What's the Deal with Presale Properties?
Of all the questions and considerations that homebuyers in the greater Seattle area must face, perhaps one of the first they'll come across is the option to buy a presale property. While resale properties (homes that have previously been owned by someone else) are a familiar concept, first time buyers and those who are new to the frenetic pace of the Seattle market might be unfamiliar with the notion of buying presale homes. These types of properties can offer a great opportunity for a wide variety of buyers, but just like with any type of real estate investment, they also come with their own unique set of risks. Buying a home in Seattle can be a challenging process, so if you've found yourself wondering about how presale condos and homes work, read on to learn more about some of the pros and cons of buying this type of property.
What are Presale Homes?
In the simplest of terms, a presale home is one that's for sale that hasn't been built yet or that is in the process of being built. If these properties are listed on online listing sites, they're usually identified as "New Construction" and they'll use artistic renderings and floorplans instead of photographs to show off the property. Presale homes may not always be listed online, so if you're specifically looking for these types of properties, working with an agent can ensure that you find what you're looking for.
Presale Homes Are Not Custom Built Homes
Many people make the mistake of thinking that a presale property is one that they can essentially design themselves. However, that's not the case. The difference between these two types of properties comes down to the question of responsibility. With custom built homes, buyers may be responsible for just about every step of the process including finding a lot, choosing an architect, hiring contractors, selecting interior/exterior design choices, etc. With a presale home though, buyers may have the option of choosing certain finishes and add-ons, depending on the developer, but overall, the builder is responsible for all the ins and outs of the construction process.
The Drawbacks of Buying Presale
Buying a home isn't for everyone and the same goes for buying a presale property. Let's tackle some of the potential difficulties that can come with these types of properties first. In essence, all of these difficulties boil down to one theme: uncertainty. As the properties are not built/completed yet, there's a lot that can change after you go mutual on your new home but before you can move in. One of the biggest problems you might come across is the completion date changing. It's not unheard of for this date to fluctuate slightly throughout the process, but problems and issues can always throw a monkey wrench into a builder's plans. A delayed ready date can make it more of a challenge to coordinate moving efforts, set up utilities, sell your current home, etc. While the completion date is less likely to change the closer it is, unforeseen circumstances can push that date back at any time during the building process.
Expected materials and layouts are another variable that can change after buying. While developers do try to stick with the initial plans and specifications, things like fixtures, paint, and tiles can be discontinued or unavailable during the building process. Layouts or square footage numbers may also vary slightly between purchase and construction completion.
Two other important items that can change in this in-between period are interest rates and market values. If you purchase a presale home, there's always the possibility that either of these numbers could go lower in the interim. This means that you might end up paying a higher interest rate or have a home valued at less than it originally was by the time you move in. Finally, you may find that you have to pay for additional costs like Owners' Association fees that you were not originally planning on. Frequently, these types of costs will be anticipated by the builder. But these fees could be more than originally expected.
The Benefits of Purchasing a Presale Home
Now that we've covered some of the pitfalls that can come with presale properties, it's time to look at their advantages. As a presale buyer, you may not face as much competition as you would when buying a resale or a completed new construction property. Obviously, this will vary based on the property, its location, proposed amenities, etc. Some presale properties in prime locations attract a lot of potential buyers very early in the process. But in a housing market like Seattle's where buyers must often put in multiple offers and are frequently outbid, the prospect of being able to avoid that process is definitely an attractive one.
Another benefit of buying new construction is that it gives buyers time to save money. While the pre-qualification process will already have happened, buyers will have additional time to put money away for their new home. This extra time may also mean that buyers will be able to sell their current home for more by the time their new home is ready for move in. Speaking of saving money, as Seattle has green building requirements for many types of new development, your new home will be more energy efficient than an older home. Things like low-flow toilets, solar panels, and energy efficient windows can do a lot to lower utility bills, which translates to yearly savings.
As a presale buyer, you may also be given the option to customize certain finishes and features or select specific add-ons. This is a great bonus to buying a presale as it allows you to make your home uniquely yours without having to take the time to hire contractors or do the work yourself. Lastly, these types of properties typically come with new home warranties. While each warranty will differ in the scope of what is covered, it's always reassuring to know that should something break or malfunction in your new home, you can have it fixed for little to no cost.
Other Things to Consider
Beyond the aforementioned pros and cons of presale homes, there are still other things you'll need to take into account as you decide whether a presale home is right for you. Start by considering your own circumstances. Think about how steady your job/income is and whether you could afford to wait for the property if construction were delayed. Then, you need to research, research, research. It's always a good idea to examine how the market and economy currently look and what the forecasts are saying. There's no guarantee that the market/economy will perform as expected but it never hurts to anticipate what might be coming down the pipeline.
Take the time to research the developer in question. Do they have a good reputation? How long have they been in business? What do other homeowners have to say about them? It's also important to research the area in which you want to live. You'll want to find out if there are other residential developments, transit stations, or shopping centers coming to the area. New additions like this can affect property values, parking availability, traffic congestion, and much more.
Don't forget to go through the new home warranty thoroughly so you know exactly what's covered after purchase and all the various terms and conditions. As a presale buyer, you should have your own real estate agent and lawyer to ensure that your best interests are being met. These individuals can also give you good information about builders and neighborhoods that may not be readily available elsewhere.
Ready to Get Started?
If now's the time for you to start looking at new construction in the Seattle area, take a look at our Communities page. Here you'll find a comprehensive listing of all of Isola Home's current projects that are available and those that are coming soon. Happy house hunting!