If you’re a buyer looking for a new home, you’re probably weighing your options on what type of house you’d want; new vs. resale, modern vs. traditional, etc. Or you may be a broker and want to learn more about the possibilities presale homes offer your clients. Or you may be curious about the real estate industry and want to learn more about the options available on the market. Regardless, you’re here to learn about presales, and you’ve come to the right place.
In this post, we’ll provide an all-encompassing rundown of presales, including an explanation of why presale homes are a great option to consider, how to customize your presale home, and what to expect when buying one.
What are Presale Homes (& Why Should You Consider Them)?
Presale homes are one of many options for buying a new construction home. Each of the following homes differs based on the level of personalization a buyer can contribute to the finished product.
A speculative (or “spec”) home is a home that’s built from start to finish by a developer, and a customer purchases the home upon completion. The only customization available for spec homes would be completed by the buyer upon moving in.
A custom home is a home that is built on land you already own and would require the assembly of general contractors, architects, interior designers, and various engineers to build from start to finish. You’re heavily involved in the process and decision-making.
In the middle of the two are presale homes (or “presales”). Presales are available for purchase before construction completion. The buyer can customize certain aspects of the home (depending on the builder and the stage of construction when a purchase contract is signed.)
Each option of new construction homes offers distinct advantages over the others, so when searching for a new home, it is vital to determine how involved you want to be in the construction of that home, if at all.
Why Presales? (The Pros and Cons)
Why presales? This type of home is the perfect mix between full customization and minimal work. You get the power to choose on the most tactile aspects of the home, including appliances, finishes, tile, and paint color. Presales, however, are not for everyone.
- There are customization options for many home elements. Whether you prefer
timeless traditional décor, a modern style, or an eclectic blend of
styles, YOU DO YOU.
- You get the customization advantages of a custom home without all the hassles.
- As the home is often well underway with construction, you can visualize what
changes can be made when you purchase it.
- You’ll receive a timeline for the completion of the home.
- No completion date is guaranteed. Unforeseen factors can cause construction delays.
- Using modern technology to visualize proposed home features in the early stages of construction can be difficult.
- Although the construction process is vastly streamlined compared to a custom home, a presale home still requires the buyer to make decisions promptly to avoid delays.
Who Can Build Presales?
When you set out to purchase a presale home while it’s under construction, you’re placing a significant amount of trust in the team that builds it. The builder has many responsibilities, including creating effective communication channels amongst the team and the buyer, maintaining an excellent build quality, and meeting all timelines.
Whom should you trust with this extraordinary home building experience?
The following areas will give you information about how the experience will be for you when it’s your home they’re building.
- Ask if the builder offers presale homes in your desired location
- Assess the builder’s quality
- Check the builder’s reputation
- Learn about their partners in the community
- Discover how they correct any mishaps
- Review the builder’s warranty program, if available
Where can Presales Be Built?
The location of the presale home entirely depends on the builder’s area of construction and the neighborhoods where they acquire land. Ensure that the builder you choose to work with has land available in areas you’d want to live.
If you have a piece of land that you’d want a builder to use for a presale, you’d be better off just building a custom home.
How Long Does It Take To Build A Presale Home?
The time it takes to build a presale home hinges on a few factors. The first is the builder and what their average build time is. Not all construction companies have the same ability to build certain properties in the same timeframe due to differing workforces, processes, and resources. The other factor is any delays in construction from a change in build plans or material scarcity.
How Does The Presale Process Work?
A presale home offers a unique opportunity in the world of homebuying. But how, exactly, does a presale program work?
Step #1: Search for homes
Presale homebuilders will typically list homes currently under construction in a few different locations, usually on their website. Start by conducting an online search for homebuilders that build within your desired location and find a home that might be a fit for your needs.
Step #2: Identify a home
Once you’ve narrowed your search, contact the builder directly to discuss availability of particular homes and whether there are any upcoming home sites in the builder’s inventory that they might recommend.
Step #3: Agree on a price and terms
Remember that the home’s price is important, but the terms that govern how it will change hands from the builder to you are also important. Once both parties are satisfied with the home’s proposed price and terms of its purchase, you are ready to sign the PSA and finalize the deal. You’ll be asked to deposit “earnest money” into escrow to show that you’re ready, willing, and able to keep up your end of the agreement. That money will later be applied to your down payment on the house.
Step #4: Meet the design team
Next, the builder’s interior design team presents a pre-planned palette of colors, features, and finishes for the homebuyer. It’s up to you to approve each item or customize it to suit your taste.
Buy early to customize the most
The longer the home has been under construction, the fewer features can be selected by the buyer. For example, if you sign a PSA after countertops are installed, it will likely be too costly (and time-consuming) to change that selection. Get involved early to maximize your ability to customize the home.
Common Areas Of Customization
Here’s where the beauty of presales really shines – the customization. As mentioned before, presales aren’t custom builds, so you cannot decide everything. Let’s look at what you can.
- Lighting Type & Bulbs
- Hard surfaces: Flooring (Hardwood, Carpet, & Tile) and Countertops
- Plumbing Fixtures
- Bathroom Fixtures
Terms To Know
When discussing the real estate and development industries, there are many terms to note. For a complete list of terms to know, visit our blog, “Real Estate Industry Crash Course: Need To Know Terminology.”
Cost & Risks
Presales tend to be cheaper than complete custom homes but can be more expensive than a spec home. While the opportunity to personalize a presale home is a huge benefit, it’s essential to be aware of how upgrade and change orders made late in the process will affect the bottom line in both labor costs and time delays.
Here are a few examples to consider when talking about presales costs
- You decide to upgrade your kitchen countertops from quartz to marble. The interior designer calculates the extra cost of marble over quartz, and you will be charged the difference.
- You select a brushed nickel finish for your guest bathroom faucets, and the pre-planned scheme specified a more-expensive gold/brass finish—you will be credited the difference between the cost of the two materials.
- You decide you’d like the kitchen to be painted a slightly different shade than the preselected color. Since that color choice won’t change the cost of materials or labor, there is no difference in your cost to make that change.
When it comes to risk, it’s only risky to buy a presale home if you buy from an untrustworthy builder. That’s why choosing a credible builder from the start is important. Do a thorough review of that builder to protect yourself from hardships down the road. Ask a trusted real estate broker who they trust to build a quality home and contact a previous buyer to learn about their own experience.
Warranties are also an excellent way to determine if buying from a specific builder would be risky. If their policies ensure your protection when you receive the keys, you’re in good hands.
Overall, presales can be a great way to get precisely what you want in a new home without the significant effort that comes from a custom home build, but they aren’t for everyone.
If you’re interested in a presale home, visit our presales page to find available inventory and create your dream home today.