Buying A New Construction Home
10 Things You Really Should Consider Before Buying A New Construction Home!
Buying new is exciting, looking at beautiful model homes and imaging what you could do is what we all enjoy about the process of shopping for a new construction home. However, there are many things to consider before stepping into a new construction home. I have created this report to help educate my clients on the process and what to watch out for along the way.
1. Who is representing you, the on-site sales agent?
- No one if you’re dealing directly with the on-site sales person. Most on-site sales people are not licensed realtors and do not have a fiduciary responsibility to you. The salesperson works for the builder and represents the builders best interests, sure they want you to have a good experience, but you’re going up against pros who do this day in and day out, shouldn’t you have a pro on your side and have your own independent representation?
- Employing my the services as a professional Buyer’s Agent to represent you is FREE. As your agent I am paid by the seller/builder. As your agent will represent you, my fiduciary responsibility is to you and requires me to disclose the positives as well as the negatives about the transaction.
2. Should You Always Use The Builder’s Lender?
- Sometimes, it really depends what the builders offering, some builders own the lending company and others have preferred lenders. Often the builder will offer incentives to use their lender, so you have to carefully analyze incentives, interest rates and compare it with what other lenders are offering. Builders always want to use their own lender it stream lines the loan process for them, provides them a more of control of the loan and they are keep fully informed of your loan progress. But builder’s lender might not offer you the best deal and that’s why as your Buyers Agent I have several reputable lenders I work with that can provide you competitive loan offers so you can make sure you get the best deal possible.
- As your Buyer’s Agent I will help you compare loan options and no matter who is your lender I will insist that they guarantee its Good Faith Estimate, I only work with lenders that do.
3. What Are You Really Buying?
- Before you fall in love with model keep in mind many models are heavily upgraded with tens of thousands of dollars in upgrades. Just like cars most new construction prices quoted are for the base price. For most builders options and upgrades are a high margin profit center.
- If possible you want to see a home that is a base model or close to it so you understand what your buying. Establish the upgrades and options you what and the price the builders charging you them. As your Buyers Agent I can make recommendations on which upgrades are best done by the builder and which are best to do later.
- You will also need to know if your lender will finance all the options and upgrades or whether you will have to come out of pocket for them.
4. Does The Builder You’ve Chosen Have a Good Reputation?
- What is the builders reputation in the real estate community like, what is the overall quality of construction like, are they completing homes on schedule and what is their warranty service like.
- In today’s real estate market there are a lot of investors buying homes as investments to rent out, I think it’s important to ask the builder if they sell to investors, many builders have a policy that all their homes be owner occupied, but many will sell to investors and actively seek them out. Investors typically don’t maintain their houses to the same level as owners and leases turn over every year, after all a big part of buying a home in a new community is pride in ownership and sharing that with other owners just like you.
5. ALWAYS Hire A Home Inspector!
- Always, always, always get a home inspection when you buy. And hire a licensed and accredited individual to perform the inspection. Be there for the inspection and ask questions because a new home can and often does contain defects. The HVAC system might be too small or the plumbing could be installed backwards. Construction workers make mistakes.
- If the inspector calls for further inspection by another professional contractor, find out if the inspector is telling you there could be a serious issue or if the inspector isn’t licensed to address that issue.
6. Review The Builder’s Contract In Detail
- The builders will use their own, standardized contract template, filled with pages of legal and construction language and detail. Once you get to the contract-writing step, reading through all of this information is time consuming and you may or may not understand much of it.
- Having a licensed real estate professional by your side who can review what you’re signing and help explain anything as it pertains to you and your rights as the buyer and will help guide you through this process. This includes the builder’s CC&R’s and the public report. I am working exclusively on your behalf!
7. Is The Price The Builder Has Listed Negotiable?
- While the sales representative will always give the appearance that sales prices are non-negotiable, an experienced agent can use recent and historical sales data to aid in the negotiation. This data is not always available during new construction, and the builders will not provide this information when evaluating the price you are paying.
- Builders are just as affected by local market trends as any other seller. When a market softens, they are more willing to negotiate. It may or may not come in the form of price. But, other items can sometimes be negotiated such as window treatments, appliances, landscaping and/or discounts on upgrades.
8. Can I Purchase The Home For Less Money If I’m Not Represented By An Agent?
- It is a common misconception that builders save money when the buyer is not represented by an agent, and subsequently will pass that savings along to the buyer. Most builders have already worked a sales commission for buyer representation into their cost model, but if there is not an outside real estate agent being paid, the builder will just absorb the savings themselves.
- The onsite agent is not given this savings, and the buyer is NOT given a discount for this savings.
- Another common misconception is that onsite sales agents try to “discourage” buyers from using an agent – the onsite agents appreciate the relationship between buyer and their agent. I have relationships with most of the new home builders and quite a few of the custom home builders as well.
- The builder has budgeted for there to be both a commission for their agent and an agent to represent the buyer. Now if you work directly with the company agent then the Builder makes more money because they didn’t have to pay an additional Realtor fee.
9. Having Professional Representation Costs You NOTHING!
- The builder pays your agent for not only bringing you to the community, but for also being a selling advocate in order to complete the sale.
- Call or Text Byron Sibson today at 817-403-1149 to discuss FREE representation for your next new home purchase.