Top Tips for New Construction Buyers
Tips For Buying a
New Construction Home
Purchasing a new construction home is a little different than a resale house. These tips will get you started on your search for the perfect new home.
Use Your Own REALTOR®
Remember that the sales representatives at new home sales sites work for the builder/developer (seller). Their job is to do the best job for the seller that they can. You should always have your own REALTOR® to work with you and protect your interests throughout the process. When you use your own REALTOR®, you can rest assured that there will be no conflict of interest. It will benefit you to contact a REALTOR® prior to going out to look at homes. Many new home community policies require that your agent be present at the first showing, and possibly at every showing. If you initially visit on your own, you may find yourself working only with the site sales representative, even if that is not what you intended.
Do Not Expect Price Reductions
Builders normally have an established set of pricing for their homes. Price reductions would also lower the comparable values of other homes within the community. Typically if you purchase a home that is not built yet, the price will be higher than a house built on ‘spec’ as inventory for the site. Another important note is that homes that have not sold for a period of time do not normally experience price drops. They actually increase in price to support the builder’s position that labor and material costs increase as time progresses. The builder also has to cover the cost of his monetary note owed over time. You may be able to negotiate some concessions with your purchase including additional upgrades. Ask about interest rate reductions, and closing cost assistance often coming from the builder’s preferred lender too! You are free to use your own lender, but the same incentives may not be available.
Expect To Use The Builder Contract Addendum
Most new construction home sales will require the use of a Builder’s contract or lengthy addendum at the very least. These addendums contain language specific to the terms of the building process, most of it is common sense, but we recommend that you read it thoroughly along with your REALTOR®. If you have any questions or concerns, consult a real estate attorney. Agents are not allowed to and should not attempt to advise you on what the custom forms really say.
Builder Warranties Vary
Some builders warrant their work from top to bottom for many years, others only for the first year. Many builder’s will warrant structural issues for up to ten years. Plus, many items and systems within the home may be covered under separate warranties (appliances, roof, windows). When shopping for your new home, it is a good idea to also compare the warranties.
The Floor Plan
The floor plan that you see on the builder’s website or on handout materials at the site, is not an exact representation of what your home may look like. Room sizes are estimates, outlet locations may move, and items like bathtubs may appear shaped in a different way than what you will receive. It will be very difficult to have the floor plan modified, as most are pre-approved by the local building authorities. Conversely, if you are having a custom home built, you can make changes prior to construction commencing and sometimes during construction as needed.
Once you have chosen your home and made your selections for features and finishes, you now have an idea of how your new home will look. Maybe not. Realistically, suppliers can run out of products, products are substituted, and prices can change. Builders usually reserve the right to substitute materials and finishes, and that can lead to surprises. Ask questions about the types of items that may be substituted. It is nice to be prepared for what to expect along the way.
Ask about the estimated date of completion for the home, and how you will be kept up to date on the progress. Be sure to include your REALTOR® in every walk through and meeting during the building process. Do not let the builder deter you from having your REALTOR® there. You need an extra, experienced and knowledgeable set of eyes and ears to keep things moving on track.
Do Not Expect It All To Be Perfect
The house will not be perfect when it is complete, but rest assured that each step of the building process is inspected by the foreman/superintendent of the project. It will also be inspected by the local building inspector to ensure that local building codes are being followed. If you notice a problem, let your REALTOR® know so they can assist you in working it out with the builder.
Walking The Site Is A No-No
Stay away from the construction site. There are many physical hazards there - workers are actively carrying lumber, using nail guns, stringing wiring, spraying compounds, etc. If you are on the site with the building team, you will be required to wear a hardhat to prevent injury. Your purchase agreement probably includes a cause stating that you cannot visit the site without an appointment. Be sure to take your camera on these visits, it’s always nice to have documentation of what is located behind your walls.
Be Nice To The Site Foreman/Superintendent
You shouldn’t have to meet with them too often, but they can be gold when it comes to completing what you need. They are usually very busy, so if you need to communicate with them, make it brief and upbeat.
Ask For Leftovers
Paint, vinyl, carpet, flooring, granite, tiles. Some builders do provide a nice box with paints. But these other items will be nice to have for your future fixes and touch-ups.
Your move-in day will be sweet when you follow these steps to be a prepared and informed new home purchaser. Once you move in, take a few moments to reflect on what you have accomplished. If you would like to be connected with a REALTOR® who has experience with new construction buyers, contact us today.