Nothing like buying a new construction home. However, Buyers should be aware of all the pros, cons, and pitfalls when deciding on a new construction. Below are some tips to take into consideration when buying a new construction:
1. Find a buyer’s agent who works with new construction
Hire a real estate agent that is familiar, knowledgeable, and frequently works with builders and new construction homes. Every builder deserves good and proper representation. Builders hire sales reps and realtors to represent their best interests and so should you, the Buyer. A good real estate agent that is well acquainted with working new construction may be able to negotiate favorable terms and incentives that includes but not limited to: reduced Earnest Money Deposits (EMD’s), closing costs assistance, a lower sales price, a more convenient delivery date, and e
2. Choose your mortgage lender very wisely
Financing is the centerpiece of any business transaction. And buying a new construction house is no exception. Affordability is paramount. Builder’s and Sellers care who you choose as your lenders as well, because they have a vested interest in your getting to the closing table. You want to a reliable, responsive, and respected lender that has truly vetted your finances to provide you with a strong pre approval letter to ensure the Builder and you the Buyer that you are in fact financially qualified to purchase the house and make it to settlement.
3. Research the various builders in your market
Not all builders are the same. So make sure to do your homework to see what each builder has to offer. Some builders are known to nickel and dime their buyers by wanting to charge exorbitant fees for any and all upgrades that many buyers think would be standard in a house, while other builders are known to provide high quality finishing’s/touching’s at no additional cost. So buyers beware.
Questions you may want to ask:
- What are builder’s reviews online?
- What items are considered standard and what items are considered upgrades in that particular builder’s new construction house?
- How long have they been in business and how many homes, developments, and communities have they been involved in?
- What quality of materials do they use?
- What do their finishing’s consist of?
4. Make sure to research the neighborhood and surrounding area
We have a saying in real estate, “Location, location, location.” Make sure you buy your new construction in a neighborhood that you familiar with and have some basic knowledge of. Buyer’s remorse is a real potential problem. Nothing worse than spending hundreds of thousands of dollars on a house that you are afraid, unhappy, or feel unsafe to go home to. You may want to consider doing the following activities to gain more insight into a neighborhood that you are considering moving into:
- Contact the crime statistician at your local police department to research the crime.
- Drive through the neighborhood early in the morning when kids could be going to school, drive by during the time kids are released from school, and drive by again in the evening after everyone has arrived home from work.
- Check the noise pollution of the neighborhood.
- Check out the parking situation of the neighborhood. (Nothing worse than living on a street with nowhere to park).
- Check out that neighborhood’s HOA, because some HOA’s could be a nightmare to deal with.
5. When picking your lot be very, very, choosey.
Every neighborhood or development has various types of lots to choose from. Choosing the right one, is the 1st step to preventing buyer’s remorse.
Below are some things to take into consideration when selecting a lot:
- Is it on or near a main/busy road – Houses situated on a main/busy road are viewed as less attractive due to traffic, noise, and etc. Less attractive lots tend to have a lesser resale value.
- What is the slope of the lot?- The slope of the lot could affect the drainage of the property.
- The features of the lot – Some lots will be labeled or categorized based on what kind of home you are able to build on it. For instance, a flat lot, a lookout lot, or a walkout lot.
- What is the orientation of the lot? – Does the house face in the direction of the sunrise or sunset?
- What are the features of the lot? – Does the lot allow for features such as a swimming pool, a walk-out basement, and etc.
6. Pick your floorplan carefully
This is where the process starts to get exciting! When it’s time to choose a floor plan, here are a few things to consider:
- Current needs – Do you need an office space or a massive kitchen for cooking for large groups? How many bedrooms do you need? Do you want a finished basement?
- Future needs – If you’re planning on expanding your family, how much space will you need? Do you plan on having in-laws or your parents move in at some point in the future and need to consider accessibility? Are you building a business and need an office or workshop space?
- Storage – Consider how much storage you currently have and use that as a jumping off point for how much storage space you’ll need in your new home.
- Maximize your space and flow – If you’re working with a smaller floor plan, consider an open concept to make the space feel larger. Do an imaginary walkthrough to see if the floor plan will suit your lifestyle.
Often builders will offer standard floor plans with customization options or you can work with them to design a custom plan.
7. Lookout for the fine print
Bring your reading glasses with you in the event that you plan to sign a sales contract or legal document. It would also help to have your realtor review any documents prior to your signature as well.
8. Everything in life is a negotiation
Some builders like to play the tough-guy role. Appearances aren’t always as they seem to be. We still suggest you attempt to negotiate anyways. Having a trusted, competent, and knowledgeable realtor to advocate on your behalf would be the best choice to do so.
Items builders will allow some room for negotiation include, but not limited to:
- Closing Costs Assistance
- Color choice selections
- Earnest Money Deposit (EMD)
This is especially true if you see that the market is slowing in your area or if the builder begins offering incentives to work with them. When it’s time to negotiate, Real suggests negotiating on upgrades or credits for interest rate reduction rather than the actual price of the home. Most builders will not be willing to budge on the final price of the home as this might set a precedent for future home prices in their development.
9. Select upgrades in your house that provide the best return on investment (ROI)
Not all upgrades provide the (ROI). As a prospective buyer, you should want to think of resale value. What upgrade will bring me the biggest bang for my buck when it comes time to selling your house down the road. Keep in mind that the (2) most important rooms in the house are the kitchen and the master bathroom. The backyard is also an important area of the house as well.
10. Hope for the best, but expect delays in your delivery schedule
In life, there are always speed bumps in the road. Buying a new construction home is no different. Give yourself some flexibility in the event that you delivery date is pushed back due to supply chain constraints, labor related issues, permit backlog, and etc.
11. Request or save the leftover materials to keep on hand
There are plenty of times the builder does not use all of your
12. Go into the transaction with realistic expectations
When you toured the model home, you probably fell in love with the shiny new features and impeccable decoration — maybe you even imagined yourself living in a home just like that one. But keep in mind that model homes are usually decked out with all of the upgrades and staged to perfection, and not every upgrade in the model home is going to be worth the extra money you spend on it. Your home may look and feel different, and that’s ok!
13. Elect to have a home inspection
One could never go wrong with having a home inspection, even with a new construction home. Builders are very much like human beings, they could make mistakes, which are sometimes not visible to the human eye. The home inspection may cost you several hundred dollars, but at the end of the day peace of mind is priceless. There is an old saying, “You either pay now or pay later.”
14. Make sure to keep & place all your warranty documents in a safe place.
A great thing about buying a new construction house is that you’re the very first person to every live and occupy the property; everything in your new home is brand new; and a good number of items in the house have some type of warranty. You will want to ensure that you keep all warranty documents, including, but not limited to: express warranties, implied warranties, and manufacturer’s warranties to be prepared in the event that something is defective or needs to be replaced/repaired.
15. Be ready to spend
Typically, new construction is 25% more expensive than existing homes. Therefore, if you want to be a proud owner of a new construction house, be prepared to shell out more for a new construction house than you would for a existing house.