Pre Constructed New Homes and Condos
FAQ's
What is pre-construction buying?
Pre-construction buying is an opportunity to purchase a pre-built new home or condo in the early stages of planning and development. A pre-construction home can be offered to the general pubic in two ways: through a process of first come first serve, or by lottery. If you reserve a home in the early stages of planning and development you will be asked to authorize a reservation agreement and pay a deposit to lock in your purchase price and secure your new home purchase.
What is the advantage of purchasing a first release home?
You take advantage of being in on the ground floor. If you are fortunate enough to reserve a home the moment the new home community is released, two main factors work in your favor. (1) Subsequent releases rise in price based on demand. In the past we’ve seen a 1-3% increases in prices with each additional phased release. There are typically 3-6 releases per development depending on the size and scope of the new development. (2) The longer a home takes to be built, the more appreciation you receive without having a mortgage obligation. If you reserve a $500,000 home with an initial deposit of $15,000 you see an increase in the home value of $2,083 for every month the project takes to complete, assuming a 5% rate of return.
How do I purchase a home during the first release?
Once you've signed up for our first release email alert service, you will be alerted the moment new home communities are released for sale in your communities or city of choice. Once you’ve found the perfect coming soon new development simply add it to your pending First Release Alert™ new home account profile. When your selected community announces its first release you will be alert via e-mail. Simply click on the set appointment button or call the builder or one of our new home specialists to schedule a site visit.
Prior to your initial visit to the builder’s sales office it is highly recommended that you get loan pre-approval from one of the builder's recommended lenders. Information about these lenders can be obtained from the builder or from one of our new home specialists. You are under no obligation to do business with one of the builder's recommended lenders. Should you wait to view the model homes first, however, and decide to purchase and don’t have your pre-approval letter in place, you may lose the opportunity to purchase your specific pre built home or condo. This is because the builder often sells homes on a first come, first pre-approved basis. The time it takes to get pre-approved may be the difference between getting what you want and settling for what is available once you do have pre-approval letter in hand.
How much profit can be made at or near completion?
It depends on market conditions, interest rates, and competition. There is no guarantee of profit. However, a substantial gain may be realized. In the past few years profits have run from $10,000 to as much as $200,000 per completed new home or condo. Remember, because you will most likely reserve a new home or condo with an initial deposit or letter of credit, your cash-on-cash return can be substantial.
What is Turn Key Equity™?
This term means that when you move into your newly constructed home, the first time you turn your key in the door, you often built up equity from your pre-built new home purchase – through additional phased price increases and/or appreciation prior to close of escrow.
What is the cost to sign up for our first release alerts and unique pre-construction services?
Our new home search and e-mail alert service is free for prospective home buyers and investors. There are no hidden charges or obligations. Our fees are paid by home builders, developers and their marketing companies.
Does First Release Homes represent the developer or builder?
No. First Release Homes does not represent the developer or their sales or marketing agents. We represent our members which allow us to remain objective in informing them about featured builder’s new home developments.
Will I save money if I go directly to the home builder?
No. Your purchase price remains the same whether you choose to work with the builders representative or use our team of pre-construction agents or purchase without agent representation.
What are the benefits of using one of our New Homes Specialist or Affiliate Agent?
There are many benefits of utilizing the services of one of our new home specialist or affiliates when considering purchasing a new home or condo in the early stages of planning and development. Purchasing pre-construction real estate is sometimes risky and quite different than traditional real estate purchasing. Involving a traditional real-estate agent in a pre-construction transaction may put you at risk from taking best advantage of the first release, or prevent you from maximizing your return on investment and selection. Our new construction specialists help buyers by recommending the best unit, floor plan, view and a whole host of pre-construction considerations, not typically known by traditional real estate agents.
A New Construction Specialist representing the buyer’s interests can guide you along the pre-construction buying and building process, help ensure you make a wise investment decision, and help you avoid the pitfalls and risk of investing in new construction. To learn more about the many benefits of involving one of our new home specialists click here.
Can I use my own agent and still use your service?
Yes. However, to qualify for our Refer-a-Friend cash back rebate program and get the first release purchasing advantage and expert pre-construction advice, you must utilize one of our new home specialists or affiliates. Rebates are offered in states that qualify and the rebate coupon must be presented to either one of our new home specialists or directly to the builder.
How much deposit money is required?
It depends on the homebuilder and the construction lender. Usually it’s a percentage of the purchase price and paid at time of initial reservation.
Who holds the deposit money?
Usually an escrow company, although it may be a law firm, title company, or real estate agency.
Do I earn interest on my initial deposit?
Yes. The funds are usually invested in a low interest pass book account. Any interest paid on the account is applied to the purchase price. When the developer sells enough units and is applying for his construction loan you will be asked to go to a hard contract.
What is a hard contract?
A hard contract is the binding agreement that converts the reservation to a sale. Once the contract is signed, generally you have 7-10 days to review the offering and make your decision on proceeding with the purchase or cancel. There will come a time during the offering that you will go direct to hard contract. This usually happens after a short time during the selling process. Some developers go immediately to hard contract. It depends on the developer.
Can I lose my deposit?
The only way you will lose you deposit, whether it is a letter of credit or cash, is if the home is completed according to the contract and you fail to close when asked.
What happens if the home is not built?
In most cases your cash deposit will be refunded with interest.
How long does it take to build a new home or condominium?
Generally it takes 8 to 18 months to complete construction on pre-construction real estate, depending on the weather and other factors. However, the time from a buyer’s initial reservation and deposit to close of escrow and move-in is typically 3 to 9 months.
Are there other costs related to the sale?
Yes. You will be responsible for closing expenses such as title insurance, association funding fees (if any), insurance, reserves, taxes, etc. These charges are outlined in a "good faith estimate" provided by the selling agency and in the homebuilder’s offering statement.
*Every effort has been made to accurately represent the above information. Members, Subscribers or Homebuyers who use our service are encouraged to perform their own due diligence in selecting and purchasing in any of our featured builder’s communities. We cannot guarantee success using the services of First Release Homes, nor are we responsible for any of our members’/subscribers’ results and or actions. First Release Homes is not affiliated with the builders or with the sales or marketing professionals who represent the builders. We provide a free service for our members in order to give them the benefit of locating, tracking and purchasing new home or condos the moment they are released for sale. Your purchase price remains the same whether or not you work with one of our new home specialists or purchase directly from the developer or home builder. There is no guarantee that our members will secure a home or realize any equity appreciation using the techniques and methods of First Release Homes. Certain statements contained within this website, including without limitation, statements containing the words "believes,” "anticipates,” "hopes,” "intends,” "expects,” and other words of similar importance, constitute "forward-looking" statements within the meaning of the Private Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors, which may cause actual events to differ materially from expectations.
