Apart from asking do I need agent for buying a new home, often times I hear what’s different about buying new construction. Some even go further and say we are thinking of buying new to avoid all the hassle of a older home. Buying new or old the buying process is the same. Instead of buying it from people who lived there and called it home, you’re may be buying from the person/craftsman who built it or the company /developer who builds the community. What can you expect? Here are some of the most important things to consider when buying new construction.
Realtor to Represent you the “BUYER” – Be sure it’s someone who has experience in new construction and isn’t affiliated with the builder. Model homes are typically staffed by a real estate agent who has a relationship with the builder. It’s important for you to have an agent to represent your best interests, from advising you on how to structure your offer to be most appealing to the builder for making choices that can affect your home’s resale value. Some developments have site registration policies that require your agent to accompany you on one of your first few visits.
Negotiation – Builders do not like to drop prices. They usually set a base price with allowances and upgrades are at additional charge. Builders are often reluctant to set a precedent for negotiating prices since future buyers in the development may expect similar discounts. Your agent can research the builder’s negotiating style on prior sales in the community thus finding an effective way to approach the offer.
In Writing – Don’t sign anything until everything has been negotiated, agreed upon and written into the contract. If you’re considering purchasing a home that is not yet complete, it’s very important to spell out how the home will be finished, what will happen if construction is not completed on time and the deadlines for decisions that will occur through the process. Verbal conversations are not binding, so everything important must be put in writing and signed by all parties.
Construction – Buyers often get to see the finished model home when they approach a builder. Model home reflects a mix of standard materials and fixtures, as well as upgrades. Keep in mind that costs can change. The price quoted at the start may not be the same when you decide to move forward.
Research the builder – To see the quality of work by the builder visit other developments and talk to homeowners if possible. Online reviews and testimonials are a great resource.
Guarantee – When you sign Purchase and Sale, you’re often buying a lot with a model home to see as a sample. What guarantees do you have the home will be ready on time? Your purchase agreement documents should specify a completion date. However, many builders add provisions that make the completion date dependent on permit approvals from the municipality or availability of building materials from suppliers. There can also be additional charges if you’re unable to close on time if your lender isn’t ready.
Get Advice – New homes have problems too. Hire an inspector to make sure everything is safe and up to code. Even though most municipalities require new homes to pass permit inspections, an independent verification with a qualified inspector is money well spent. In many cases, the builder will allow buyers to conduct an independent inspection and agree to repair code compliance issues but do not include a provision that would allow the buyer to walk away and retain their deposit if they are not satisfied with the result of the inspection.
What’s covered – Many new homes come with a warranty from the builder, but not all warranties are created equal. Know what is and isn’t covered and for how long. Many builders use a third-party warranty company. In some cases, the manufacturer of certain products, like windows, may have a separate warranty or guarantee and the builder might refer all issues with those components to the manufacturer instead of handling any issues directly. The builder should be able to provide details on which part of the home is covered by which policy.
Looking Beyond – Always check out the neighborhood and see what is planned for the surrounding area. Most builders put the responsibility on the buyer to be aware of neighborhood or community dynamics. Many new communities now have homeowners associations.
Financing – This is what most buyers do, they automatically use the builder’s lender. They are either encouraged and lured into this. Buyers need to shop around for the loan that is best for them and not for the builders. Some builders require that you get pre-approved with the builder’s preferred lender. By the time you are ready to make an offer, you probably have already spoken to a lender of your own. It can come as a surprise when the builder requires you to also get pre-approved with their lender.
Your agent can help you find out if there are any special offers, promotions or contractual differences if you agree to use the builder’s preferred lender.
For more guidance on buying a new home, contact me – 508 210 2121. Available Always.
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