During the past 20 years, since I have been representing both buyers and sellers at New Housing Developments in the Santa Clarita CA areas (1998), I have had the chance to work with some awesome clients.
They have questions about buying new homes for sale in Santa Clarita CA and elsewhere in Southern California. (have a real estate license will travel).
Is buying a new home a good idea?
One of the first questions they ask is if buying a new home is a good idea?
That is going to depend on the overall status of the real estate market and in which phase the new home builder is in. In some cases, they are finishing up their inventory and their deadlines are forcing price reductions. These price reductions can equate to discounts on the home buyer closing costs, additional upgrades, and premium modifications to the interior of the home that could have cost thousands of dollars.
In this case, buying during the final build-out phases may be worth it for new home buyers.
In other cases, buying a new home in the later phases, depending on future surrounding development, can be a detriment to a new home buyer. In this scenario, this home buyer would be better off buying a resale home and not new.
The numbers of phases will also contribute to the decision making process when it comes to buying a new Santa Clarita – Valencia Home.
Simple new home math
If the new home builder is going to be building 17 phases and if there are 8 homes in each release, that is 136 homes that will be ultimately built and sold.
After a few weeks, the new home builder will be able to give me an idea as to how much the subsequent phase releases go up in price. In some cases, these “increases” can be in the $10,000 or more range.
If a new Santa Clarita home buyer factors this into buying in the 1st phase – at build-out – they could be sitting on a bunch of equity. Therefore, this scenario has a very happy ending to this new home buyer.
Another consideration as to whether this new home is going to be “worth it” has to do with the new home builder’s warranty on their construction. In most cases there is 10-year warranty – bumper to bumper on the home and the construction, appliances have their own independent warranties. This will add to the value of the new home being purchased and is most times transferrable to a new buyer (I double check this and get it in writing for my new home clients).
Unexpected New Home Fee’s to watch out for
Something else to consider is the Home Owners Association Fee if any. If it is too much higher than the “other market” HOA fee’s, then a new Santa Clarita home buyer may be getting into trouble. If the HOA is too high for not doing anything visual with those payments, it can be a turn off to those buyers wanting to buy your home when the time comes.
I always give my “opinion” related to the HOA fee’s – if the new home has them and get clear and concise visuals on what duties those fee’s result in.
When it comes to fee’s – think about property taxes. In Santa Clarita Valley, you can expect the property taxes to be 1.25% in Los Angeles County. This is applicable at all New Home Centers and New Santa Clarita builder communities. They all carry the same tax fee’s. However, in some cases, there are additional taxes which are also needing to get paid twice a year. These extra taxes are known as Mello Roos or special assessments.
Back in the day, the mello roos(special assessments) were the price of admission paid by the home builder to build their new homes. They paid this and it was not a new home buyer responsibility.
In the Santa Clarita Valley Mello Roos and Special Assessments started with the new home builders in Stevenson Ranch. Circa 1996ish. They found that home buyers were willing to pay the mello roos taxes themselves in addition to their regular property taxes. As you can imagine those mello roos were not as high as we see at some of the new Santa Clarita home builder communities today. $30-40 dollars a month to live in a new home in a new community is much easier to swallow than $500-600 dollars a month as we see at some of the New Home Builder Communities in Santa Clarita Valley.
I always make sure I’m up to speed on how much these mello roos and special assessments are at all Santa Clarita new home builder communities. I also take clients to those of our new home centers that don’t have mello roos and special assessments. I have a conversation with my clients as to how this will pertain to them in their own personal financial situation over time. In some cases, homes with mello roos and special assessments should be avoided like the plague, and in some cases, they can be embraced by a home buyer. The rationale is very personal and I take them on a case by case basis. I want to be able to sell the home at some point so my advice has to be accurate.
Watch the new home builder’s crystal ball
New homes rarely lose. During the fall of the last real estate cycle, new home builders in the Santa Clarita Valley closed up shop before the crash. There may have been a few homes that did not sell. It was as if they had the 2007 Almanac in 2005!
When buying new homes and real estate, most are a good bet as long as the new home builder is building. Look at the other areas which are being developed. I always ask how many homes and the ownership of other nearby pieces of land being bulldozed for the placement of new homes.
If you have KB homes (or insert any builder’s name here) being built, the new home builder representative will know their competition and give us the skinny on which other new home builders will be breaking ground. This is good information and can show the robust quality of the current new housing market. If lots of new home builders are investing in building new homes, you can bet the market is one that will continue to sustain itself for a long time to come within the typical housing cycles.
How I negotiate with the Builders Realtor
In most cases when buying a new home you will have contact with the real estate agent who was hired by the new home builder to represent them.
They allow for you, at no cost, to have your own agent representing you.
This is the best possible scenario. You have your own agent to do the negotiation for you, who is seasoned, knowledgeful and experienced. The new home builder has an agent who they have hired who has their best interest at heart.
We all share that same relationship with our employer, we feel that we should be true and honest in all our dealings. The same point exists because my new home clients are my employers. They hire me to perform a service, although they are not paying me for it, I have a job to do and I will execute it perfectly.
When I approach the new home builder’s agent, I need to know several things which I ask directly to them in the presence of my new home buyer clients.
First and most importantly, I want to know how many phases to build out. I want to know how many homes are in each phase. I want to know how many single story models are being offered. I also want to know if there are any visual or functional conditions that may affect a homeowner’s resale terms in the future. (such as water retention structures or high-frequency powerlines passing overhead).
I want to inquire as to when the new “orders” are given. The orders pertain to the price increases and other developments like phase release schedules being modified. I also make myself a part of this mechanism when representing a new home client. The new home builder’s agent has no issue putting me on their update list so I can best inform my new home clients as to any new pertinent news.
After getting this information I want to find out what kind of “cancellation” numbers they are experiencing. How many people are canceling after signing up for a new home and why? This may be a good indicator as to whether we should or should not buy a new home in this particular community. Where there is smoke there is fire.
I, of course, don’t ask in a direct manner this question. Who in their right mind would tell me the truth? I find out by wanting to get put on a notification list for my new home buyers whom I’m representing. So they can get first dibs on a home that they may like better which falls out of the contract that is not readily available at this time. The new home agent is more than willing to hook me up in order to help their boss sell their assets quickly.
I then find out what “incentives” are being offered to those who are using the new home builder’s lender and other service providers.
We found out that the new home seller is always willing to pay someone’s agent so they can have their own as the new home builder retains theirs.
Discounts via the New Home Builders lender?
But, when it comes to your lender, that may not be the same case. At many of the new home builder communities, they have a preferred lender. They need this lender to prequalify new home buyers that already have their own lender. This has to do with real estate procedure and comes from years of experience with real estate lenders.
In some cases, a real estate lender will approve someone after only speaking with them over the phone. They have not run credit, they have not gotten any kind of automated approval, verified employment, nothing. Just a simple phone discussion and the magic pre-approval letter appears.
New home builders know this all too well, so they have a lender that is willing to do free work double checking new home buyers to ensure they are actually qualified to buy the new home. In some cases, the new home builder’s lender will pick up a new home buyer from time to time. Either they don’t have a lender they are working with, or they don’t like the lender they are using and want to switch.
I then find out if there are any “additional” incentives given by the new home builder’s preferred lender if my new home buyer client wants to work with them. These additional discounts or incentives typically come in the form of closing costs being covered for the home buyer. Closing costs are a new home buyer’s part of the escrow fee, the buyers part of the title insurance fee, and the lender’s fee. It can be as much as 3% that the home buyer has to pay on top of the price of the home they agreed to.
New home hardstyle action plan
I then go directly to the new home agent and get to the bottom of the offering process. Most agents think that the price on the paper is the last and final price. They are happy to sign up their clients at new housing collect a paycheck later. This is not the case. Sometimes, it takes work but that price on the paper is not final, ever. I ask how responsive the builder is and how long until we can get a response if we make an offer that is not in the amount advertised.
You would be surprised how often they take lower than listing price offers. And if they didn’t at least we know that my buyers were protected at my 100% level, which they deserve.
Don’t sign anything at any new home center without me being by your side. Not even an interest card. If you do this prevents me from being on your side during the viewing, negotiation and the transaction to closing. I must be with you on your first visit to register you under my name. I’m Connor MacIvor and I am great at representing clients at new Santa Clarita housing and homes. I’ll be there for you when you are ready for a New Santa Clarita Home Tour.