Tips for Buying New Construction
Buying a brand new a shiny, un-lived in home has a certain amount of appeal. There is no previous homeowner who has affected the home or who has emotional ties to the home that will factor into the negotiation process. New homes are usually built with floor plans that reflect the latest, most popular design trends.
In many ways, buying new construction is an entirely different animal than buying an existing home. While you still need to determine your budget, decide which home features are must-have and secure financing; the process of buying new construction involves a number of different steps.
Always have independent agent representation when considering new construction. The builder will have sales agents of their own, but they are paid to represent the builder's interests, not yours. Many will use pressure tactics to encourage you to sign the contract.
A buyer's agent will act as your fiduciary and provide unbiased information on the pros and cons of any potential transaction. If you find developments that you are interested in learning more about, channel everything through your own independent representation. Protecting your own welfare is paramount.
Learn About the Development(s)
Buying a home in a planned development necessitates careful research of the development and neighborhood itself - more effort than you might otherwise put into learning about an existing neighborhood surrounding a resale.
Research the Builder(s)
Accurately and fairly reviewing a builder's history is a crucial step if you're considering the purchase of a newly built home. Don't rely on information provided by representatives of the builder or subdivision, as it will be their goal to represent the builder in the best possible light.
Go to the courthouse to see if any liens or lawsuits have been filed against the builder, and verify how they were resolved. Check with the Better Business Bureau for any serious complaints against the builder registered by past homeowners or subcontractors. If at all possible, contact homeowners currently living in homes previously constructed by the same builder to see how they feel about the quality of craftsmanship after having actually lived in the home. Experienced real estate agents should also have a good understanding of which builders have a good reputation locally, and which do not.
Be Cautious with Upgrades and Extras
5 Home Features That Excite Buyers
1. Stainless Steel Appliances:
2. Hardwood Floors:
3. Quality Fixtures:
4. Surround Sound:
5. Slab Kitchen Countertops:
Upgrades to the home itself are features (such as hardwood flooring or high end appliances) that you pay extra for to improve the home based on your tastes. Builders can make a lot of money on upgrades, because they get the parts and labor at favorable rates and generally tack on a large markup.
Make sure you know the base feature list of the model you are purchasing by heart. When the builder offers upgrades, make sure you understand exactly what is being offered by asking questions and taking notes.
Do your own research to compare the cost of the feature plus installation as offered by the builder with what it would cost to have the work done independently after move in. If the builder's version is far and away more expensive, bidding the work out to independent contractors after you move in is probably the smart move. If the costs are similar, however, it may be less stress to have the work completed by the builder in advance.
Hire an Independent Home Inspector
Many people who purchase new construction fall into the trap of thinking that because the home is newly built, the important step of getting a detailed home inspection is unnecessary. Simply put, new construction does not guarantee sound construction, and skipping a professional inspection can leave you open to future problems that might crop op as a result of building flaws or cut corners. Even homes built by the most scrupulous contractors can have defects that are not obvious to the untrained eye.
Many builders will proved an all-inclusive home warranty as a part of the purchase agreement. This should not dissuade you from getting an impartial inspection: most warranties have a limited lifespan, and many original issues with home construction may not become apparent until many years later.
Shop for Lenders
Builders almost always have a preferred lender (sometimes even an in-house mortgage company), and will typically try to steer you to using this lender to secure the mortgage for your new home. Some builders will even offer deals on the purchase price of the home or free upgraded - contingent upon you using their lender.
Using the builder's lender, especially without first shopping around for mortgages and other sources, is highly problematic. A mortgage provider who has a working relationship with a builder or development is out to make sure they can get you into a loan for the property. What they aren't necessarily doing is making sure you get the best deal. Always shop around for the best possible rate, lowest closing cost and fewest hassles.