Purchasing a brand new home in the southwest suburbs is an exciting venture for many families looking for modern designs, customizable options, and the chance to live in a brand-new community. However, the process can come with certain complexities, especially when navigating the financial and logistical challenges of selling your current home while waiting for the new one to be completed. One increasingly common scenario is builders requiring buyers to list their current home for sale within a short time frame – often within seven days of signing the purchase contract – even if the closing date on the new construction home is months away. This requirement can add stress and uncertainty to the homebuying process, especially when it comes to timing and selling contingencies.
The Builder’s Requirements: Why So Soon?
When purchasing a new construction home in Chanhassen, buyers often have to work with the builder’s rules and conditions. One of these conditions may be a requirement to list your current home for sale within a week of signing the purchase contract, even if the completion date for the new home is many months away. While this may seem surprising to some, there is a strategic reason behind it from the builder’s perspective.
Builders are keen on reducing any risk associated with contingent home sales. When a buyer’s ability to close on the new construction home is dependent on selling their current property, there are a lot of uncertainties that could arise. If the buyer’s current home doesn’t sell, it could jeopardize the entire deal, potentially leaving the builder with a completed but unsold home. By requiring buyers to list their homes quickly, builders aim to ensure that the buyer’s financial situation will be settled well in advance of the new home’s completion. This approach gives builders peace of mind, knowing that there is one less hurdle in the sale process.
In Chanhassen, where the housing market remains competitive, builders may also want to avoid delaying the sale process, which could result in losing out on other potential buyers. By getting buyers to list their homes early, builders can feel more confident that the transaction will proceed without unexpected issues arising later in the process.
The Challenges for Buyers
For buyers, this requirement can add significant pressure. The primary challenge comes from the need to sell your current home far in advance of moving into the new one. If the closing date on the new construction home is still several months away, selling your existing home quickly may leave you in a position where you need temporary housing or must negotiate a rent-back agreement with the new owners of your current home. For many, this is a logistical nightmare.
Selling your home within seven days of signing a purchase contract also doesn’t leave much time for preparation. For most homeowners, getting a property market-ready can take weeks of decluttering, staging, and making small repairs. Having to rush through this process could potentially affect the sale price or the speed at which the home sells. Furthermore, there is always the risk that your home may not sell as quickly as you hoped, adding even more stress to an already complex situation.
Another concern buyers may have is what happens if something goes wrong with the new construction. New builds are not immune to delays, and if there are any issues with the builder or construction timeline, you could find yourself without a home for an extended period. Many buyers prefer to wait until closer to the completion date to sell their current home, ensuring a smoother transition between the two properties.
Navigating Financial Contingencies
One of the main reasons builders push buyers to sell their homes early is the financial contingency. Most buyers cannot afford to carry two mortgages simultaneously, so the purchase of the new home is contingent on selling the current one. In such cases, selling the current property quickly is necessary to secure the financing for the new home.
However, some buyers may have the financial flexibility to qualify for the new home without selling their current one. If this is an option, it can relieve a great deal of pressure, allowing you to wait to sell your current home closer to the new home’s completion. If you are in this position, it is important to explore financing options, including bridge loans, which can help cover the gap between selling your current home and moving into the new one. Bridge loans, however, come with their own set of requirements and typically require significant equity in the current home, so not all buyers will qualify.
Another option is to consult with a lender outside of the builder’s preferred financing partner. Builder-affiliated lenders may have stricter requirements or incentives to get buyers to sell their homes quickly, but other lenders may offer more flexible terms. It is always advisable to get a second or even third opinion on your financing options to ensure you are making the best decision for your specific situation.
The Importance of Inspections in New Construction
Although buying a new construction home in Chanhassen may seem like it guarantees a worry-free property, it’s still crucial to have a thorough inspection done. Many buyers assume that because the home is brand new, there is no need for an inspection. However, even new homes can have construction defects or issues that may not be immediately apparent.
City & county inspections ensure that the home meets the minimum building code requirements, but they do not always guarantee that everything was done correctly or to the highest standard. Hiring an independent home inspector to evaluate the property during various stages of construction can provide you with peace of mind and catch potential problems before they become costly repairs. Issues such as plumbing leaks, electrical faults, or improper insulation can sometimes slip through the cracks, even in new builds.
Inspections should be a key part of your new home purchase process, regardless of how confident you feel about the builder’s quality. It’s an extra step that may save you from future headaches and unexpected expenses.
Planning for the Transition
One of the most stressful aspects of buying a new construction home in Chanhassen is the timing of the sale of your current home and the move into the new one. With builders requiring homes to be listed quickly, it is essential to have a transition plan in place. If you sell your home well before the new one is ready, you may need to arrange temporary housing. Whether that means renting a short-term apartment or staying with family, it’s important to have a plan so that you’re not caught off guard.
Some buyers negotiate a rent-back agreement with the new owners of their current home, allowing them to stay in the home for a set period after closing while they wait for their new home to be completed. While this can be a convenient option, it’s not always available, and rent-back agreements often come with additional costs.
In conclusion, buying a new construction home in Chanhassen can be a rewarding experience, but it also comes with challenges, particularly when it comes to selling your current home. Understanding the builder’s requirements, exploring your financial options, and planning for the transition are key to ensuring a smooth and successful move. By staying informed and prepared, you can navigate the complexities of new construction and enjoy your brand-new home in Chanhassen.
David Gooden is a luxury real estate agent specializing in Chanhassen, MN luxury real estate.