What REALTORS® Need to Know Before Recommending Custom Home-Building

Posted on Dec 12 2018 - 2:13pm by Housecall
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By Josh Biggs

Zillow's latest Consumer Housing Trends Report indicates that 38 percent of homebuyers consider new construction, but only 11 percent end up building a new home. You've probably experienced this decision-making process with some of your clients who aren't sure whether they should buy land and build a new home or purchase an existing home.

Among other things, clients want to know how long the building process will take, how much work it will be for them, and, of course, how much it'll cost. Whether you're a new REALTOR® who's not yet familiar with custom home-building or a seasoned pro looking to expand your client base, the more prepared you are to answer these questions, the better you'll be able to serve your clients.

If your client's dream home doesn't exist in the current inventory, new construction is a viable solution they might not have considered. Close more sales by becoming the trusted expert that can start them on their custom home-building journey.

How Long Does It Take to Build a New Home?

As with buying an existing home, it depends. There are parts of the process that are predictable and others that are not. For a new build, clients can expect the entire process to take roughly nine months to a year, but this varies depending on factors such as how quickly they are able to make design decisions, the local permitting process and the complexity of the home. Remind clients that although buying an existing house might happen more quickly, building allows them to get exactly what they want in a home, and once the process starts, the timeline is predictable.

What Is Required of Clients for New Construction?

The process to buy an existing home might not be simple, but it's familiar territory for a lot of clients. Building a custom home requires an even greater level of commitment, because the undertaking is more complex, it takes longer and more parties are involved. However, there are multiple ways to build a new home, and each builder has a unique approach. Some builders offer turnkey solutions that allow clients to be hands-off after all of the design decisions have been made; others allow clients to participate in the building process to help keep costs down, allowing them to get more house for their money. Develop relationships with various builders in your area to get an understanding of how they work so you will know which ones are a good fit for your clients no matter where they fall on the spectrum.

How Much Does New Construction Cost?

Although you can't necessarily give hard numbers when a client asks this question, you can be prepared to talk about the types of costs that are involved in building a new home. The three major components are the land, site development and the house itself. Understanding the overall budget and the client's design goals can inform how much is left over for land and site development, so you know what type of lot to search for. Many clients assume that building new will always cost more than buying an existing home, but this isn't always the case, especially if they plan to renovate to get the desired features and finishes. Having some renovation numbers in your back pocket can help bring this point home.

What Requirements Must the Property Meet?

Clients might not initially think to ask this question, but you'll need to know the answer if you're going to help them find land that's suitable for building. Learn about your local zoning and permitting requirements so you can determine whether particular properties are viable. Nothing is more frustrating to a client than falling in love with a piece of land and then learning that they can't build on it. Save yourself and your clients some time and frustration by getting educated about setbacks, access to utilities, septic system requirements and any other relevant local details.

Become a Trusted Advisor

You might not be able to answer every specific question your clients have about building a new custom home, but the more you understand the process, the better able you will be to offer new construction as a solution. Partner with local builders who can provide information about site development costs early in the process to help your clients determine if particular lots will work with their budgets.

Learn about the services each builder offers so you can recommend the ones that best match your clients' preferences. At least one-third of your clients are likely considering new construction. Agents, are you prepared to guide them down that path so you can close more sales?

Josh Biggs is the VP of Sales and Marketing for Adair Homes. Having spent more than 16 years in the housing industry–from lending and financing to home-building–Biggs is passionate about helping people achieve their dream of homeownership.