s right here in my kitchen. Did you read The Help? No? Oh, great book. Here it is, Minny’s Chocolate Pie, just for you because you’re so special. I got the recipe from that book. Now, if you’ll please excuse me, I have to go back to freaking the eff out about how I’m never going to get it all done and the holiday will be ruined for everyone in my family.

4.    The tacky – For every beautiful and tasteful holiday decoration there’s a hot pink artificial tree with zebra striped ornaments all over it. For every handmade, meaningful ornament you truly love, there’s a dancing Garfield the Cat wearing a Santa hat statue that plays Jingle Bell Rock my four year old cannot. Stop. Making. Go. Off. For every ‘Silent Night’ and ‘Peace on Earth’ there is an Alvin and The Chipmunks’ version of ‘We Wish You a Merry Christmas’. For every Bob and Doug’s ’12 Days of Christmas’ there’s a Justin Beiber ‘All I Want for Christmas Is You’. You can’t hide from the tacky. It’s drowning the cool. It’s killing the meaningful. Pretty soon we’re all going to be wearing matching hoodie/footie’s with cartoon Reindeers all over them and exchanging matching florescent purple Shake Weights. Mark my words.

5.     Guilt over the closing of another year and what I didn’t accomplish in it – Face it, even though the closing of another year is just another human construct that doesn’t really mean anything, we all feel the need to reflect on what we have (and have not) accomplished in the last year. The pounds we didn’t lose judge us from our midsections. The money we didn’t make mocks us from just out of reach. The organizational system we implemented last January remains in the corner we pushed it into mid-February, gathering dust. Sure, maybe things will be different next year, but considering your track record, how likely is that?

(OK, my heart grew a little in the last week. These things still suck, but now that the lights are actually on the tree and the presents are almost all purchased, I’m kind of looking forward to the big day. What can I say; I clearly should be medicated.)