BEST Time to Buy New Construction in Atlanta Is NOW! Massive Incentives and Scams Exposed!
What’s up you guys? Tim Travathan with Tim Travathan Homes. And this video is going to be a good one because we’re going to talk about the different kinds of discounts and incentives that new construction home builders are giving here in metro Atlanta. Some of you may know about the current housing market nationally where things are slowing down in certain areas, especially in Texas and Florida. And here in Atlanta, Georgia, we’re seeing kind of a balanced market where we’ve got some places where prices are still rising, where there are great schools, and in others where it’s not rising so much. In fact, some of the prices are going down. And with new home builders, they’re trying not to lower the prices by giving very, very attractive incentives. So, in this video, I want to go over some of the communities where they are offering some of the biggest incentives in case you’re interested in these communities to move and purchase a home with, and also to be aware of the current market, what you can expect with these incentives. Are they going to get bigger or are they going to stay the same? And some other tips that you may or may not know. So, let’s dive in. So, here’s a community called The Enclave at Cooper Creek. This is located in Grayson and this is a town home community and the prices of these homes are in the mid 300,000 range. They’ve got a lot of lots available. We’re not going to go into the detail of the community though as I do with a lot of other new construction videos. Again, I’m going to focus on the incentives. And this is a big one. Take a look. They’re doing a full appliance package plus 15,000 in closing cost and no HOA for the first year. So, what does that mean? full appliances, meaning that it also includes the washer and dryer and fridge, which are typically the items that I always tell people it’s 50/50 as far as maybe they’ll provide, maybe not. Especially in resale, you’ll see that a lot. They’ll often times leave the dishwasher, stove, or the oven in the range as well as the microwave, but the fridge and the washer and dryer kind of 50/50. In this case, they’re offering all of it. And on a town home like this where you’ve got a price that is like 350,000, typically the closing cost associated with purchasing a home is around 3% of the purchase price. So a home price like this, which is 350,000, 3% of that is around $11,000. So if they’re offering 15,000 in closing costs, they’re basically saying, “We’re going to cover all of your closing costs plus you’re going to have a couple extra,000 left over.” Also, with the HOA being covered, for example, let’s say the monthly HOA fee is $200 a month. They’re basically saying $200 times 12 months, which is $2,400 for the first year, is being covered completely by the builder. Let me tell you guys, these incentives that I just listed for this particular community is some of the best that I have seen. And I’ve been in the business since 2016 as a licensed real estate salesperson, and I have seen some big discounts, but this is one of the biggest. And sometimes I get this question from buyers, can I put in an offer that is lower than what they’re asking. Most of the time with new construction, whatever they ask is what it sells for. It’s not like resell where you can negotiate more often. Now, having said that, there have been a few times, a handful of times where I have had clients get an offer accepted on a new construction home that was lower than asking. But a lot of times it has to do with two things. one, the financials of the buyer, and two, it’s heavily dependent on the current market situation. So, I can recall back in summer of 2018, this was the first time where we offered on a home. And believe it or not, this was in Belmore Park in John’s Creek by the Providence Group, which is an incredibly hot community now as it has already closed out with the entire community built out. But at the time, the interest rate skyrocketed to 5.1%. I’m sure you’re laughing at me. Skyrocketed really compared to the rates now of 7%. Well, at that time it was a big deal in summer of 2018 because for the last 2 years prior to that, it was hovering around 3 1/2%. So when the rates went up in summer of 2018, we started to see steep discounts from builders. And when it comes to putting an offer, usually you get a sample contract to review. But in the case of trying to get an offer accepted with a new construction home, we would simply do a formal offer via email offering what price that we wanted to purchase the home for. We got a response back from the builder and they accepted. Other times when this happened, it was in October 2022 on a new construction single family community located in Loganville built by Dr. Horton called the independence I believe and I had one client he bought because this was when rates had already skyrocketed to around 7 12% and we’re experiencing for the first time in many years rates that are above what we were used to for the last 5 or 6 years and so the market had slowed and he actually got a really good deal in terms of a sales price adjustment. Again, not a big amount because they don’t want to impact appraisal values and they don’t want to lower the prices. Uh, but we did get that as well as a $10,000 incentive. And then the third and only other time where I had it happen was actually last year, also in the month of October. And you’re probably thinking, why October? What’s so special about October? Well, the slow season is in the fall and winter. And October and November are the slowest months, which give the most advantage to buyers if they’re looking to buy a home. And this client, they bought a $650,000 home, new construction in Dula. It was a big lot, almost a 1 acre lot. It did have a septic tank, but that’s typical when you see a lot that size. But the point that I’m trying to make is that they got a huge discount on that. We offered 15,000 lower, and they accepted. Let’s take a look at another community. So, here’s one called Alcoi Meadows, and this is located in Dula. And this community is town homes that are three and four bedrooms, and they are in the mid 300,000 range. And right here, they’ve got a huge nice advertisement saying 4.99% 30-year fixed rate on an FHA or VA loan plus up to 12,000 in closing cost. So, there’s a couple things I want to highlight about this because it’s different than the other one is that this buy down in the rate, it’s not a 2-1 buy down where you may see in some of the other communities, which that Loganville community, Independence by Dr. Horton in October 2022 was one of them. I forgot to mention that he bought down the rate, but it was a two-1 buy down, meaning if say the market rate is 7% on the first year, it’s going to be 2% lower at 5%. Followed by the second year being 1% lower at 6%. And then the latter 28 years of that 30-year fixed loan will go back up to the market rate of 7%. Now, with this one, this is incredibly appealing cuz this isn’t a 21 buy down. When it says 4.99%, it’s saying 4.99% for the entire 30 years. Now, there’s one catch which you may have caught. This is only for FHA and VA loans. So, for Fanny Maybacked, governmentbacked loans and those that are retired or current military for VA that that qualify. But for conventional loans, which are typically the most common type of loan, you do not get that. One question I get is why? Well, the reason why is because it costs more to the builder to buy down the interest rate of a conventional loan. So, they’re only offering this for FHA and VA. Now, there’s a caveat when it comes to an FHA loan. And so, I want to hone in on that for a minute. Yes, you can get a 4.99% rate, but be aware that when it comes to an FHA loan, unlike a conventional loan, when you pay down 20% of the loan value, when it’s a conventional loan, your PMI is removed. PMI stands for private mortgage insurance. This is an insurance that protects the lender in case of default from the buyer. This was implemented way back during the 2008 Great Recession. And so this is a way they protect themselves. Now with FHA loans, when you pay down 20% of your loan, guess what? That PMI still stays. So you still have to pay that PMI insurance throughout the entire length of that loan for 30 years. So that’s the one catch. And how much does that come out to? Usually a good rule of thumb is I would say like $100 to $150 per month. Every month for 30 years will be your private mortgage insurance. Sometimes you can get that down to around $50, but it really depends on the price of the home as well because basically it is 1.75% of the value of the loan that PMI is calculated out to. Another thing to be aware, and I’m telling you guys, I’m not just sharing all these great discounts. I’m giving you all the warning signs and things to watch out for where while a lot of this sounds good, and it indeed is good, there are still things to watch out for. Another one is if you buy a town home specifically and it is marked as it’s actually in the legal description marked as a condo rather than a town home which a lot of times these new builders will will they will often times say well we’re advertising as a town home but it’s actually a condominium then in that case if you try to go and sell the town home listen to this if there is a delinquency rate with HOA dues from other homeowners in the neighbor neighborhood that can indirectly impact the sale of your home. So, what I mean by that is if a buyer who is an FHA or VA loan buyer and they are putting an offer on your home that you are now selling years later after you decided you wanted to sell for whatever reason, if there’s a certain percentage and I think it’s like around 50% of the entire community, if they’re delinquent, meaning they are late on their HOA dues, that they have not paid their dues either on a monthly basis or annually basis, that impacts the approval of that buyer’s loan. Can you believe that? And it’s happened to me once in Lawrenceville when I sold a town home back in 2017. So, that’s how I know this for sure. So, be aware that while you can get in with this incredible rate, when it comes time to sell, beware of what you have to expect. Now, let’s take a look at another one. This is a single family community called Summer Tree built by Ryan Holmes in Stone Mountain, Georgia. And these are three different kinds of floor plans. And again, I did a video on this already, so we’re going to hone in on the discounts and incentives. That’s what this video is about. They are offering up to $15,000 towards closing costs if purchased by March 31st. Now, at the time of this video, we’re already at that deadline. I believe they’ve extended it to April. And a lot of these incentives do continue on as time goes on, even though they have an expiration date. Kind of is a way to create a sense of urgency so that you can get in in case those incentives disappear the following month. Now guys, a lot of these communities, if you’re seeing 105,000 in closing costs, this is huge. When I bought a home back in 2021, I only got a $5,000 credit towards closing costs, which is still great, but compared to these, can’t compare. So, it’s attractive to be able to get in and have all your closing costs paid for. So, then really, all you have to do is come out of pocket your down payment and voila, you’re a homeowner. And in the case of this one at the Enclave at Cooper Creek, let me tell you something. They all have preferred lenders. Some of them got some incredibly sweet deals going on that differ from lender to lender cuz sometimes you can see up to six, seven, eight, or even nine preferred lenders. And in this case, they have one with Renaissant Bank where it’s a portfolio loan that has no PMI, 0% down, in other words, 100% finance, and you’ve got a rate, not quite the 4.99% like on that one community, but it is around a 6.1%. So, less than the market rate, and you got all that paid for plus all the closing costs, and I believe it was, yes, 15,000. So after all said and done, if you use that lender, you will actually pay $0 to purchase a home. Can you believe that? $0. Now, of course, you got your mortgage payment that starts the following month, but as far as the money that you need to purchase the home initially, you don’t have to. Now, there are some other communities. If you venture further out to the great school districts such as Northwinet High School in Swany, which also borders with Sugar Hill, there’s this one community where I actually have a contract with a buyer and it’s for this community called Creekide Landing. I also did a video on this talking about how it was a secret community because it wasn’t even listed on the market yet. But if you found it on their website, you can get some preliminary plat contracts with 30,000 less below the price that they’re asking for now. Now, with this one in the contract, I’m only going to show you this small little snippet of the contract here because it is confidential, but this part is you can ask for a sample contract and they give it to you no matter what. It says here that they are offering $2,500 credit towards your closing cost. That’s it. You’re probably thinking, Tim, what about all these other incentives that you just shared about these other communities? Well, the reason why is because this is in a highly sought-after area and they know they can get buyers to buy their lots and their floor plans without having to offer a huge incentive. So, this is the catch. This is the balanced market. This is what I was talking about at the beginning of the video that while I am seeing some of the biggest incentives that I’ve seen in many years at the same time it’s very dependent on the location. So if you look at John’s Creek, Alpharetta, Swany, these are the areas where you’re seeing very little incentive if any at all with new construction. Whereas if you look on east side Gwynette like Snailville, Loganville, Dula, parts of Lawrenceville, you can see these big discounts. the closer you get to great schools and even the closer you get to locations where it’s just popular such as Mall of Georgia or big shopping districts and malls and grocery stores, you’re going to see less incentives there. Now, the other question that I’ve been getting from people is, “Well, will these incentives last, Tim? And would it not benefit me to just wait and not buy? If I know the market’s going to go down, wouldn’t these incentives be greater?” Yes and no are the answers I’ll give. Yes, they could be greater when a home such as a freestanding inventory home, they call them movein ready homes, quick sale homes. In other words, they’ve already built them. They’re not in the pre-sale stage. They’re not in the pre-framing or pre-D drywall stage. They’re already 100% built. The longer those sit on the market, the greater incentives they have on them because it is expensive for the builder to hold on to a home that’s not sold, but is already completed. They’re paying interest every month and it compounds like crazy. They want to relieve of themselves of the inventory. Those will get greater discounts as the months go on. However, there’s a catch. Are you ready? And this is another big tip that I’m giving you. Yes, while that is true, it may not be for the lot that you want. For example, a lot of times with new construction, time and time again, I see most of my buyers want lots that are in culde-sacs because they’re private and you don’t have a lot of traffic going through because it’s only the homeowners that live in that culde-sac that you’ll actually see their cars drive through. You also will see lots that are popular that have privacy in the back. So anywhere where you see another house that you can see or another community that that community backs up to and you don’t have the privacy and your neighbor can see you and vice versa. Usually those lots aren’t good. But the ones that are private, those are the ones that sell the fastest along with the culde-sac lots. And thirdly, the other popular type of lots are the big lots and the ones that are flat that don’t have a steep slope going downward or upward in the backyard. I see a lot of people, they consider that. I work with tons of buyers and they always consider that as a factor. In fact, I even got one that’s in Korea. They’re looking to buy a home from South Korea, sight unseen in terms of not being able to see in person, but definitely be able to see through the video, which I provide as I drove all the way there on a 8 on a Thursday at 8:00 a.m. and showed them with a FaceTime live chat of all the different lots. just going there and just surveying the area. And they wanted me to show them the back. That was the first thing they wanted to see. Not even the front of the lot or just the location of the lot, but just the back. They wanted to see how big that slope was. And they ended up picking one that had a flat backyard. Backyard wasn’t that big as sometimes that is the complaint of new construction homes, but at least it was flat. So, that was the one they ended up choosing. So, here’s what I mean by the yes and no answer earlier with the question. Yes, you can find a home that has a great incentive, but it is probably for a lot that most buyers would not be interested in, including you. So, yes, you can wait, but it’s a re there’s a reason why it’s been sitting on the market so long because there’s not as much demand for that lot like others. Now, if you think about a macroeconomic or at least just like an entire metro Atlanta housing market analysis as a whole, you may be saying, “Well, if the market’s going to go down, then there aren’t going to be buyers to even find those appealing lots like the culde-sac lots and the private lots.” I wouldn’t go that far. There’s still enough buyer interest and buyer demand that can move inventory, especially new construction, as a lot of buyers are looking, especially millennial generation like me, they like to buy new construction that already has everything updated and renovated inside with the latest trends that there’s enough interest that those lots would sell. So, I would say wait, but don’t wait forever. And if you’re ready to buy, you find what you’re looking for and you’re financially sound and ready and mentally and emotionally you’re ready to go, that’s a go for it. If you’re looking to purchase a home or even sell, give me a call. I help buyers buy new construction, not just resell, a lot of new construction. This video is here to provide value to you. You want to know more about incentives and discounts in other locations. Leave a comment below. If you have another question about incentives and discounts, leave a comment below. I help answer every question that comes my way and give me a call as well.
