Tips For Buying New Construction Homes
Most people will make one of the largest purchases they will make in their lifetimes when they buy a home. New homes fall into a special category and this article will focus on new home buying tips in this article, although many of these tips can equally be applied to any home purchase.
Newly built homes, often in recently-developed communities, are regaining popularity and are more affordable than in years past. New home builders are using desirable, open floor plans and are helping buyers get into new homes despite the nationwide credit crunch.
As with any major transaction, it’s critical that the buyer enter the home purchase fully informed and educated. Follow these important tips in a new home transaction to ensure that the outcome is a success.
1. Choose a Realtor Who Has New Home Sales Experience
Hire a buyer’s agent to represent you. Most of the time, your agent will be paid by the seller, but sometimes the responsibility for the agent’s fee is open for discussion. Even if you have to directly pay your agent, you can probably add that fee to the sales price, which would be worthwhile since a strong Realtor negotiating on your behalf can save you thousands more than the commission.
The builder’s sales agents are paid to represent the builder, regardless of what they may tell you. Many will use high pressure tactics to persuade you to sign the contract. Due to the high volume nature of brand new home sales, lots of builder’s agents are paid less than a traditional commission; some earn a salary plus incentives, so turnover is important to their livelihood.
Your own agent will represent you, act as your fiduciary and disclose the positives as well as the negatives about the transaction. Builder’s agents don’t discuss drawbacks.
If your contract contains a contingency to sell your existing home before buying, again, hire your own seller’s agent to list your home. Be aware that buying before selling is not always in your best interest as hard bargaining goes out the window once you’ve emotionally already left your home.
2. Carefully Evaluate the Seller’s Lender before Committing
Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it’s one-stop shopping for a builder. However, a builder’s lender might not offer you the best deal. This is particularly true if the builder actually owns the lending company.
Builders will offer huge incentives to get you into your new home; sometimes up to 15% of the value of the home. However, they will often put one big stipulation on those incentives that you use their lender. You should comparison shop lenders and compare the total cost of the home and the fees associated with a loan. A builder’s lender often charges higher rates and higher closing costs than you will get from a lender that has an arms length relationship with the builder.Ask to see a copy of your credit report and FICO cores. You can also order your own free credit report before shopping for a new home.
Insist that your lender guarantee its Good Faith Estimate. If the lender balks or makes excuses, go elsewhere. Reputable lenders will honor that request, even though it’s not required by law.
3. Check out the Builder’s Reputation
If a buyer has a bad experience with a builder, word spreads rapidly throughout a community. However, accurately and fairly assessing a builder’s history is the appropriate path- check public records for lawsuits or complaints and evaluate their resolutions.
Talk to the neighbors and scrutinize the construction quality of surrounding homes. Is the builder consistently building same-sized or larger than existing properties, or are homes shrinking in size, which could reduce neighborhood value?
Learn if the builder limits investor purchases this ensures that the neighborhood doesn’t turn into a rental neighborhood, which may appear less well-maintained and reduce property value.
4. Hire a Home Inspector
Many people who buy new construction homes don’t bother to get a home inspection. Most new homes come with a one year bumper to bumper warranty that includes everything, and many home buyers feel that they can find out if there are any construction flaws during those 12 months. The problem is that many problems won’t surface until well after the 12-month warranty has expired.
If the inspector calls for further inspection by another professional contractor, find out if the inspector is telling you there could be a serious issue or if the inspector isn’t licensed to address that issue.
An inspection provides education about the property, and offers the validation of a trained, independent third party assessment of the structure and systems.
5. Obtain Legal Advice before Buying a Brand New Home
Before you sign a purchase contract, talk to a real estate lawyer. Standard purchase agreements are designed to keep everybody out of court, but they don’t necessarily contain language that protects the buyer.
Ask questions about removal of contingencies and your cancellation rights. Make sure you understand your liability and commitments.
Find out if the materials used by the builder contain chemicals that are hazardous to your health. If your contract contains a warning about health issues, it’s probably because it’s a valid concern and other buyers have gone to court over it.
6. Location, Location, Location
The most important thing to decide when building a new home is where to build. What makes,the community that you are interested in stand out? Often, new building developments are located on the outskirts of a city or suburban area. It’s therefore important to check if the area you are considering is close enough to transportation routes, shopping and schools. Also, find out if the developer is planning to add amenities that will enhance your lifestyle such as walking trails and ponds.
Another variable to consider when purchasing your new home is future plans for your area. What is going to be built beside you, behind you or across the street. Horror stories abound. Imagine just moving into your new home when construction starts on the lot across the street, which was previously zoned as unplanned, for a local convenience store with the associated traffic and kids hanging around. Always make sure you know what is being built around you and do not make any assumptions.
7. Embrace Quality Landscaping
Trees and shrubs can make a huge difference in your energy bills, so make sure a qualified landscape contractor is helping you with decisions. You don’t want tree roots to eventually impede your water lines, nor do you want their limbs to eventually grow into electrical or cable lines. And you don’t want to plant sun-loving flowering shrubs in the shade of a big tree. Will the plants you’ve chosen provide the appropriate screening from neighbors or noisy highways? Don’t just think about how the plants look now. Picture them 20 years down the road. Consider maintenance, too. Will you benefit from an underground sprinkler system? Will a hose and sprinkler reach to that bed of flowers you want to plant near the sidewalk? Do you have hose bibs where you need them one close enough to wash your car in the driveway, others well placed on the front and back of the house?
8. Watch Your Budget
New home communities list a base price for the homes that they offer. However, this is rarely the actual final cost when building a new home. Be aware that you can add thousands of dollars to the base price of a home very quickly if you get carried away upgrading the standard flooring, cabinetry or lighting. It’s important to know exactly how much you can afford and to budget accordingly.
9. Build with Resale in Mind
No matter how much you love the house that you are building, it’s unlikely that it will be the last home you will ever own. Knowing that, you should be mindful of its potential resale value. Don’t add so many upgrades that you overprice your home for the neighborhood. And don’t choose anything too out of the ordinary. Ask yourself if the features you’re considering installing are likely going to appeal to others.
10. Know Your Timeline
Building a new home usually takes many months and lots must be coordinated during this time frame. If you are already a homeowner, your current home must be sold, you must make decisions regarding your new home and you must arrange a new mortgage. Get an estimate of when the building of your new home will be completed and plan accordingly.
11. Be Prepared For Delays
No matter what time frame a builder gives you, there is always the possibility of delays. Inclement weather, shortages of supplies and labor problems can all factor into delaying the completion of your home. Be aware of this going into the building process and be prepared to be somewhat flexible.
12. Keep a Close Watch on Progress
One way to help prevent delays and mix-ups is to stay involved in the building process. If possible, drive by the construction site to keep track of the progress that is being made. And keep in touch with your builder on a regular basis.
13. Avoid Making Changes
Try to avoid making changes to your designs once all of the plans have been completed. It will delay the completion of your new home and may add considerably to the final cost.
14. Arrange Temporary Housing
Chances are there may be a delay between the time you sell your existing home (or the lease expires on your current rental unit) and the time you move into your new home. If this is the case, you will need to arrange some temporary housing. Realize that you may be living there for several months so make sure it will be both affordable and able to meet your needs.
15. Read Those Manuals
Sure, you’d rather rearrange your furniture than read owner’s manuals, but if you don’t learn precisely how your new appliances and other home gadgets work, you may inadvertently break them. Ideally, your builder will walk you through the operation of every appliance but read the manuals to be safe.