Important Things to Consider When Buying
A Newly Built Home
1. Be Represented Find a Realtor that is experienced with new construction but is not associated with the builder. The agent that greets you in a model home typically works for the builder. It is important that you have someone who is representing your interests. Your Realtor can help you structure any offers, obtain incentives that may only be offered to Realtors, and assist you with option choices that will payoff later in the resale of your home.
Inside Information: Builders have registration policies so ask your Realtor to find out what they are for the home site(s) that you are interested in before you go. Your Realtor may be able to register you in advance allowing you to visit the development anytime and still be represented by your Realtor. However some builders require your Realtor to be present with you for the first visit to get registered.
2. Negotiations Rely on your Realtor to help you with negotiations. Developers want to do their best to maintain their price structure. Your Realtor may know that the builder will help with closing costs or give you upgrades at a reduced or no charge.
Inside Information: Ask your Realtor to find out what the builder typically does to negotiate back end discounts.
3. Contracts Consult with your Realtor and if desired, an Attorney specializing in Real Estate Law. Do not sign anything until all the terms and conditions are in writing. How the home will be finished, what will happen if deadlines are missed and your obligations as construction proceeds. Verbal statements are not binding.
Inside Information: Ask your Realtor to get a copy of the builder’s agreements ahead of time to review in advance.
4. Model Homes -A model home can be misleading. It has been “decked out” with many options and professionally decorated and staged. Ask your Realtor to help you discern what is standard, what are optional and what the cost of each is. Set a budget n advance for the total cost of the home to keep you from “feature creep” making the home exceed what you planned on spending.
Inside Information: Ask your Realtor to get a list of standard features and a list of the common options and their associated costs before you pick your options.
5. Check out the Builder Ask to talk to other homeowners in the same development about their experiences. Look online for reviews and testimonials about the company. Keep in mind that not all review will be excellent but the overall picture should accurately represent the company.
Inside Information: Rely on your Realtor to advise you of what they know of the developer’s reputation. Your Realtor can talk to their associates to find out other’s experiences with that developer.
6. Guarantee Determine what guarantee you have and what your obligations are. What does the contract say about completion date and reasons that will allow the builder to not meet the deadline (permits, material shortages, weather, etc.)? What if your lender is not ready to close on time? Will there be any additional charges?
Inside Information: Ask your Realtor to point out what happens if this is a delay on either side.
7. Inspections Consider hiring a qualified contractor to inspect the home during construction for defects or poor workmanship. Although the builder will be required to have government inspections, typically cosmetic or other issues are not their concern. After completion have a qualified home inspector do a complete inspection.
Inside Information Ask your Realtor to explain the inspection process of that developer and what rights you have in the contract to request repairs or even terminate the agreement.
8. Warranty Find out if there is a warranty. If so, what is covered and what is not and for what period of time. Some warranties will be offered by the manufacturer of the item. In that case you will need to deal with them and not the builder.
Inside Information Have your Realtor get you the details on warranty information early. This will allow you to make it part of the negotiation process.
9. Future Plans What other developments are planned around the builder’s site? If the view of your home is now wooded, will it always be or can new homes be built there? Check with the county or city development department to inquire what plans they have for the future.
Inside Information Plan to do your research on the area before making any offers. Ask your Realtor what knowledge they have about future developments.
10. Find out about lender requirements Obtain pre-approval with a lender of your choice. Get rates and terms first before visiting the builder’s site. Inquire what terms the lender that is associated with the builder offers which will enable you to compare. Sometimes, builders will offer incentives if you use their lender.
Inside Information Have your Realtor find out if there are any specials or incentives if you use the developer’s lender.