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Buying A Model Home: How It Works And What You Need To Know

Miranda Crace5 minute read
May 24, 2021

Finding a home that fits both your dreams and your budget can be a challenge. If you’re looking to purchase property that’s never been lived in or that’s been fully modernized, there are ways to do so without breaking the bank on a newly constructed home or on major renovation projects. Model homes, for instance, can be a great option if you’re looking to save a little money and still have access to some of the upgrades you might be looking for in your new home.

Let’s dig deeper into what model homes are and what goes into buying one.

What Is A Model Home?

A model home is a property intended to show off the work of a builder to prospective buyers looking to live in a particular real estate subdivision or development. This type of house is specifically designed to appeal to a buyer’s interests, as they often contain many popular wishlist items like a larger and more open floor plan, granite countertops in the kitchen, high-quality appliances and luxurious flooring.

While the purpose of a model home is primarily to sell other, similar properties in a builder’s development, these properties themselves can also sometimes be made available to interested buyers.

When Do Model Homes Go On Sale?

More often than not, model homes are some of the last properties sold in the developments they’re meant to showcase. After the majority of the newly constructed homes in your desired area are off the market, builders will put their model properties up for sale and will likely be willing to negotiate for a discounted price compared to the rest of the surrounding real estate.

How Does Buying A Model Home Differ From Buying Traditional Housing?

The process of making an offer on and buying a model home is fairly similar to the home buying process for more traditional real estate properties. However, there are a few distinct features of the buying process for model homes that are worth keeping in mind. Let’s review those.

They’re Often Cheaper Than New Homes

Although model homes are meant to be a current reflection of what other properties will look like in a given development, they’re often several years older than the homes being built in the surrounding area and, as a result, might not look quite as pristine or have high-functioning home systems like plumbing or HVAC.

Because of this, interested buyers may have a better chance at getting a decent discount in their negotiations with the builder, and buying a model home can end up being a much more affordable option than purchasing a newly built one.

You Can Buy A Model Home With Furniture Included

While it’s not unheard of to buy a more traditional house that’s move-in ready, it tends to be more common practice with model home purchases. If the model home you’re interested in buying comes with furniture or decor that you also like, it’s entirely possible to ask your builder to include the furniture as part of your purchase agreement. This could potentially save you a good deal of money, as you won’t necessarily need to worry about buying lots of new pieces to furnish your home or hiring movers to transport some of your older furniture.

The Builder Might Offer Lending Services

If you’re looking to apply for a mortgage, you might find that the builder of the model home you’re eyeing has existing partnerships with mortgage lenders, or even owns their own lending company. It’s important to proceed with caution if this is the case, as it’s possible that any mortgage lending decisions made could benefit the builder’s best interests rather than yours. You run the risk of ending up with worse or more unfair loan terms than you would have if you’d gone through a separate third-party lender.

Before making any decisions, you should conduct thorough research into which types of mortgage loan options would best serve your needs. You might also consider talking to a Home Loan Expert or a financial advisor for additional insight.

Should You Buy A Model Home? The Pros And Cons

Purchasing a model home can have a number of benefits. As discussed above, in addition to their relative affordability, model homes tend to be decked out in desirable modern amenities and state-of-the-art appliances that would otherwise cost buyers a sizable chunk of change to incorporate into their homes.

However, there are a few important drawbacks to be aware of as well. First, there’s a chance that the construction team who built the house took shortcuts in order to have the property ready to show prospective buyers as quickly as possible. Some builders also use their model homes as a testing ground for the functionality of new design layouts they’ve created, so it’s possible that some mistakes might have been made during the construction of the property that could negatively impact your ability to fully enjoy living in the home.

Tips For Buying A Model Home

If you decide that buying a model home is the best choice to fit your needs, there are a few steps you should take to ensure the success of your buying process and increase your chances of being completely happy with your purchase.

Check Out Comparable Sales

While buyers often end up being able to purchase model homes at a discount after negotiating with the builder, you still want to make sure you aren’t being taken advantage of – and that the initial asking price has been determined fairly. Most model homes don’t end up getting listed on an MLS, but your real estate agent can still pull hard data on comparable sales in your area from a title company in order to make sure the builder is offering you a reasonable price.

Have The Property Inspected

Before agreeing to purchase a model home, it’s wise to order a home inspection, especially if you’re concerned that the property’s been hastily built and might have some hidden issues as a result. If you bring in a professional to inspect the home and they discover any structural damage or pest infestations, you’ll be able to work those fixes into your home buying negotiations or walk away from the transaction more easily.

Ask If The Property Has Been Previously Used

Even if the model home you’re interested in hasn’t been lived in yet, there’s a chance it might still show signs of wear and tear due to extensive foot traffic or previous use as a sales office. Talk with your builder to make sure that any areas of the home that were used for nonresidential purposes will be reverted back to their original state before you purchase the property. Then, see if you can use any visible imperfections from frequent use around the home to get an even better discount.

Ask For An Extended Warranty

Because a model home may have been in use for home buyer tours for years before getting listed on the market, it’s possible that you won’t get to benefit from having the full duration of the warranty on the home as you would if you were purchasing a newly built property. If this is the case, you should talk to the builder and see if you can get an extended warranty, or if the terms of the warranty can be adjusted to reflect the date of purchase rather than the date of construction completion. This will ensure that you’re protected against certain unforeseen issues with the property for the length of time you deserve.

The Bottom Line

If you’re looking to buy a modern, upscale home that hasn’t had previous residents, a model home can be a cost-effective option. You may want to negotiate with the builder on price, and make sure any issues with the property are fixed or covered by a discount during the home sale, but as long as there aren’t any problems that put your health or safety at risk, you’re golden. A model home could end up being the ideal pathway to finding a cheaper home that checks all of your boxes.

Ready to begin shopping for your dream home? Get in touch with a Rocket Homes Verified Partner Agent to help you get started on your journey!

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Miranda Crace

The Rocket Homes blog is here to bring you all you need to know about buying, selling and making the most of your home. Whether you’re thinking about becoming a homeowner, selling your current home or looking to keep your place in tip-top shape, our writers and freelancers bring their experience and expertise to meet you right where you are.