Street view of new model home.

Is Buying A Model Home A Good Idea?

Jamie Johnson4-minute read

November 23, 2022

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You've probably come across a model home if you’ve ever driven through a newer neighborhood. These display homes aren’t lived in but are meant to demonstrate to potential buyers what’s possible with the other houses in that neighborhood.

But as construction winds down in that neighborhood, many builders will eventually sell the model homes as well. But is buying a model home from a builder a good idea? This article will explore how to buy a model home and the pros and cons of that decision.

What Is A Model Home?

A model home is a show property that’s intended to display the work of a home builder to prospective buyers. It showcases the design, floor plan, upgrades and amenities of potential new construction homes in development. Model homes can come in many types of home styles.  

Can You Buy A Model Home?

Although a model home is primarily used to sell other homes in the neighborhood, you may be able to purchase one. Model homes are typically the last properties to be sold in that development. Once the majority of new construction homes have been sold, the builder may list the model home at a discounted price. 

How To Buy A Model Home

The process of buying a model home is similar to the traditional home buying process. You should make sure you’re represented by a real estate agent when you meet with the builder. Don’t rely on the agent the builder uses – that person will always work in the builder’s best interest.

You should ask to see all the different model homes in that neighborhood and compare them to other homes in the area. From there, you can negotiate a price with the builder. Make sure to have the home inspected and check up on the reputation of that builder before signing a contract.

Buying A Model Home Vs. Traditional Housing

Here are some of the biggest differences between buying a model home and a new home:

  • Model homes may not be listed: Model homes may not be listed or visible on the multiple listing service (MLS). The builder will usually only list the homes they are actively working on selling.
  • Model homes might be cheaper: Builders are sometimes motivated to sell model homes at a lower price point, so there may be more room to negotiate.
  • Model homes can come move-in ready: Model homes are typically sold as is and may come with furniture plus other amenities.
  • Home builders may offer financing options: Home builders sometimes work directly with lenders and can offer mortgage However, home buyers should still look into other loan options.

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Tips For Buying A Model Home From A Builder

If you're thinking of buying a model home, here are seven steps you can take:

1. Work With A Real Estate Agent

Before buying a model home, your first step should be to find a qualified real estate agent to work with. That person can assist you in purchasing a model home by looking at real estate comps and negotiating with the builder’s agent. And a real estate agent will give you their opinion on whether you’re getting a good deal and should move forward with the home purchase.

2. Get A Home Inspection

Even though you’re buying a home that’s never been lived in before, it’s still a good idea to request a home inspection on a model home. This information you receive could help you negotiate a better price on the house.

3. Ask If Someone Previously Occupied The Model Home

Even though the home hasn’t been previously lived in, it’s a good idea to ask whether or not it was previously occupied. For instance, the house could have been used as a sales office for a period of time. This is important because it helps you understand what kind of condition the home is in.

4. Consider Your Own Loan Options

Builders often offer lending options, but it’s a good idea to look into your own loan options. Taking out a loan from another lender could help you find a better deal when you're getting a mortgage, and home warranty.

5. See About An Extended Warranty

A model home isn’t exactly a brand-new home, so it may not come with a full warranty. So, it’s a good idea to ask the builder for an extended warranty on the house. This will protect you from any issues that arise during the first year.

6. Negotiate The Sales Price

Even if you feel like the builder is already offering a good deal on the house, you can always negotiate the purchase price of a model home. Your real estate agent can assist you during the negotiation process and help you get the best deal for your money.

7. Look Into The Builder’s Background

And finally, it’s important to look into the home builder’s reputation. Check to see if that person has any pending lawsuits or other red flags you should know about.

Should You Buy A Model Home?

Here are some of the biggest pros and cons of buying a model home.

Pros

  • Model homes may be priced lower than other homes in the development.
  • Model homes can come with upgraded amenities that were installed to showcase to potential buyers.
  • The prices of model homes are often negotiable.

Cons

  • A model home may be older or more outdated than others in the development.
  • Model homes can have wear and tear from constant walk-throughs.
  • Some model homes have rushed construction to get them in front of buyers.
  • You may not get a full home warranty with a model home.

The Bottom Line

Buying a model home can be a good opportunity to purchase a new home at a lower price point. However, it’s important to do your due diligence on the house and research the builder. If you’re ready to start the home buying process, you can apply online with Rocket MortgageⓇ for financing options.

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Jamie Johnson

Jamie Johnson is a Kansas City-based freelance writer who writes about a variety of personal finance topics, including loans, building credit, and paying down debt. She currently writes for clients like the U.S. Chamber of Commerce, Business Insider, and Bankrate.