The 'New Construction' Catch: Why Buying Early Could Cost You

If you're looking to buy a new construction home in Central Texas, or anywhere in the state for that matter, you're likely thinking it's the smart move—and in many ways, it is. But there's a big risk that a lot of people don't talk about, especially if you think you might need to sell in the near future.

The Hidden Competition: Builder vs. Buyer

When you purchase a new construction home, the community is often still building. This is where the risk comes in. If you need to sell your home within the next couple of years, it's highly likely that the builder will still be constructing and selling homes in that exact same community.

You'll find yourself in direct competition with the builder, and frankly, you're never going to win that match.

• You'll be selling an identical or similar floor plan.

• The builder can often offer the home for cheaper because their costs may be lower, and they can afford to take a smaller profit margin just to move inventory.

• They'll likely have better incentives, especially on the financing side, like attractive interest rate buy-downs that a private seller can't match.

You would need years of equity built up to be able to price your home in a way that would attract a buyer and still allow you to walk away without losing money.

The 'Hack': Find the Close-Out Community

So, how do you get the perks of a new construction home without the risk of competing with the builder when you sell?

Here's the hack: you have to find a community and a builder that is closing out.

The sweet spot is a builder who is on their way out of that particular community. Even if there are a few homes still under construction, you want to ensure the builder's main phase is wrapping up.

Why this works:

• You eliminate future competition. In a few years, when you are ready to sell, the builder will be gone. You won't be trying to sell the exact same floor plan against the original builder offering a better deal.

• You might get better deals now. Builders who are "closing out" a community are often highly motivated to sell their remaining homes. They are likely throwing the best incentives and discounts at buyers to finish the development and move on to the next project.

Find the close-out community, or the builder who is closing out in that community. That is how you win the new construction game.

What questions do you have about finding a "close-out" community in your area?