New Home Sales

How Builders Can ...

How Builders Can Differentiate Themselves to Buyers Considering New Construction Resale

By Nick Czar 4 min read

Many builders run up against a common scenario: past buyers who just finished building their home plan to sell in your community and can use earned equity during the eight-month construction process to provide more aggressive pricing. 

The builder’s biggest issue: the home is their same floor plan, it’s in their community, it's available now — and at the end of the day, it's also significantly less expensive. 

To stay competitive, builders either have to lower their pricing or proactively build value for new buyers. We see this situation play out a lot, and there are a few key ways to protect your margins without lowering cost for this specific group of buyers.

Understand Personalization is the Name of the Game 

Builders need to sell the merit of a brand new home that customers can make completely their own. The home is specifically designed for their needs and their needs only. The probability of finding a home that they selected for themselves is impossible — which means they have to make some level of concession with resale and consider costs for changing things in a resale home to suit their unique requirements. 

First, think about quantifiable price differences. If customers want to change the countertops to fit their personal preferences, for example, a big price tag will be associated with that swap. There are also emotional price differences that come into play, including the time customers have to live in new homes without the personalized countertops while they wait for the granite to arrive and then for it to be installed (an often lengthy process). Emotionally, they want their new home to be complete as soon as possible — but we all know things can happen in the building process, and they might be more satisfied just going with the fully personalized options up front versus having to make changes after the fact.

Consider Differences in Warranty

While there might not be a major noticeable difference in the quality of a new home compared to a resale home, there will be a difference in available warranty. There are quantifiable maintenance differences between a one-year-old home and a brand new one. For example, let's say the roof needs to be reshingled after unexpected damage occurs. With a new home, this cost would be covered, but with a year-old home, you’d be already out of your bumper-to-bumper warranty and need to pick up the cost.

There’s an emotional price that goes along with this, too — when you move into a new home, you don’t want to worry about warranty and needing to pick up major costs with so much else to think about already. Peace of mind is often considered priceless! 

Work With Purchasing Department to Add New Items

Builders have to differentiate what is available now versus what was available back when the home was sold 12 months ago. They should work with the purchasing department to add new features and items so they can more easily position themselves against an "outdated" home from a year ago. 

A few common lines to showcase this value to buyers include: 

  • "That other home is already outdated."
  • "You don't have the more modern new finishes."
  • "You will have to remodel that house."

Everyone always wants the newest model — it’s the reason why you see people rushing to get the new iPhone every year, without even really acknowledging whether the new benefits are worthwhile. It’s worth it for builders to make small but significant changes in the minds of customers looking to buy something totally new and on-trend.

Know Energy Efficiency Matters

With a resale home, there’s a year difference in energy code. A newer home gets you better and more energy-efficient technology. This could be significant enough to result in higher monthly cost savings for buyers of new homes versus resale. 

Make Them Ask, Who Lived Here Before Me?

When you’re buying a home that was previously lived in, you truly have zero idea how the space was utilized. With a used home comes a stranger’s history. Did they have multiple animals who weren’t well-trained and used the carpets as their personal bathrooms? Even if a home has been deep cleaned before a new buyer moves in, there’s never a way of fully understanding the history and what you might find in the first few months of living there. 

New home builders need to quantify the peace of mind that comes with a brand new, clean, fresh space with the knowledge that only the buyer will have a say in how it’s used and pave their own future with it.

Explain How It’s Harder to Break Into Social Circles After a Year

If a community closed out of new homes a year ago, social structures will be fairly locked in, and it could be more challenging for buyers to meet new people. Families with children usually see the social circles for both adults and children as a big perk — and missing out on the first few months of meet and greets can make it harder to develop strong bonds and relationships with neighbors. 

Part of the social circle benefits is also the purchasing power that comes with a larger group of neighbors needing the same maintenance requirements and with the same questions about things like interior design. With five families all searching for landscaping packages, you can likely get a group discount, and the same goes for multiple families seeking out interior decor or a house painter. When everyone is new, professionals and businesses are more open to that, but when it’s an isolated ask, deals and group rates don’t typically apply.

There are undoubtedly big perks to buying totally new, not resale. It’s all about positioning and making sure the buyer understands these benefits and that paying for them will result in greater happiness at the outset and a better relationship with their new home and community in the long run.

Originally published Oct 6, 2022 7:04:40 PM under New Home Sales, updated October 6, 2022

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