New Construction Transactions From Heaven Or From Hell???

By
Managing Real Estate Broker with RE/MAX Executive Realty

When showing new construction to interested buyers, the first step of the purchasing process is very important.  The easiest way to encourage nervous buyers to pull that trigger is to not require a deposit with the reservation.  Our reservations are good for 30 days with no funds paid up front, and during that period, the buyers will have the opportunity to meet with the builder, have their questions answered, walk through the model home (if there is one) with the builder and meet with all of the suppliers.  This reservation will take a property off the market for that period of time.  This gives the buyers time to firmly decide if they want to go forth and sign a purchase and sales agreement and pay a 10% deposit, at that time. 

My team members have a very good track record for converting reservations into a signed purchase and sales agreement.  That initial reservation without a deposit allows both the buyer and the builder the ability to either cancel or firm up a potential sale.  Buyers like this method because there is no pressure to buy because there are no funds paid.  Remember, the builder can walk from the deal also, if he feels their personalities do not mesh.  If the builder and the buyer are not compatible, it makes sense that the transaction not happen. 

Signing that initial reservation form is a very important part of the potential transaction.  New construction is a complex entity to sell, especially when the dwelling is not constructed and all you are showing is dirt and a set of plans.  It's one step at a time and all parties need to be very comfortable working with each other.  The first meeting is a critical one and provides a good indication of the potential for a successful transaction.

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Topic:
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Massachusetts Norfolk County Franklin
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Rainmaker
401,965
Claudette Millette
The Buyers' Counsel - Ashland, MA
Buyer, Broker - Metrowest Mass

Barbara:

That is a great way to ease someone into new construction which can be very scary to a lot of people. I really like your low-pressure approach. I am sure it helps during those early phases when there is so much for a buyer to learn about the process.

 

April 08, 2010 06:42 AM #1
Rainmaker
1,971,242
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"New Franklin MA Homes"

Claudette.....as you and I both know, new construction can be and usually is a very frightening process to all buyers.....they need to be comfortable with the product, the total price and most importantly, the builder.....all marriages are not from heaven!!!

April 08, 2010 06:44 AM #2
Rainmaker
909,753
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

In the end it all comes down to the product. If someone likes it enough they will buy. I am sure they appreciate the non pressure aproach though!

April 08, 2010 07:21 AM #3
Rainmaker
1,971,242
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"New Franklin MA Homes"

Bill....yes, but the builder may not blend with the buyers and by not taking money, he has the option of not taking the deal....there was builder in Franklin(not mine) who was sued because he deposited $1000 and wanted to return it....the buyer wanted the property....cost the builder $40k!!! that's not happening to one of mine....we don't take money until p&s is signed....then it's 10%.

April 08, 2010 07:25 AM #4
Anonymous
Anonymous
Anonymous

Sounds like a good approach....we have a builder in our town who accepts just a $500.00 deposit and that is good until they start the construction and a formal written offer is done.....if either party wants to back out before start of construction they sign the release and the buyer has their money back rather quickly......he has been doing this for years and I guess it works for him...

April 08, 2010 08:11 AM #5
Rainmaker
1,971,242
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"New Franklin MA Homes"

Dennis....the key to that is there is a clause that says EITHER party can back out with no recourse....works the same as ours but we don't go through the steps of collecting money....why bother??

April 08, 2010 08:29 AM #6
Rainmaker
802,301
Paula McDonald
Chevaux Group, PLLC - The Woodlands, TX
CHEVAUX Group ~ The Woodlands, TX 936-203-0279

As always Barbara, great information in your post.  Our builders down here require a hold deposit which does make buyers very nervous.  In light of the recent market however, I believe this policy might change.

April 08, 2010 10:22 AM #7
Rainmaker
1,971,242
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"New Franklin MA Homes"

Paula....my builders have always worked this way on my recommendation....their legal counsel like this method also....no money is exchanged until the p&s is signed.....when buyers have their selection of homes narrowed down to ours and another, we will win 99% of the time because of the "no pressure" method of doing business....it really is a novelty to most buyers and they appreciate it.

April 08, 2010 11:01 AM #8
Ambassador
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Julie Chapman
Lennar - Jacksonville, FL
New Homes Sales

featured post new homes sale group - homes brunswick gaFeatured Post in New Homes Sales Group

Congratulations on this featured post in the New Home Sales Group.  Thanks for your contributions. 

 

April 09, 2010 06:51 AM #9
Rainmaker
1,971,242
Barbara Todaro
RE/MAX Executive Realty - Franklin, MA
"New Franklin MA Homes"

Thank you, Julie....

April 10, 2010 01:57 AM #10
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Barbara Todaro

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