Working With a Design-Build Team to Create Your Dream Home

What do the experts say you need to do and know for a smooth build out?

Building your dream home from scratch is a daunting task, especially if you’ve never worked with an architect, builder, and design team before.

To make the project a little easier to wrap your head around, here’s some advice from construction professionals.

Do your research

The building process isn’t short, so make sure you are happy with your team — you’re stuck with them for a long time.

This requires doing a little homework.

To start the building process right, you’ll want to do the following:

  • Conduct extensive online research to make sure you’re using a reputable builder
  • Get referrals from friends and family
  • Look at examples of the builder’s current work

Nikki James, studio manager at Ashton Woods, a builder and design studio constructing homes in the South and Southwest, recommends visiting a builder’s model homes and those under construction.

It’s fine to even be a little sneaky, says Jesse Fowler, president of Southern California-based Tellus Design + Build. Pop in at a construction site unannounced to see what the job site looks like. Workers not wearing hard hats or lots of garbage on the ground are red flags.

Ask questions (and more questions)

You need to understand the parameters of what the builder is doing for you, advises Roger Kane of Kane Built Homes in Massachusetts. And you get that information by asking questions. Make sure the builder can execute what you want, because not all builders can accommodate custom designs.

One of the first things you should do before meeting with your team for the first time is to identify what you don’t know, and then eliminate that doubt.

If this is your first time building, there are probably going to be a lot of things you don’t know, and that’s fine, Fowler says. There are no dumb questions.

Here are a few starter questions:

  • What exactly are you paying for?
  • Do you need full architecture/design/build services, or do you just want a blueprint?
  • How much time should you allow?

Know what you want

“Design inspiration can come from anywhere,” says James. She asks her clients to bring in plenty of pictures, scraps of fabric, or anything that speaks to their aesthetic.

The first thing to do, Fowler says, is to figure out the look and feel that a customer likes, and weed out what they don’t like.

It’s also important to know your limitations, though. James warns that you must make the structural selections for your floor plan before picking design elements so you know what you can and can’t have. For example, if you want a freestanding tub, you will first need to know if you have the right plumbing for it.

An architect wants to know how you’re going to use your home, advises Kim Nigro, the architect at Chicago-based Studio Nigro Architecture. Tell your architect what you don’t like about your current home, and what your day-to-day needs are.

This can be as simple as letting them know you shop at Costco a lot, so you want a big pantry, James says.

The details matter

You probably never thought about what kind of grout you want between your tiles. But these are the kinds of decisions you will be making.

Ashton Woods gives its customers a checklist for details like this, and there are a lot of specific items on it, from what kind of edge you want on your counters to how many outlets and phone jacks you’ll need.

This sounds overwhelming, but Kane’s advice is to just take it room by room. Start out with the basics. Determine how many bedrooms and bathrooms you need, then go inside each room and think about what should be in it.

“Make a list,” he says. “’We want hardwood flooring; we need his-and-her closets.’ Make your own little notebook and just address every room. That’s a great way to start.“

Know your budget

The harsh reality is that you can’t buy something you can’t afford. So, do your math and be upfront about your budget.

“Not communicating a clear budget to a designer is a mistake,” Fowler advises. “Designers need something tangible. If you let them go wild, 99 times out of 100 they are going to do something you can’t afford.”

There are good reasons not to pinch too many pennies, though.

As the saying goes, “If it seems too good to be true, it probably is.” You probably shouldn’t go with the cheapest guy out there, Fowler suggests. A lot of builders, he says, cut corners by doing things illegally.

Don’t get roped into a mess like that. Saving a few bucks now might end up costing you more later.

James recommends doing things exactly the way you want them from the beginning, because remodeling later will cost you more money and more stress.

“We see a lot of buyers getting nervous about spending too much. As people get closer [to finishing], they wish they had spent that extra money,” she reports.

Spending more for quality products is another big consideration. Kane uses sustainable products for the exterior of his houses that last “pretty much a family’s life in a home — 30 to 40 years.”

That’s good for the environment and your wallet, because regular maintenance like repainting the outside of a house can cost $15,000.

Be decisive

The biggest mistake Kane, a veteran homebuilder, has seen homeowners make is being wishy-washy with their decisions.

Once a home is under construction, it’s important to have made all your major design selections.

“Paint color’s not a big deal,” Kane says. “But you should have things like all your tile and granite picked out.”

Why? Because at this point in the process, your selections could be backordered, and waiting on them is costly to the builder and to you.

If you do tend to change your mind a lot, make sure you pick a builder with a good warranty program.

Communication is key

One core piece of advice from construction professionals: Keep the lines of communication open. The biggest mistake you can make, says Fowler, is leaving gray areas in your building and design plan.

“I’ve heard horror stories, and most are because one party’s expectations were different from the other’s,” Nigro states. “The more developed drawings can be, the fewer assumptions the contractor will have to make.”

And it’s not only important for you to communicate to your design team. The members of your team need to be on the same page with each other as well.

“They need to really create a collaborative team,” Nigro says. “There are a lot of decisions to be made.”

Fowler recommends getting the whole team together to meet each other and start working collaboratively from the start. Most times, he says, architects, designers, and builders who work in a community have met and done projects with each other before.

Consider the trends

More homes across the country are being built “healthy” or “green.” These are homes built with non-toxic, natural products and materials.

Nigro says she used to recommend healthy building to her clients, and now people are coming to her asking for it.

Another trend sweeping the nation is “mother-in-law suites” or homes that accommodate multi-generational families.

Over the past five years, a lot of Nigro’s clients have started looking down the road to when older relatives might move in with them, or maybe their adult children will move back home after college.

This could mean a separate apartment over a garage, or maybe a guest bedroom on the main floor.

Why are trends an important factor to consider? It could help you sell your home in the future.

Have fun

“It’s important for us to personalize your home and make it yours and something that you’re proud of,” James remarks.

If this means having a full basketball court right on the main floor next to the dining room, like one of Nigro’s customers wanted, then that’s what you should have!

Custom features can range from practical to fantastical: Fowler has had clients ask for water pipes over their nightstand so they wouldn’t have to get up for water in the middle of the night; “living walls” (walls with plants or grass growing right on them); hidden cameras; and even an unexplained hole in the closet floor.

Hey, it’s your dream house, after all.

Wondering if new construction is right for you? Search new construction listings, and get more home-buying tips and resources to help you decide.

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Originally published October 21, 2016.

Source: zillow.com

Dealing With a Seller Who Is ‘Just Not That Into You’

You’ve got your heart set on their home. Should you try to win them over, or just walk away?

As Valentine’s Day approaches, many single folks swipe left and right searching for the “one” love of their life. Looking for the right match is not much different in real estate: trying to find the perfect home, in a prime location, that checks all the boxes on your wish list.

Given the ups and downs of a home search and the love affair many buyers have with potential matches, many real estate agents feel their job becomes part therapist and part matchmaker.

Buyers tour dozens of homes and sift through dozens of properties, maybe even going on “second dates” — or in real estate terms, “private showings.”

Sometimes they feel it in their gut when the right house comes along. They know the comps, and are prepared to make an offer at fair market value. In their minds, they’ve already moved in.

Unfortunately, sometimes love is unrequited — even in real estate.

The seller has every right to reject a buyer for any reason whatsoever. They may stand firm on their price or wait for better terms. It could be they don’t like the buyer’s contingencies, or they’re holding out for a cash deal.

Either way, the seller has no obligation to sell to you, even if you offer what seems like a fair price.

Here are five tips for dealing with a seller who is “just not that into you.”

Go to your max

After submitting an offer and even going through a series of counter offers, you realize you’re probably too far apart on price.

You’re wasting time by holding back and playing the seller’s game. If you want the home, it’s time to go to your max.

By putting your best offer forward, you’ll have done all you can. Sometimes a few weeks pass, and they will come back to you.

Move on

Moving on is easier said than done, of course. But if the seller isn’t interested in working with you, move on.

Hanging around wishing the seller will come to their senses and accept your offer is a waste of time and emotional energy. By pining away in your love affair with that house, you risk missing out on other great properties that are available and whose owners may be more “into” you.

And who knows? Sometimes, when you move on, the seller may suddenly show interest.

Learn from the experience

The sheer desire to own a home and the assumption that an available home should be yours doesn’t always translate into homeownership. If things don’t work out for you, analyze what went wrong.

What mistakes could you have avoided? Did you spend too much time negotiating with that seller? Did you get too emotionally involved?

If you can walk away with some lessons learned, your next try at homeownership should be easier — and more likely to succeed.

Don’t try to figure out the seller

You’ve got no idea what’s going on in a seller’s head. For all you know, the seller is emotionally attached to the home and not ready to sell. Or maybe they’re simply are firm on their price, and that’s it — no matter how high it seems relative to the market.

It’s certainly tempting to play armchair analyst when a seller isn’t selling to you for mysterious reasons. It’s also, in most cases, a waste of time and energy.

Accept the fact that the seller just isn’t that into you for whatever reason, and move on to the next home.

Do try to figure yourself out

Is there a pattern developing? Are you only going after the ones you can’t have? If so, are you sure you’re ready to commit?

Like finding a mate, buying a home is a huge decision and financial commitment. If you find that you keep going after sellers that aren’t co-operating, the issue may be you — not them.

Identify the motivated and serious seller, and make a play for their home.

And don’t spare too much thought for the one that got away. You’d be surprised how many times buyers, at the closing table, admit that the home they had previously pinned for wasn’t the one for them, anyhow.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Source: zillow.com

What Do You Need and Want in Your Next Home?

In this article:

While everybody knows that buyers shop based on price range, there are many additional considerations to make when looking for a home. And, most buyers end up refining their criteria once they start touring homes. Ultimately, your home criteria should depend on your personal lifestyle and needs. Regardless of what you’re looking for, here are some general rules you should follow to make sure you’ll be happy with the home you buy for the foreseeable future.

What are the top features buyers look for in a home?

Today’s buyers are juggling many different priorities when it comes to buying a home, but according to the Zillow Group Consumer Housing Trends Report 2019, here are the features that rank as very important or extremely important to most buyers.

Neighborhood wants and needs for buyers

  • Safety: 82% say a neighborhood that feels safe is very or extremely important
  • Walkability: 60% say it’s very or extremely important
  • Preferred neighborhood: 56% say it’s very or extremely important
  • Proximity to shopping, services and/or leisure activities: 53% say it’s very or extremely important
  • Optimal commute to work or school: 52% say it’s very or extremely important
  • Offers a sense of community or belonging: 48% say it’s very or extremely important
  • Close to family and friends: 46% say it’s very or extremely important
  • In preferred school district: 43% say it’s very or extremely important

Home features buyers want

  • Within initial budget: 83% say it’s very or extremely important
  • Air conditioning: 78% of buyers say it’s very or extremely important
  • Preferred number of bedrooms: 76% of buyers say it’s very or extremely important
  • Preferred number of bathrooms: 67% of buyers say it’s very or extremely important
  • Private outdoor space: 67% of buyers say it’s very or extremely important
  • Preferred size/square footage: 67% of buyers say it’s very or extremely important
  • Floor plan/layout that fits preferences: 67% of buyers say it’s very or extremely important

28% of buyers look for a home to rent out, 27% looked for smart homes, 58% of buyers looked for assigned parking

1. Search for the right price

Price will ultimately dictate what you can or cannot buy. While looking at homes above your price range can be fun, it’s not a good use of time — and it can lead to heartbreak when you realize it’s not financially feasible. Despite this, Zillow research found that in 2019, just 55% of buyers stayed on budget, while 26% went over their initial budget.

How to set your home buying budget

Use Zillow’s Affordability Calculator: This handy tool gives you an initial budget range based on your income, existing monthly bills, and down payment amount. Once you have that range, you can set up Zillow alerts for homes on the market that fit your price range, along with other criteria.

Get pre-approved: Once you’re ready to really start your home search, you’ll want to get pre-approved by the lender of your choice. They’ll approve you for a loan up to a specific amount, based on your income, debt and credit history.

Forecast your mortgage payment: Even if you are pre-approved for a large loan from your lender, you should make sure you’re comfortable with your estimated monthly housing payment. When you use Zillow’s mortgage calculator to estimate your monthly payments, be sure the taxes, insurance, and HOA fees are accurate — those items can make a big difference in your monthly costs.

2. Prioritize the location

Next to budget, location is one of the most important things to consider when buying a house. The 2019 report uncovered that 24% of buyers found it difficult or extremely difficult to find a home in their desired location. If you can’t find or afford a home in your ideal neighborhood, you’ll want to ask yourself a few questions (and enlist the help of your agent) to find a location that fits your lifestyle, needs and budget. Remember — your home’s location can’t be changed, so take the time to really identify a neighborhood where you’ll be happy live.

Proximity to downtown

Unsurprisingly, homes closer to core downtown areas have better resale value, thanks to their shorter commutes. According to Zillow research, in 29 of the country’s 33 largest metro areas included in the analysis, buyers should expect to pay more per square foot for a home within a 15-minute rush-hour drive to the downtown core. That may be why 15% of buyers who compromise to stay within their budget add time to their commute.

Community attributes

If you like being able to walk to restaurants and shops, try walking the distance to town to see if it’s doable. Spend some time exploring the area, checking out nearby parks and figuring out what kinds of attractions are nearby.

Alternatively, if you’re someone who likes a more solitary life and doesn’t mind driving, you might prioritize a home that offers more privacy, perhaps in a location that’s off the beaten path.

School district quality

If you have kids (or are planning on having kids in the future), you want them to get the best education possible. Checking out the school district ratings is a starting point, but you should visit the local schools to gather your assessment of the education and programs. Even if you don’t have children, the school district that your home is in can impact your future resale value.

Flood zone status

Homes located in flood zones require additional insurance, and buying a home in a flood-prone area means you need to be prepared if a flood actually happens.

3. Think long term

According to the Zillow Group Report, the typical homeowner stays in their home for 14 years before selling. When shopping for a home, don’t just think of your immediate needs. Make sure the home you select will meet your long-term goals, so you won’t have to move again in the near future.

Bedrooms and bathrooms

If you plan to expand your family in the near future, make sure the new home can accommodate your plans, whether it’s an extra room for a new baby, an in-law suite for parents, or a guest bedroom if you’re moving out of state and anticipate lots of visitors. The same goes if you are planning to downsize or you have grown children who will be moving out soon.

Outdoor space

As mentioned above, most buyers rank outdoor space as important. If you have a dog (or plan to get one), have kids who need a safe place to play or are an avid gardener, you’ll want to make sure the home’s outdoor space meets your needs.

Potential to personalize

Many buyers look for a home that’s move-in ready, so they can avoid costly repairs and updates (especially right after moving in). But at the same time, it’s nice to be able to add some personal flair to make a house feel like home. If you’d like to add some of your own style, be sure to steer clear of homes that you won’t be able to change enough to fit your preferences.

Lifestyle amenities

Ideally, your new home should enhance your current lifestyle — and you’ve probably already envisioned what your life in a new home will look like. As you evaluate houses, consider your hobbies and what makes you happy. For example, if you love spending time outdoors, you probably want a home with a nice yard. If you love to cook, maybe a nice, big kitchen is on your wish list. And, think about your current living situation: What things do you wish were different?

4. Assess property condition

TV makes home renovations look easy, but in reality, they’re anything but. If you’re a first-time buyer who has never undergone a renovation, you may want to steer clear of a home in serious disrepair. The costs can add up quickly, and if the home needs structural work, it could delay your move-in, causing unnecessary stress. Here are the three major categories of property condition.

Move-in ready

A move-in ready home is new, close to new, or has been recently renovated. Zillow-owned homes are move-in ready homes that have been recently renovated by a licensed contractor, and are ready for new owners to start their lives.

Minor updates

A home that needs minor updates might have cosmetic issues you’d like to change, or have some dated mechanical systems that could be updated for energy savings. Learn more about minor cosmetic details below.

Major renovation

A home that needs major repairs is usually priced lower due to the work that needs to be done. One upside to a major renovation is the opportunity to personalize the home to your tastes. Keep in mind that the return on investment for a major renovation isn’t 100%, and you risk a delayed move-in if the repairs are more extensive than anticipated.

Check condition of costly systems

No matter the condition of the home you’re buying, make sure your inspector checks to make sure major systems and mechanicals in the home are functioning properly. If issues are uncovered, you’ll want to ask the seller to either repair them before closing or offer a credit so you can fix them yourself. Look out for the following costly issues:

  • Damaged roof
  • Older furnace or HVAC system
  • Flooding, water damage or mold
  • Old insulation
  • Plumbing issues
  • Exterior cracks
  • Uneven floors

5. Don’t focus on minor cosmetic details

No house is perfect, so try not to get hung up on little imperfections. For example, don’t eliminate a home from your list just because you don’t like the interior paint color. Cosmetic changes are fairly easy and affordable to make. Don’t let the following minor issues keep you from buying a house you would otherwise love:

  • Paint
  • Hardware
  • Furnishings
  • Landscaping

When you attend showings and open houses, or even when you’re just browsing through pictures online, it’s easy to get distracted by clutter. Try not to pay too much attention to the seller’s stuff — it’ll all be removed by the time you move in. Put in the effort to picture the house as a blank canvas for all of your belongings.

6. Stick with your must-haves

There’s a big difference between wants and needs, so create two different lists when searching for a home. For instance, a shorter commute may be a must-have, but smart home features are a nice-to-have. Practicality and functionality should always take priority over the bells and whistles.

Things to consider when buying a house: needs vs. wants

For example, your list of needs might look like this.

  • Need: shorter commute
  • Need: specific number of bedrooms and bathrooms
  • Need: parking

Other items might fall to your list of wants, like these.

  • Want: updated kitchen
  • Want: upstairs washer and dryer
  • Want: smart home features

Source: zillow.com

How to Negotiate Repairs After a Home Inspection

Most would-be buyers and sellers believe the real estate “deal” is negotiated at the signing of the contract.

Most would-be buyers and sellers believe the real estate “deal” is done at the signing of the contract.

In many cases, the deal-making and negotiations only start at the contract signing. Even in more competitive real estate markets, negotiations still happen once in escrow.

Issues typically arise after the home inspection, and those issues tend to result in another round of negotiations for credits or fixes.

Here are three buyer tips for negotiating repairs after a home inspection.

1. Ask for a credit for the work to be done

The sellers are on their way out. If the property is moving toward closing, they’re likely packing and dreaming of their life post-sale. The last thing they want to do is repair work on their old home. They may not approach the work with the same conscientiousness that you, as the new owner, would. They may not even treat the work as a high priority.

If you take a cash-back credit at close of escrow, you can use that money to complete the project yourself. Chances are you may do a better job than the seller, too.

Finally, if you get the credit, there will be less back-and-forth to confirm that the seller correctly made the repairs.

2. Think ‘big picture’

If you know you want to renovate a bathroom within a few years, then you likely won’t care that a little bit of its floor is damaged, that there’s a leaky faucet, or that the tiles need caulking. These things will get fixed during your future renovation.

However, the repairs are still up for negotiation. Asking the seller for a credit to fix these issues will help offset some of your closing costs.

3. Keep your plans to yourself

A good listing agent will walk the property inspection with you, your agent and the inspector. Revealing your comfort level with the home or your intentions, in the presence of the listing agent, could come back to haunt you in further discussions or negotiations.

If they sense you are uneasy with the inspection, they’ll be more willing to relay that to the seller. Conversely, if you spend two hours measuring the spaces and picking paint colors, you lose negotiation power.

If you mention you’re planning a gut renovation of the kitchen, the sellers will certainly hear about it. And they’re going to be less likely to offer you a credit back to repair some of the kitchen cabinets.

Eyes wide open

A word of caution: You should never complete the original contract assuming that you can and will negotiate the price down more after the inspection. It will come back to bite you, particularly in a competitive market.

If the property inspection comes back flawless, there’s nothing to negotiate. If you attempt to negotiate anyway — to recoup what you lost in the initial contract negotiations — you risk alienating the sellers and possibly giving them an incentive to move on to the next buyer.

You need to go into escrow with your eyes wide open. A real estate transaction is never a done deal until the money changes hands and the deed is transferred. Stay on your toes. Otherwise, you may risk losing out on further viable negotiation opportunities, which could lead to buyer’s remorse.

Shopping for a home? Check out our Home Buyers Guide for tips and resources.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

Originally published December 18, 2013.

Source: zillow.com

Busting 4 Big Myths About Buying a Home

Conventional wisdom, like conventional loans, can go on for decades without changes or challenges. Everyone assumes these nuggets of wisdom are true because they’ve been repeated so long and so often. But Zillow researchers used hard data to challenge some real estate assumptions and have discovered that what you think you know may not be true. Here are fresh takes on commonly held real estate beliefs, based on research for “Zillow Talk: Rewriting the Rules of Real Estate.”

Myth: Buy the worst house in the best neighborhood

This notion hangs around because it just seems to make sense. If you really want to make a smart investment, everyone knows location is the most important factor. So the worst house in the best neighborhood should be a great deal. You’re buying the best location you can afford, so what if you have to buy a sub-par house? But it turns out, that’s not such great advice. At best, the bottom 10 percent of houses in a ZIP code will appreciate at a similar rate to the other 90 percent of homes, leaving you no better but no worse off than your neighbors. But it turns out that in the most affluent neighborhoods, the worst house is actually likely to appreciate more slowly than the houses around it. In essence, not only is the myth not true, when it comes to the nicest neighborhoods, it’s the exact opposite of true. The worst house in the best neighborhood is the worst investment.

Why would that be? Most likely the demand for cheap homes isn’t very strong in affluent neighborhoods. People who want to live in fancy ZIP codes want fancy houses as well. Besides, a house that is substantially cheaper than those around it is less likely to attract bargain hunters than it is to raise concern about what’s wrong with it.

How about the worst house in the hottest neighborhood? If you can get into a neighborhood that has seen five consecutive years of higher-than-average home value appreciation, you can get one of the low-end houses, fix it up and turn a tidy profit. But timing is everything. If you miss the spike, you’ll be stuck in an underperforming house. If you buy a bottom-tier home in a neighborhood that was recently hot but now just luke-warm, you’re going to see lower than average appreciation.

According to the data, to see tBhe maximum return on your investment, you should buy in the most expensive neighborhood that you can afford to buy a home that isn’t in the bottom 10 percent. It doesn’t have to be the best house or even one right in the middle. But the worst is, well, the worst.

Myth: If you want a screaming deal, buy a foreclosure

At the height of the housing bust, you could see stories every day about the huge discounts available on foreclosed houses. Foreclosures could be had at less than half the price of other homes, so buying anything else seemed foolish. That talk has calmed but there’s still the pervasive ideas that foreclosures are always a bargain. But it’s not necessarily so.

Yes, foreclosures frequently sell for less than other homes. But they aren’t like other homes. When people are in financial crisis, unable to make their mortgage payments, chances are good that they aren’t keeping up with basic maintenance. Why fix the roof when you’re going to lose the house anyway? In addition to issues of neglect, some homeowners facing foreclosure actually vandalize the home and take out copper piping, appliances and anything else they might be able to sell. Add to that the fact that banks don’t have the same disclosure obligations as traditional homeowners.

Of course, the impact of foreclosures on price varies from market to market. In some regions, the discount for buying a foreclosure is still steep. In others, it has all but disappeared. But instead of assuming you’ll get a better deal on a foreclosed home, make sure you are comparing prices between homes of similar size and similar condition.

Myth: Real estate is a terrible investment

It’s true, when you look at annual returns over most long periods, stocks perform at almost twice the rate of residential real estate. But you can’t live in your stock portfolio. That’s worth something each and every month. In addition, buying a home probably means taking out a mortgage. Not only does that bring tax benefits, but it allows you to leverage your down payment to make a bigger investment. If you have $100,000 to invest in stocks, you can buy $100,000 worth of stock. But if you take that same $100,000 and invest it in a home at 20 percent down, you can buy $500,000 worth of real estate.

In “Zillow Talk,” Zillow Group CEO Spencer Rascoff and Chief Analytics Officer Stan Humphries crunched the numbers and determined that from 1975 to 2014 the S&P 500 averaged an annual return of 10.4 percent while residential real estate averaged 11.6 percent annual returns. Buying a home is a great investment.

Myth: Buying a home is a risk-free investment!

While it’s true that real estate is, historically, a less volatile investment than stocks, it’s still an investment and that means there is some risk. It’s a gamble that usually pays off but not always. And we’re not just talking about those horror stories you see in the news about a couple buying a home sitting atop an enormous snake den or discovering the carpeting covered giant holes in the floor.

Buying a home is a particularly risky gamble for low-income families. If you’ve had to stretch to buy an inexpensive home in an inexpensive neighborhood, you are probably in real trouble if you lose your job. You’re less likely to have a financial cushion. And if you lost your job as part of a regional economic downturn, chances are you can’t just sell your house because your potential buyers are likely out of work too. That means you can’t move to where you might get another job.

In addition to the loss of flexibility, lower income homeowners are less likely to benefit from the mortgage-interest tax deduction because they are less likely than more affluent taxpayers to file itemized tax returns.

Does that mean you have to be well-off to profit from owning your own home? Certainly not. But it does mean that you shouldn’t go into homeownership thinking that it’s going to give you an instant financial leg-up. Real estate is a good bet – if you can afford to make it.

Source: zillow.com

Home Buyers: 5 Things to Know As You Wait for Closing Day

The seller accepted your offer, and now you’ve just got to sign on the dotted line. Right?

For some home buyers, the closing day for a real estate purchase is as formal and complicated as the transaction itself. For others, it’s just a blip on the radar. Either way, there are some important things to keep in mind as you make your way to homeownership.

Your mortgage rate could expire

Mortgage interest rates can fluctuate daily, and the rate your bank quoted isn’t good forever. Instead, a bank will “lock-in” your interest rate for 45, 60 or any number of days. Once that lock expires, you may have to pay a higher rate.

Any number of issues can come up: open permits, illegal renovations, or other types of roadblocks might require the loan process to stop until resolution.

For example, a buyer in upstate New York learned at the last minute that a previous owner built an addition to the home in the 1970s but never documented it properly. It turns out it was so bad that it wouldn’t pass today’s requirements. The buyer had to hire an architect, re-draw plans, and document the issue before the bank approved the loan. And, consequently, he lost the rate he’d been quoted.

Don’t wait until it’s too late, and don’t assume it’s a smooth journey to the closing table. Rate-lock expiration can throw an expensive wrench into the closing process.

The mortgage process isn’t over yet

Some buyers think once they’ve completed the application and submitted paperwork, their loan is approved and ready to go.

Not so fast. Today, some lenders will verify income, assets or credit all the way up until the very last minute. Don’t make any major changes to your finances until the closing.

That means don’t apply for a new credit card, finance a new car, or take a new job without running it by your mortgage professional.

The smallest (even seemingly insignificant) change to your finances can affect your ability to be approved for a loan.

And the house isn’t yours yet

In some locations, the walk-through is a formal event, and in others, it’s a checked box. Most real estate contracts provide for a walk-through up to 24 hours before the closing. Be sure to take advantage of it.

Why? You don’t want to close on the home if systems aren’t working, the seller hasn’t made the necessary repairs, or the seller hasn’t moved out.

If things aren’t as they should be, you can postpone the closing until they are.

You may need to do some homework

Once the home closes, not only is it physically yours, but also it’s completely your responsibility. In most states, the law is on the side of the buyer, and requires the seller to disclose any issues and confirm they’ve been resolved.

In others, it’s “caveat emptor,” or buyer beware. In this case, it’s up to the purchaser to double- and triple-check that the seller closes all outstanding building permits, releases all liens from the title report, and resolves any issues with the local building department, assessor or health department.

The actual closing could be very low-key

In most places, the end happens in parts, and the two parties don’t need to meet. Buyers sign their loan documents in the privacy of their home or office, and the seller shows up at the title company to sign off on the deed. It’s seamless and straightforward, and happens in the background.  Buyers wire their down payment, and sellers receive their funds electronically.

But sometimes, the buyers and sellers and lots of attorneys and title folks sit around the table for hours, passing paperwork and using calculators. The process is archaic and cumbersome. What’s worse: If the transaction wasn’t smooth, the atmosphere around the “closing table” could be pretty tense.

What can you do?

The easiest way to a smooth closing is to be on the lookout for red flags and do lots of research.

Have a solid team on your side, starting with a good local agent. He or she can refer you to necessary mortgage pros, title insurances, escrow offices, attorneys or inspectors.

Processes and customs vary by market, and customs that apply in one community won’t matter across the country, so getting as much information upfront as you can will help avoid unpleasant surprises.

Related:

Note: The views and opinions expressed in this article are those of the author and do not necessarily reflect the opinion or position of Zillow.

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Source: zillow.com

New Construction: A Guide to Buying a Brand New Home

How is buying new construction different than buying an existing home? For starters, a newly built home likely includes up-to-date design, the latest construction standards and new appliances. And since many new construction homes are sold before they are finished, you may have the opportunity to make some design choices, things like upgrading tile or selecting the carpeting color. You won’t be moving into a home with a honey-do list of projects and repairs.

Here are some tips to help you shop for and buy new construction.

Finding a brand new home

How to find a newly built or under-construction home? You can refine your search on Zillow to show only new construction but don’t stop there. A good real estate agent will know about new developments in your area. Of course, new construction isn’t always in a new development. Some builders pick up lots and build one or two homes at a time. So keep an eye out for new places under construction in your target neighborhood and ask your agent to contact the contractor or developer.

Have pros on your team

Builders of larger developments often have a sales force that works directly for them, bypassing traditional real estate agents. Other times they have a real estate agent who handles their listings. In either case, you will want your own agent to represent your interests.

The same goes for lenders. Don’t be surprised if builders require you to be pre-approved by their preferred lender. They just want assurance that you are a serious buyer and the deal won’t fall through. In most cases, you can still use the lender you choose. But if it’s a development with no finished homes, you may have a tough time finding another lender willing to loan you the money.

Research the builder

You want to know who you’re putting your money behind, so go online to read reviews of builders. Do they have a reputation for quality work they stand behind? Or are they better known for putting up shoddy homes that look nice but quickly fall apart? How financially sound are they and their financing? You don’t want to put down a deposit only to watch the builder declare bankruptcy before finishing your home. Ask what kind of warranty is offered on the home.

Know what you’re buying

When buying new construction, you may be purchasing your home before it’s finished. So how do you know what it looks like? You’ll tour a model home or homes in the same development. Models give you a feel for the floor plan and display finish options. But beware! Oftentimes model homes have a mix of standard and “custom” or “premium” finishes. You don’t want to fall in love with a back splash in the model only to find out later that it’s a pricey add-on. Ask for a list of standard and upgraded features, including their costs. You have to make sure you know exactly what is included.

No-dicker-sticker? Not so fast…

Builders aren’t emotionally attached to the homes they construct. It’s their business and they usually aren’t keen on negotiating price. For one thing, if they cut the price for you, the next buyer is going to expect a similar discount. For another, they need to show their own lender that homes are selling for the prices they expected to.

So what can you negotiate? Everything else. Upgraded cabinets or flooring? Negotiable. Closing costs? Negotiable. Anything that isn’t going to show up in the county records to lower the sales price can be negotiated.

It’s also true that most big developments come in phases. Buyers who jump early, getting into one of the first homes available, sometimes get a sweeter deal. Why? Because the builder wants to build interest in the development as well as start some cash flowing to help finish the next phase. If the housing market is strong, builders can raise prices with each new phase of the development. That doesn’t mean you’ve lost out by buying late. You can still negotiate some sweet upgrades from a builder who wants to complete that development and move on to the next.

There is some risk with jumping in early. If the rest of the development doesn’t sell and the builder runs out of money to finish your home, you could be out your down payment with no home to show for it. Or you could find neighbors moving in a few months later having paid significantly less than you did. (Always a risk, no matter what kind of home you buy.)

Deposits and contracts

Your new home may still be under construction when you sign the contract. You’ll need to provide a deposit (from a few thousand dollars to 10 percent of the home’s price) so make sure your agent explains the contract. You will need to know if and when you can get your deposit refunded; your agent can make sure a review period is written into the contract. The contract should include a specific completion date, but know that many builders have provisions that allow for some wiggle room in case materials or permits cause delays.

Who pays for delays?

Your contract should spell out what recourse you have if your home isn’t ready on time. Get everything in writing. Don’t assume that because you talked to the builder that’s good enough. Even an honest builder can forget things. That’s harder to do if it’s written down in a contract. Ask your agent to walk you through the details.

Inspections and warranties

Just because your home is brand new doesn’t mean you should skip the inspection. For a few hundred bucks, you get an unbiased and trained set of eyes making sure things are in order and up to code. A good inspection gives you the opportunity to work with the builder to correct problems before you close. Make sure your agent explains your rights. Most times, the builder will fix any code issues, but you aren’t able to simply walk away based on inspection results.

In addition to manufacturer warranties for new appliances, new homes may include a builder warranty, often through a third-party warranty company. Your agent can explain what the builder’s warranty covers and for how long. You’ll want to make sure you understand the details before signing your contract.

Source: zillow.com

Valuing a House: What Is It Really Worth?

In this article:

There are three values for any home on the market: What the seller thinks it’s worth, what the buyer thinks it’s worth and what a professional appraiser will think it’s worth. The key to a successful purchase is to get those three numbers to align.

You never want to assume that the asking price of a home is also its fair market value. Home values are somewhat subjective and always changing, so understanding how home values are calculated and what factors impact them can help you make a sound real estate investment.

Buyers should always do their research, taking time to determine the market value of a home before making an offer. Otherwise, you risk overpaying.

What is market value?

Simply put, market value is what a fully informed, willing buyer would pay for a home. It’s an amount informed by prices other buyers have recently paid for nearby, similar homes — called comparable homes.

What are comps in real estate?

Comps (short for comparables) are similar, recently sold properties that agents and appraisers use to help determine the value of a home. Comps are used for multiple purposes: to determine the listing price of a home about to list on the market, to help buyers determine a fair offer price and to help an existing homeowner find out the current value of their property and potential equity.

Comps usually consider five key criteria when calculating a home’s value:

Timeline: In a typical market, comps include homes sold in the past three to six months.

Location: Comps should be pulled from the same neighborhood, and in close proximity to the home in question. In an urban area, comps are usually within a mile or so. In rural areas, the radius comps are pulled from will be larger.

Home size: Comps should have the same number of bedrooms and bathrooms, same number of stories and a similar square footage. The lot size and presence of a garage or basement should be similar, too.

Features: Comparable homes should have similar amenities and level of finishes and updates.

Age: The homes being compared should be roughly the same age. Newer homes have newer designs, layouts, systems and appliances, which can increase value.

How comps determine home value

In order to determine a home’s value using comps, three to five comps are collected and grouped together. Then, a report is generated determining a market value, based on the sale prices and details of these homes. You could get two types of reports, based on who is doing the calculations:

  • Comparative Market Analysis (CMA): This is a report typically generated by a real estate agent, used to come up with an accurate list price/estimate of a home’s sale price.
  • Appraisal: This is a report generated by a licensed appraiser and it’s typically used for financing approval.

Keep in mind that the market value you receive from your agent or an appraiser can differ depending on a few factors.

Market speed: If your local real estate market is moving slowly, you might have to depend on comps that are older or less relevant, which could affect the results.

Comp selection: When multiple relevant comps are available, different agents or appraisers might choose to use different comps, which can affect the outcome slightly.

Valuation of features: The agent or appraiser will add or subtract value based on the features of a specific home, and different agents or appraisers may assign slightly different values to home features.

Subjective human nature: CMAs and appraisal reports depend on humans to evaluate and calculate the home’s value, which means you won’t get the same outcome every time. Remember, the true value of a home is how much a buyer is willing to pay for it.

What’s valuable to one buyer isn’t valuable to another

The value of some home features just comes down to individual buyer preferences. If a swimming pool is factored into the price of a home but you plan to just fill it in and re-landscape, it doesn’t make sense to pay extra for it. If you love new carpeting, it may be worth paying a little more for a house with new, high-end, wall-to-wall carpet. But if you’re going to tear it out to install hardwoods, it’s not. If your idea of home cooking is popping something in the microwave, you probably don’t want to pay a premium for a gourmet kitchen when a nice, reasonably sized one would suit you just fine.

Does the Zestimate determine fair market value?

Buyers can look at the value of a house on Zillow using the Zestimate. Zillow’s estimated home value should be used as a starting point, but it shouldn’t be the only data you use in determining a home’s value. The Zestimate is based on a sophisticated and proprietary algorithm which calculates both public and user-submitted data to estimate a valuation range for homes.

The Zestimate is not a replacement for an appraisal, CMA or another home value estimator.

Key factors that influence home value

Home values are usually based on comps, but it’s important to consider a home’s key factors when choosing comps to use. For instance, if a similar, nearby home sold recently, but it’s in a slightly better location, it’s probably worth more. How much more? That’s up to the buyer to determine.

Location

Many features of a home can be changed by the owner — like finishes and even home size. But, you can’t change where the home is located. That’s why location is such an important factor in a home’s value. Outside of standard market appreciation, a home’s land will only increase in value if the area around it improves. For example, 60% of buyers say being in a walkable neighborhood is very or extremely important, according to the Zillow Group Consumer Housing Trends Report 2019.

Here are key location factors that can increase a home’s value:

  • Proximity to urban core
  • Cul-de-sac location or dead end (less traffic)
  • Farther away from railroad tracks, airports, freeway noise and power lines
  • Near parks or green spaces
  • Sidewalks and walkability
  • Proximity to public transit
  • Waterfront, water or mountain views

Job market

When the job market is strong and incomes are growing, people may look to buy a home, or move into a newer or larger home, increasing the demand for homes and boosting competition among buyers.

Property taxes

Budgeting buyers look at their monthly housing payments including taxes, so homes with very high property taxes can be out of reach for some buyers. However, property taxes help pay for public services that benefit the local community. As a buyer, you’ll have to determine the value of savings versus local benefits.

Interest rates

Buyer demand tends to be higher when long-term interest rates are lower, as low interest rates give buyers more purchasing power. Conversely, when interest rates are high, buyers may have a harder time paying off other debt, which can impact their ability to buy a home. When demand is lower, housing prices follow suit.

Home maintenance

While not directly related to a home’s value, buyers may also want to consider any maintenance needs they’ll have to pay, especially in the first year of ownership. For example, will they have to replace the water heater or service the HVAC system?

Buyers of Zillow-owned homes can rest assured that the main systems of the home have been evaluated and serviced by professionals prior to purchase.

The consequences of valuing a home incorrectly

For buyers, the biggest risk in valuing a home incorrectly is overpaying. Other consequences include loosing financing after appraisal or not getting your offer accepted at all.

Overpaying

If you value a home too high, you may set yourself up to be underwater on your investment, especially if market conditions are volatile. Plus, the more you borrow, the more you have to repay!

Low appraisal

Even if you and the seller agree on a price, the appraiser’s valuation will determine the amount your lender will loan for the property. When you agree to pay too much, it can be hard to get financing. If the appraisal comes in too low, it’s possible you will have to come up with a larger down payment, or you risk the deal falling apart.

Missing the opportunity

There’s also some risk in valuing a home too low. If you miscalculate, the seller may not accept your low offer and you may have to move on to another home.

What’s worth more: the home or the land?

Generally speaking, if you’re purchasing a newer or well-maintained home, the home is likely worth more than the land today. But in 50 years, without upkeep, the land would probably be worth more. The physical structure, appliances and materials usually depreciate over time, assuming everything in the home is left original.

Of course, most owners continue to update and repair their homes over the years. So, the longer you stay, the more you will inevitably have to improve to maintain the value of the home itself. The cost of labor and materials inflates steadily over time, so the value of improvements is moderately predictable.

The value of land however, is much more volatile and difficult to predict. A home within close proximity to desirable shops, restaurants, schools, city centers or attractions will generally have a higher value compared to a home farther from these perks. But those amenities and their desirability can change over time.

If you’re buying a home with a view or near a long-standing city center then odds are good that its value will appreciate, but land value is never guaranteed.

Source: zillow.com

Picking the Kind of Home That’s Right for You

Ready to shop for homes, but overwhelmed by listing descriptions or not sure which type of home is right for you? Homes can be classified in two ways, either by the type or style of the house. The type of house refers to the building structure, while the house style is based on the architectural elements that make up the overall design.

Knowing the different types of houses and styles available can help you make an informed decision on your next home or allow you to better understand your current residence. Learn more about all the types of houses available with names and pictures below.

Single-family home 

A single-family home is a standalone, detached house used as a single dwelling unit, meaning a residence for one family, person or household. It has its own private entrance and direct street access, and is built on its own land, usually with additional yard space. According to the Zillow Group Consumer Housing Trends Report 2019, 77% of home buyers purchase a single-family detached home, and the typical single-family home purchased is a 3 bedroom, 2.2 bath, 2,000 square foot home. Among renters surveyed, 26% rented a single-family detached home

Multi-family home 

 A picture of a type of multifamily home.

If a structure includes more than one collection of living spaces with separate entrances and privacy, it’s a multi-family home. The term multi-family home can be applied to any structure with more than one independent dwelling space, from a simple duplex to a sprawling apartment building.

Apartment

An apartment is a type of housing unit that shares walls with a similar unit where three or more residences are contained within a larger structure. The apartment building usually has one or more levels and oftentimes includes shared spaces like a gym, pool, playground, laundry room or game room.

Apartments can be found all over the world and are generally located conveniently within more urban areas. They are typically owned by a landlord or property manager and rented out to tenants under agreed upon terms. The owner may choose to furnish the units or allow the tenant to furnish their own apartment. The size of an apartment can range from a studio with a single living space to units with three or more bedrooms.

Condo

An owner-occupied apartment is generally referred to as a condominium or condo. The public common areas are jointly-owned and usually managed by a homeowners association (HOA). Residents must pay a fee to the association to maintain the public spaces, while the physical condo unit is owned outright by the resident.

Condo equivalents can be found in many countries. The first to be built in the U.S. was in Salt Lake City, Utah in the 1960s. Since then, condos have become a familiar type of house and a more affordable option for homeowners who don’t want the additional upkeep that comes with a single-family home.

Co-op housing

A cooperative, or co-op, is a type of housing that is actually a corporation. A co-op resembles a condominium but the unit owners do not own their unit outright. Each resident owns a share in a corporation that entitles them to live in one of the units under a lease agreement.

Co-ops are generally less expensive than an apartment, making them an attractive option in more expensive urban areas like New York City. However, Homeowners Association (HOA) fees that are paid to the co-op to take care of maintenance, landscaping and rules may be a bit higher than those paid on a condo.

Duplex 

A duplex is a single structure with two private living spaces that share a wall. While a duplex is considered one property, it may be sold to two separate owners (similar to a twin home). If there are two owners, they must cooperate on decisions regarding the property.

Twin home 

A picture of a type of twin home.

A twin home is sold as two properties on two separate lots. You might share a wall with the person next to you in a twin home; otherwise, the owners are free to treat their side of the structure and their lot as they wish.

Townhouse

A townhome, or townhouse, “shares at least one wall with another home. Mostly found in urban areas, they became popular in the early 19th century due to limited space and the financial benefits for the architect or builder because they could be built quickly on a smaller area of land. They have a “row-house” design; they are typically two stories or more with a traditional layout, side hallways and minimal lawn space. Unlike row houses, townhomes can be arranged in clusters or lines that aren’t parallel to the road.

Row house

A picture of a type of row house.

A row house specifically refers to attached homes that line up along a street, in a row, and that shares at least one wall with another home. 

Manufactured home 

A picture of a type of manufactured home.

A manufactured home is ready to be lived in when it leaves the factory. A manufactured home is not a modular home because it can be moved after construction.

Prefab

A prefabricated home, or a “prefab”, is constructed in pieces which are then assembled on-site.

Modular home

The term modular home refers to houses that are built off-site, and placed on a permanent foundation (and includes prefab). According to Andy Gianino, a builder of modular homes and the author of “The Modular Home,” most modular homes are between 12 feet and 15 feet, 9 inches wide, and up to 60 feet long, which allows for transportation of the pieces via truck. A manufactured home is not a modular home because it can be moved after construction. 

Motorhome 

A motorhome or RV is a home on wheels that can be easily moved from place to place. The most common size of motorhome (Class C-25) is 23 to 25 feet long and can sleep a family of five.

Mobile home 

A picture of a type of mobile home.

A mobile home is less mobile than a motorhome or RV. Mobile homes (also called trailers) are generally placed in one location for permanent living. They come in two standard sizes: singlewide (typically 18 feet wide or less and 90 feet long or less) and doublewide (typically 20 feet wide and 90 feet long or less).

Houseboat

A houseboat is like a motorhome on water; it’s self-propelled and can be driven like a boat. 

Floating home

A picture of a type of floating home.

A floating home is a home on the water that floats on a foundation of logs, Styrofoam and/or concrete. Floating homes are permanently connected to a dock where they’re hooked up to electrical and sewage.

Accessory Dwelling Unit (ADU)

A picture of an Accessory Dwelling Unit (ADU) type of house.

An Accessory Dwelling Unit (ADU) is a small standalone structure that is added to a residential property, usually serving as its own separate living unit. They’re commonly called guesthouses, in-law apartment, and backyard cottage. In most cities, the minimum size for an ADU on a residential property is around 800 square feet. To get around these restrictions, the first tiny home builders constructed their dwellings on wheels, so they could park them on their property like an RV.

Tiny home

 A picture of a type of tiny home.

A tiny home or tiny house is a standalone structure, typically between 100 and 400 square feet. Most tiny homes are built on wheels, but they aren’t necessarily meant to be mobile. Some say tiny homes and tiny houses are the same thing. Others argue a tiny house is any small living space, including RVs, vans, sheds, boats, etc. When in doubt, call the 400-square-foot-or-less structures on wheels tiny homes.

Mansion 

A picture of a type of mansion.

A mansion is a very large house; somewhere between 5,000 and 8,000 square feet. But the specifics of what qualifies vary based on opinion and location. A mansion in Manhattan might be 3,000 square feet while a house in Atlanta would need to be much bigger to qualify. A mansion is also defined by luxury: tennis courts, large open foyers, grand staircases, crystal chandeliers.

McMansion

McMansion is generally used to describe a large, recently built, multi-story, often cookie-cutter house with no clear architectural style other than it’s sheer mass in size. There is no real clear definition. Some refer to a McMansion as an oversized and cheaply built house and others may refer to it as a structure that replaces a smaller-sized house making the home too big for its lot. The term “McMansion” was said to be coined sometime in the early 1980s, and this type of home seemed to fall out of trend sometime around the 2010s.

For more resources on buying a home, start here or read our tips on how to Level Up Your Zillow Home Search.

Source: zillow.com

New Construction: Different Types for a Variety of Buyers

Shopping for a new-construction home? One of the first things to decide is what type to choose: a custom, spec or tract home. Ask yourself if you want to help design a home that’s a perfect fit or fit into one already built. As you begin your search, here are some pros and cons to help you make your decision.

Custom homes

Custom homes are built for and with you. You can buy the land and hire an architect builder to help create your unique vision; or you can enter into a contract with a developer or builder to create a home on land he owns. Either way, you collaborate with to build a home that fits your tastes and lifestyle.

Builders often have basic plans you can tweak for an additional cost. That might mean adding a laundry room on the main floor or including an in-law suite in the basement. With custom homes you can make rooms bigger or smaller, upgrade cabinets and pick bathroom tile that warms your feet and heart. The builder will give you a budget for each finish, and apply a credit if you go under and charge you more if you exceed the limit.

Pros: You have a big say in just about everything. You decide on the floor plan: Do you want a formal dining room and a breakfast nook? You pick upgrades according to your taste and budget: Think high-end appliances, heated bathroom floors and french doors. Your home reflects your style, and it doesn’t look like every other house on the block.

Cons: You’re responsible for all the decisions: floor plan, landscaping, flooring, finishes, paint colors, cabinets and more. Even if you work with an interior designer, you will still make the final choices. So if decision-making isn’t your strong suit, building a custom home could feel like an overwhelming chore rather than a creative opportunity.

Spec homes

That’s short for “speculative,” because builders or developers construct a single-family home, townhouse or condo before having a specific buyer. Consequently, spec homes come with features and finishes the builder thinks will appeal to the greatest number of potential buyers. You may be able to find a spec home under construction and pick some elements such as counters and cabinets. But typically spec homes are a completed package.

Pros: The work and decisions have been done for you. If you don’t have the time or inclination to make a million choices, this may be the best option. It’s usually move-in ready, and you can make changes like paint colors once you own the place.

Cons: Some spec builders go with “builder grade” or “contractor grade” materials, which are generally considered inexpensive products made from low-grade materials. This may mean you’ll get low- or mid-range appliances, flooring, counters and cabinets. While it’s a budget-friendly choice, you may be sorry in the long run.

Tract homes

Tract homes (called that because they’re developed on a large tract or parcel of land) are usually built in planned communities outside the city core. You may buy an available lot and pick a floor plan if the development is in-progress, or an already built home in the tract. Each developer provides design choices that establish a cohesive look and feel.

Pros: Many planned communities include perks like clubhouses, pools, tennis and sports courts. They often are built near transit hubs to make commutes easier. Price can be a compelling reason to buy in planned communities, where builders take advantage of volume buying to lower material costs.

Cons: Turning a profit depends on how quickly and cost-effectively the builder can construct the homes, so check the quality of both materials and construction methods.

Lots/land

Buying an undeveloped lot that’s not associated with a planned community gives you many options. You can build a home now, or wait until you have time and money. Even if you build nothing, land can be a smart investment, depending on the location. As Mark Twain said, “Buy land, they’re not making it anymore.”

Pros: Lots give you the opportunity to build your dream house on your own schedule. When you’re ready, you can select a custom builder and make the choices that fit your budget and lifestyle.

Cons: You’ll be paying property taxes even if you haven’t built on it, and you’ll need to maintain it (keeping grass cut, for example) if you want to stay on the good side of your future neighbors. Undeveloped lots may not be connected to electricity, sewer, water, or natural gas, which are expensive to bring to your property line when you decide to build. Also zoning may not allow you to develop the land the way you’d like. Research what your options are before you buy.

If you’re interested in newly build homes, we have more tips about how to buy a brand-new home and how to work with a contractor.

Source: zillow.com