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White kitchen with herringbone tile floors and quartz counters and walk in pantry

A few weeks back, we toured model homes that were for sale in Chandler with some friends who are in the market. These properties had every bell and whistle available, but likely would not appraise for asking price. We were concerned there could be almost a $150,000 gap between market value and appraised value in this case.

This is why most builders put a cap on the amount of upgrades you can put in a new home, if you are financing the home. Once you reach the cap, you have to start paying cash *upfront* for more upgrades. Yes, UPFRONT. They don’t want to pay to put upgrades in a home you over-improve and then have it not appraise and your financing fall through. The cap is usually anywhere from 10-18% of the home’s base price and varies from builder to builder. This includes lot premiums, structural upgrades, granite, tile, surround sound…everything…

Recently, I spent the morning at a design center with some clients to pick out their upgrades. We hemmed and hawed over what to pick and what to leave off, fitting it within their cap. I also connected to them to some additional vendors, such as painters, who could help them do work after closing for cheaper than the builder was offering. This is the second new build home they have bought with me and they are going to make a profit on their last one that they purchased two years ago. After buying and upgrading strategically, they did some additional work after closing and are now making a 28% increase on their investment! That is practically unheard of.

I always help clients use their upgrade cap to maximize their investment, and keep clients from being up-sold while we’re there. Builders make a lot of money on upgrades. That is one of the many things I do when you are buying new.

Don’t forget! When you are buying a new home, you always want to make sure your Realtor is with you at the new home model the FIRST time you tour, otherwise, you will be denied representation and the Builder will make you go it alone. Second, make sure you check the rates and fees. Recently, Robert was able to save a client approximately $5,000 in fees compared to the builder’s in-house lender, in addition to giving them a better rate. This paled in comparison to the “special” they were offering them to incentivize the buyer to use the in-house builder’s lender. Call or text Robert to double-check when shopping new: 480-415-0783.


Always, always double-check rates and fees, and make sure your Realtor is with you to help you negotiate with the builder.