If you are a homeowner, you may be familiar with the process that takes place when buying an existing home. Typically the buyer meets with their agent, visits multiple houses that are on the market, enters an offer, and then goes through the financing process to owning a new home. However, there are some difference in owning a new-to-you home and a new construction home.
Here are a few tips to help educate even experienced buyers on the new construction purchases.
1) Floor plans are not “exact replicas” of the finished product.
That does not mean that your home will not have the same number of bedroom, bathrooms, and that your kitchen will not be in the same location. What it means is that most builders include a statement on floor plans to remind customers that just because the measurements say 12′ on a wall, it could easily become 11.5′. A good builder accommodates for plumbing, electrical, and framing necessities to ensure the quality standards of your home. Bathroom tubs may be marked as an oval but turn out as a square. If you want an oval tub, make sure and speak with the builder before the construction process begins. Other things to remember are that sometimes the location of outlets will move around and your chosen particular lot requires other modifications in order to fit the home properly.
2) Unlike Resales, Don’t Wait on Price Reductions.
Price reduction do happen from time-to-time but not frequently. Buyers should consider that Builders, etc., have established a set of prices based on both cost to produce and the market value of homes in the area. Lowering the price on a house drops the comparable value of other houses in the community, thus bringing the entire suite of houses down in price. Typically a pre-sale home, or one that has not yet been built, will be slightly higher in price than a home that the builder erected as a “spec” house because it is built to the buyers specifications. Note also, that very often homes that have not sold for a period of time will not drop in price – they may actually go up in price at a new home development, thus supporting the builder’s position that materials and labor costs increase. Rather than price reductions, ask your builder about specific upgrades if you are looking for a bargaining chip. Perhaps the Builder would be willing to include a fence, landscaping, upgraded carpeting, or appliances as part of your purchase without charging the full retail pricing.
3)You can use your own buyer’s agent.
It is always important to have a licensed agent help represent what it best for you in each transaction. Although the sales reps you meet at a new construction community will do the best they can to help you, they are very similar to a seller’s agent in a resale transaction. On site agents are representatives of the Seller, who in this case happens to be the Builder, corporate owners, or developers. The on site agents are there to present their product, answer your questions, and do the best job for the Seller that they can.YOU want the same thing, but from your standpoint. You want to see the product, get your questions answered, but have your needs be number one. By using your own Broker/Agent, you can be assured that there’s no conflict of interest.
Most new communities have incentive programs that cite things like “Zero Closing Costs”, “Builder gives $10,000 back toward upgrades” or even “$2,000 toward closings”. These are great for the buyer but its important for the buyer to know that the Builder is not going to be actually paying those closing costs or upgrades by cutting you a check. Typically, those types of incentives are coming from the Builder’s preferred lender who has worked out the specific deals with the builder to sell the homes.Keep in mind that you are in no way required to use the Builder’s lender, but they can require you to use their lender in order to gain the benefit of the incentive. Don’t yell at the builder – Check with your own lender first to see if they’ll match the incentive or can give you a benefit in another fashion if the incentive is a deal breaker. Remember that nothing’s really free!
5) It comes with a Warranty!
Builder warranties can vary from builder to builder. Some builders may warrant their work for multiple years, some only for one. Warranties on structural-type issues may be different than warranties for plumbing leaks. As a new home buyer, read your warranty information and ask questions. You’ll probably find that your new home will likely have individual warranties for appliances, roofs, windows, etc. However, the bottom line is that your new home comes with a warranty which a new-to-you but older home does not.
6) But it’s usually not move in ready.
Unless you buy a spec home that is complete at the time of showing, be prepared to wait before you pack up your belongings. The Builder and/or sales rep should provide an estimated date of completion for the building of your new home as part of your pre-sale purchase process. What’s important to remember is that this is an estimate – a projection of when the home will be ready providing everything goes according to plan. Realistically, though, plans don’t work out exactly on time and can be effective by things that are outside of the builder’s control such as weather, materials, inspections, and utilities. In our experience, expect delays. If there are none, then your expectations have been exceeded.
There is a reason they wear hard hats and you should be cautious of your own safety. Although you want to see your home being built, you will need to stay away from the construction site during working hours. Workers carrying lumber, shooting nails, stringing wires, spraying drywall compounds, etc. are not always expecting the tenants to show up.
Another important reason to stay away is the fact that you don’t really want to disrupt work flow. You want your house finished. When future residents show up frequently, it can cause delays in the building process. If you read your contract, it will probably state that you cannot visit the site without making an appointment. If you want to go on site, contact your selling representative to schedule a time with the project superintendent or foreman.
8) Don’t expect perfection, but share concerns.
As much as we want our new home to be perfect, realistically the house won’t be perfect when you do a walk-through. For example, you may see knot holes, crooked boards, perhaps what look like curious framing practices, etc. But unless you see significant problems, remember that each step of the build process has been inspected not only by the foreman in charge of your project, but also by the local building inspector who should be keeping an eye on things to be sure that the local building codes have been met. However, if you do have concerns, be sure to bring them to the attention of your Broker/Agent who will assist you in working out any issues before the construction is complete.
9) The “certificate of occupancy” is more than a green light.
The certificate of occupancy is more like a final overall inspection than a framed certificate with a gold star. When the final signatures are given by the City/County inspector, the builder can release your paperwork for closing.
10) Enjoy the process!
After signing the last document and making sure your wire transfer hit the bank, it may see overwhelming to have to pack and move. No one will argue that moving isn’t stressful, but you should feel excited that you are moving into a home where the finishes, fixtures, lighting, and flooring have never been touched. Since everything is brand new, you might want to consider buying a roll or two of carpet protector stuff or paper to cover the walking paths on the rugs and floors so that you don’t bring more than your belongings into your new home.
Congratulations — You are now the owner of a new home! After picking out the colors, accents, flooring, tile, and appliances; hopefully you have some money left over for new furniture and accessories. But even if you don’t take a second and breathe in your new space before you stress yourself out again trying to arrange all your belongings!
If you have questions about buying a new home or building a new home on your own land, give us a call at 678-297-1500 or send us an email at firstname.lastname@example.org. We would love to help.