If you’re like me, it’s been a while since you bought electronic appliances of any kind in a brick-and-mortar store. However, do you remember ever asking about a display model or being offered one? The unit used for sales demonstrations often sells last, but at a steep discount, and this is also possible in home buying.
Most homes are considered ‘regular’ homes, ‘non-model’ homes, or ‘spec’ homes. However, there are also model (or show) homes.
Builders often construct these near the entrances of communities they are putting up to show prospective customers possible floor plans and building quality. After a while, model homes themselves are put on the market themselves, as there is eventually little to no demand or any lots left to sell.
What Distinguishes Show Homes From Standard Homes?
While both kinds of homes eventually become permanent residences, they have different beginnings.
Let’s start with spec homes. This is short for speculative homes, where builders buy land they think will eventually be occupied. The speculation is that if they build a home on this lot, someone will buy it, and in many cases buyers don’t get involved until after construction is already started.
Model homes are different. If a builder is going to build an extensive community with hundreds of homes, they might want to speed things up by offering only a handful of specific floor plans. One or more of these are constructed near the entrance before the rest of the community so prospective buyers can actually walk through the floor plan or plans and choose their own customizations.
Can a Model Home Be a Good Investment
Model homes prove enticing properties to buy for many reasons, including the following:
1) Builders Showing Off Their Skill
Model homes are built to impress potential buyers. Builders hope they can lure in prospective customers and convince them to buy a home, meaning a model home has genuine effort put into it.
2) Not As Expensive As You Might Think
Tour most model homes, and you’ll notice plenty of bells and whistles throughout a luxury home filled with high-end furniture, appliances, and fixtures. That doesn’t mean you have to pay for them, as such additional costs are often written off by builders as simple marketing expenses. That means you might be able to pay for such features at cost.
3) Bigger Floor Plan
Model homes don’t just have nicer features, but often bigger-than-average floor plans. They want prospective buyers to feel the size of a home as they walkthrough, especially if multiple families are walking through at once. Builders are known to build model homes with more square footage than all the rank and file homes they’re trying to sell up and down the street.
4) More Bargaining Potential
When you make an offer for a model home, you are bargaining directly with the builder. You can tell the builder that you shouldn’t have to pay full price since the builder already got a lot of use out of it. Also, if the model home is one of the few remaining homes in that subdivision, then the builder might be looking to wrap up their last sales quickly so they can turn their attention to other projects after this one is closed. Sellers can be just as motivated to deal as buyers.
5) Better Landscaping
Builders know that the secret to a first impression happens from the street or through online photos. The landscaping and gardening in front of and around a model home is usually going to be high-end and pristine, giving you a wonderful outdoor space from day one.
However, prior to signing, get something in writing to guarantee the builder won’t significantly alter the landscaping. Sometimes, they will completely redo the landscaping when installing sprinkler lines or finishing the garage and driveway, etc.
How Can Model Homes Be Bad Decisions?
While buying a model home might have a lot of appeal to you, there are many potential downsides you need to consider. They are as follows:
1) Buyer Beware
If you’ve ever learned this lesson, then you should know that applies now more than ever. Many builders try new construction plans the first time with model homes, making construction flaws and mistakes far more likely.
2) Built Too Fast
Even if a model home is built correctly, the job might have been rushed in order to start selling homes. With an emphasis on speed over quality, you could end up with things like cabinet doors that squeak or don’t close right. Also, some model homes are sold ‘as-is’, without fixing up the wear and tear.
3) Make No Assumptions
Even a model home needs a thorough inspection by someone who answers only to you. Make a list of all issues the builder should fix before selling the home to you. Be sure to get an expert inspector who will thoroughly test all the electrical, plumbing and HVAC work. You don’t want an electric breaker going off every week, or to discover after your first shower, that a bath fan isn’t actually ventilating.
Also, ensure that all warranties covering structural defects and workmanship are going to be effective starting with your purchase date and not the initial construction date. Some builders offer significantly inferior warranties on model homes so be sure to ask!
4) Remember The Foot Traffic
Everything can be negotiated during a home-buying process. You don’t know who or how many people have visited this home while doing their own home shopping. Everything from new carpet and fresh paint to HVAC upkeep is on the table.
5) Location, Location, Location
On top of all this, model homes are often on an entrance corner or centered at the entrance of a subdivision. If you don’t like corner lots or having a ton of traffic and lights passing by all the time, then model home lots might not be your cup of tea.
Three Buying Tips For Model Homes
If you are considering buying a model home, do these three things:
1) Don’t Assume There’s Only One
If you find a model home you like, ask the builder if they have other model homes also for sale. They might have multiple options in that community or model homes for sale at good discounts in other subdivisions.
2) Check The Warranties On Appliances
These are often different than warranties on the construction and home. You don’t know what abuse the fridge might have suffered during the months or years the office sales staff used it for storing their lunches.
3) Look Into The Builder’s Reputation
Model homes tend to sell towards the end of a neighborhood filling up, which means there should be plenty of reviews and feedback from non-model home owners in that community.
In Summary
Hopefully by now, you have some idea whether a spec home or model home is right for you. In either case, starting the home-buying process is largely the same.
Start your research as early as you can to further pin down your particular preferences, and determine how much house you can actually afford. Get both pre-qualification and pre-approval for your mortgage, and choose a reliable real estate agent. (When you work with a real estate agent like me, you’ll get top shelf service. If you’re looking to buy in Denver give me a holler… Contact info is below ;))
Next, go house shopping and make an offer on the home that feels right to you. Have the home appraised and fully inspected before signing any paperwork, but once it’s all done, get the keys and welcome home!
