What to expect when buying new construction home?
Buying “new construction home” is a bit different from buying a previously-owned home. You are buying from the builder who built it, not the person who called it home. Because there is no previous homeowner, you don’t have to deal with a seller’s emotional tie to the property, which typically influences the negotiating process. Whether you’re designing and building a custom home or buying a home that’s built on spec in a new subdivision, here are some of the most important things to know about buying new construction home.
Image by Paul Brennan from Pixabay
The builder has an agent and a lender…do you?
If you ever visited a new home community, you no doubt noticed the fencing that corrals folks to ensure they visit the builder’s office prior to viewing the model homes. The greeter inside this office is typically a licensed real estate agent, employed by the builder. His or her job is to not only let you know all the fabulous features the homes and the community offer, but to peel off those potential buyers who aren’t working with another agent.
While in Arizona, it is legal for one agent to represent both the seller (in this case, the builder or developer) and the buyer, and this “dual agency” situation seems like a handy solution for you, be wary. Dual agents are prohibited from representing one party exclusively so you’ll receive only limited representation.
Since the seller is paying for your agent’s services, your best bet is to go into the situation with your own representative. It is important for you to have an agent to represent your best interests, So, when the builder’s agent asks you if you’re working with an agent, let him or her know that you are and you can move on to view those amazing new homes. Be sure to let you agent know ahead of time, if you are planning to visit new home community.
Whether or not you should work with the builder’s preferred lender may take some research and shoppings. Often builder’s preferred lender will be able to save you money on your mortgage such as closing cost. The only way to know for certain is to obtain quotes from other lenders and compare them all.
Be Prepared to Wait
Delivery can range – it could be immediate or more than a year. Make sure you understand the delivery timeframes and be prepared for these timeframes to be extended a bit. Almost every new construction project hits delays.
Research neighborhoods and builders
When the neighborhood is brand new, you will be presented with several challenges not present when purchasing an existing home. Many home builders have been in the business for years and produce a quality product. However, a few do not. Check review sites, state licensing boards and Better Business Bureau to see whether the builder you’re considering has run into any trouble, including lawsuits, complaints with licensing agencies and disciplinary actions by state and local agencies.
Drive around the neighborhood and check out the amenities and the quality of the homes. Visit at different times of day, do stop and chat with any residents you see. Ask about their experience with their homes and with the neighborhood overall.
Check with the builder’s agent about potential homeowners’ association (HOA) fees and rules; some are incredibly expensive and strict. They may not allow storage sheds, certain paint colors or finish materials.
Ask whether cable and internet are readily available and from what companies; your new house will be wired for cable but that does not mean the cable company offers service to your neighborhood. Visit the city planning office to determine what they have planned for the area surrounding the community.
What you see isn’t always what you get
The model homes you tour doesn’t necessarily represent what comes standard. In fact, it will be a bare shell, with the least expensive flooring, appliances and fixtures. Often the model home reflects a mix of standard materials and fixtures, as well as a handful of upgrades. When touring the model home, make sure to find out which is which. The important thing is to know exactly what you’ll be getting, what’s available and, of course, what it will cost. Typically upgrades performed by the builder during the construction process are more expensive than if you hire someone to do them later on. The advantage of having them done during construction, though, is that you can roll the costs into the loan.
Here are some of the most popular builder upgrades:
The lot — The one upgrade that you can be assured will hold its value is land. A larger lot, or a better-located lot (if you can afford it), is worth the money it costs.
Elevation and structural upgrades — Most of the new homes these day has different type of exterior features and design. Bigger front porch, extended garage, stone on the front are some of the upgrade. Creating a three-car instead of a two-car garage or adding an extra bathroom are popular upgrades.
Interior upgrade such as flooring, carpet or tiles, what kind of carpet and what kind of tiles. Appliances upgrade such as builder grade white/black color or stainless steel. Gourmet kitchen with double oven and granite countertop or standard laminated countertop. All these are upgrade buyer need to consider when buying a new build.
Get a home inspection
You may think you don’t need to have a home inspection done on newly built home. But getting an independent inspection before closing is always a good idea, and you want to be there so you can learn more about the home. “Newer homes can have just as many problems as older homes, and it is always better to know what you don’t know before the signing last piece of paper. In many cases, the builder will agree to repair issues found during inspection 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.
Ask about warranties
Most builders offer a one-year workmanship warranty and a 10-year structural warranty, but not all warranties are created equal. Make sure the warranties you receive explicitly state what is and isn’t covered, and what the limitations are for damages. You should also receive manufacturer’s warranties on the washer and dryer, hot water heater, air conditioner, kitchen appliances, and roof.
Some extra costs that might surprise you
New homes often don’t come with everything you need. It’s quite common for them to lack window treatments, garage opener, landscaping, sprinklers and other essentials.
Each of these missing items can be a major added expense. Before you make an offer, note what’s missing and do some research to figure out how much these items will cost. Make sure to factor these purchases into your budget.
Buying new construction can be a great opportunity, but you need to know where to look in order to protect yourself.
If you have questions about buying new construction, please Contact us. We are always happy to help you navigate you through the home search and buying process.
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