If you have toured a new subdivision or driven by the new home construction area, you would have seen the builder’s model home. Some builders will have multiple model homes if there are different styles and elevations available for sale.
A builder’s model home is known to have all the latest features, all the bells and whistles and the eye-catching decor.
Builders will often times sell off their model homes once the construction and sales have been completed. However, it’s important to consider why you should never buy a model home from a builder.
What is a Model Home?
A model home is a show home that potential customers can walkthrough and tour to get a feel of the home, and see what the builder can offer. It is the builder’s one chance to showcase their best work. Due to this, builders will often times put their best foot forward and create a stunning home with all their best work.
The Model Home Buying Process
You can purchase a model home from a builder at a reduced price, but the model home may only be available at the very end of the sales phase. When you are purchasing a model home, you’ll be the last to move into the community.
The majority of model homes do not get listed on the MLS, as they are offered through the builder via their contacts. It is one of the benefits of knowing a realtor who specializes in new construction homes.
The model home buying process is very similar to the process of buying an existing home or new build home. You will need to have a realtor on your side, complete an inspection and get financing if required.
It’s important to remember that there are several factors to consider when deciding if a model home is right for you. The real estate experts and homeowners we have spoken to have provided some of the below advantages and disadvantages of buying a model home.
Advantages of Buying a Model Home
- These homes will have all the best features of the builder, including upgraded floors, paint, tiles and kitchen cabinets.
- The model home will be staged with aesthetically pleasing furniture which is sometimes included in the sale of the home.
- The model home will include blinds and light fixtures that match the interior of the home.
- The home has had the most time to settle in place.
- The price of the model home may be negotiable and lower than other homes in the area, giving you instant equity.
Disadvantages of Buying a Model Home
- The model home is often built incredibly quickly to initiate the sales process
- The home is the oldest construction in the subdivision.
- The home may not have complete new construction home warranty or protection
- The model home is often used as sales offices, and hundreds of people have walked through the home. There will be signs of wear and tear in the home.
- There is a high chance the subcontractors have cut corners during the construction, as this is a model home.
Can You Get Home Insurance for Model Homes?
Yes, you can get home insurance for model homes. When you are purchasing a model home – be sure to complete a home inspection. Your insurance company may request to see a copy of the report when approving you for coverage.
Should You Inspect Model Homes?
In most cases, model homes are sold one to three years after they are built. These homes endure a tremendous amount of foot traffic from buyers, agents and office staff. While staff are on site to provide surveillance and assistance, they cannot control the physical wear and tear that happens to the home.
Given the circumstances, it is highly recommended to complete a home inspection on a model home before purchasing. A home inspection may not necessarily lower the price of the model home, but it will give you an idea of what needs repair or attention.
Do Model Homes Have Utilities (Water, Gas, Electricity)?
Yes, all model homes are built with access to necessary utilities. However, while the model home is on display – some services such as water access may be shutoff. This is to prevent visitors from using the in-home bathrooms or faucets. The home will have full access to power while it is being showcased.
Once you purchase the home, the utility services will be switched to the buyer’s name.
Are Model Homes Sold With Furniture?
Some builders do sell the model home with the furniture if the furniture is not rented from a staging company. Homebuyers sometimes prefer to purchase model homes with the furniture, as it gives them a move-in ready home.
As mentioned earlier, these model homes will already have elegant and matching blinds, electrical fixtures, wall-art and all the cool new features you’d dream of.
Are Model Homes Built Better?
Most model homes are built quickly so that they can be made available to bring in sales. Homebuilders hire multiple sub-contractors across different trades, and some may cut corners during the build process to bring the home to life.
However, rest assured that they will not cut corners when it comes to the structure and overall build of the home – but rather the small aesthetical features.
What is a Model Home Leaseback?
A model home leaseback is a purchase option offered by builders, where they sell a model home, but continue to rent it from the buyer. It would be a great option for someone who has the financial ability to buy a home, but is not ready to move in.
With the model home leaseback option, buyers enjoy the opportunity to get a show-ready home at a discounted price, while receiving rental income. There are a few advantages of buying a model home with a leaseback option, as discussed below.
Consistent Rental Income
When you purchase a model home with a leaseback, you immediately have a reputable tenant – which is the builder. The builder is guaranteed to provide rental income to the homebuyer, while taking care of the show home.
Best Features and Upgrades
All model homes are built with the highest-value upgrades and features. When you purchase the model home, the builder will give you the home as-is with the features. It provides a great deal of value for money when you buy a model home with a leaseback option.
Best Interior Furnishings and Decor
Builders will typically hire professional interior designers and stagers to decorate and furnish a model home. Most designers will build in a vision for the home and create a space that is unique to the builder. If you’ve ever wondered why these model homes smell good, you should read about the scents they use.
As the buyer, you will have the option to purchase the home with the artwork, clocks, furniture, carpeting and decor pieces.
Real Estate Appreciation
There are a few financial benefits for buyers who buy model homes early and keep them as rentals at the onset. These benefits include tax benefits, the creation of equity, income generation, and the market appreciation on the home.
Given the features and upgrades in the home, there will be some demand from certain buyers who value all the bells and whistles. So, when the time comes to selling your home in the future – you may be able to spur up some demand!
If your builder is reputable in the industry and has a proven track-record for building high-end homes – that would be another bonus too.