Tis the season! No, not that season….it’s the end of the fiscal year for a majority of Denver home builders and they will do just about anything to squeeze in one more closing to meet their annual sales goals. For many local builders (see the list below) that clock stops when the ball drops on New Year’s Eve. So if you are out searching for a property and want to score an amazing deal, now is the time to check out construction sites around the metro area to see what is available.
WHY ARE BUILDERS SO EAGER TO SELL RIGHT NOW?
Some of these completed homes are the result of contract cancellations, so the builder was counting on the sale. Builders are feeling tremendous pressure to meet sales targets set earlier in the year. Meeting sales goals translates to shareholder confidence for publically traded homebuilders. For some sales managers and construction managers, it can mean their annual bonus or even their jobs. Many builders would rather unload their remaining homes at deeply discounted prices rather than let them sit on the market unsold. Finished homes create tremendous costs to the builder including HOA dues, electricity, insurance, and their own construction loan costs. Many builders cannot get the cash to start building new homes that customers have ordered until they sell the ones they have completed, so there can be opportunity costs as well.
What is the downside?
These homes are finished or almost finished and therefore, buyers don’t get to customize the home or choose the building site. These homes may not have sold because they have an unpopular floor plan or located in an undesirable location. It can also be stressful or inconvenient to close so quickly because the builder will want the deal in the books before the year’s end.
AREN’T NEW HOMES MORE EXPENSIVE THAN OLDER HOMES?
Traditionally, builders have been able to sell new homes for more than comparable older homes. However, the weak housing market has forced builders to be competitive in both price and offerings. Builders recognize that their biggest competition is the resale market, not other new homes. They are offering options not easily found in the resale market such as solar panels and four car garage options. They are throwing in landscaping, window coverings, fences, and sprinkler system to cut the traditional after-close expenses home buyers would typically incur.
SHOULD I USE A REAL ESTATE AGENT TO PURCHASE A NEW HOME?
You don’t have to, but that is true with any home purchase. Working with a real estate agent does not affect your negotiating ability because the commissions are paid from the builders marketing budget. In Colorado, builders use a non-Colorado Real Estate Regulated Contract. It is certainly helpful to have an experienced agent who can ask questions that aren’t addressed in their contract, but are in the regulated version. In short, there’s no downside to having an agent, but a big potential benefit.
Here is a table of publicly held home builders who build in Colorado and their fiscal year end:
|Builder||Fiscal year end||Areas|
|KB Homes||Nov. 30||Thornton, Stapleton, Parkfield, Lakewood, Morrison, Parker, Aurora, Commerce City|
|Lennar Homes||Nov. 30||Longmont, Aurora, Thornton, Castle Rock, Parker|
|Meritage||Dec. 31||Castle Rock, Parker, Aurora, Lafayette, Brighton, Thornton, Erie|
|Pulte/DelWebb||Dec. 31||Broomfield, Castle Rock, Aurora|
|Taylor Morrison||Dec. 31||Parker, Arvada, Broomfield|
|Ryland Homes||Dec. 31||Louisville, Johnstown, Timnath, Aurora|
|Richmond American||Dec. 31||Castle Rock, Commerce City, Erie, Golden, Centennial, Evergreen, Thornton, Parker, Aurora, Westminster, Littleton, Brighton, Lakewood|
|Standard Pacific||Dec. 31||Broomfield, Castle Rock, Commerce City, Denver, Parker, Westminster|
|Toll Brothers||Oct. 31||Aurora, Parker, Broomfield, Lakewood,