Buying a home that doesn’t exist?

This weekend is the Anchorage Spring Preview of Homes with twenty-nine entries from six different builders in price ranges from $808,000 to $300,000.  Unlike the fall Parade of Homes, these entries do not need to be completed and so visitors will see anything from furnished models to bare studs.   This weekend is a good opportunity to inspect how homes are constructed beneath the sheetrock.  Several homes should have exposed insulation, plumbing and electrical.  Some home plans will seem familiar to you; others will be brand new but most shoppers will be more interested in the latest cabinet color, the width of the baseboard, gray vs. taupe walls and the size of the master bathroom.

The idea behind the Spring Preview is to generate buyers for brand new homes. However, with Anchorage building permits still at record lows of 300 units or less for the past three years, there is very little available or ‘spec’ inventory (homes built without a buyer) to select from which forces buyers to purchase a home before it actually exists.  Attending the Spring Preview is the first step in trying to determine what plan, subdivision and builder to work with.  All six builders are licensed, bonded, insured with a general contractor’s license and residential endorsement. However, each builder will have their own procedure when it comes to working with buyers for what we call in the business a ‘presale’, a home under contract to a buyer before it is built.

Some builders are also land developers and prefer to build in communities where they have an ownership interest in the land and are familiar with the soils. Others buy lots as they are needed. A significant cost for every home is in the excavation cost which can increase the cost of a home $10,000 to $15,000 without adding any value on the appraisal.  Some builders develop their own floor plans.  Others sub out the drafting and design work which will increase the cost of the home. Selecting a builder’s plan that he has built before allows the builder to provide a more specific price for a home to be built.  However, the devil is really in the details, i.e. the finishes and the allowances.  Some builders have an all-inclusive list of finishes that are included in each home.  However, those standards may vary from one subdivision to another, one floor plan to the next. For example, don’t assume that if you see quartz (the latest in countertop material) in a builder’s home, it is a standard feature. Most likely that was an upgrade that the buyer paid for.    

Before a buyer makes a commitment to a builder, they should be provided with a copy of the floor plan, the plot plan which shows the relationship of the foundation to the lot lines and a standard features list specific to that home, inclusive of a description of plumbing fixtures and a trim package.  They should also be given in writing allowances for cabinets, appliances, countertops, lighting, flooring, tile, et cetera.  Buyers who exceed their allowances should be prepared to pay for any upgrades in cash directly to the supplier. The more time the buyer and the builder spend working together to outline the cost and the specific finishes of the home, the more successful the transaction will be. And, it goes almost without saying that all agreements must be in writing, including any change orders.