6 Things To Consider When Buying New Home Construction From Builders

Here are 6 Things To Consider When Buying New Home Construction From Builders.

New home buyers don’t want a used house when only new home construction will do. They don’t want to inherit somebody else’s worn carpeting, personal taste in kitchen appliances, or look at some kid’s initials scrawled into once-wet cement. The home must be brand-spankin’ new, fresh, and clean without so much as a fingerprint on the walls.

If this describes you, and you have always fantasized about buying a brand new home of your dreams, here are a few tips that can help you protect yourself to make the process a pleasant experience.

Many builders will not allow you to hire your agent if you wander into the new home sales office without representation. If you visit a builder’s home construction site without an agent, you might be hosed, because later the builder could refuse to pay your agent.

Let your agent introduce you to the builder, and you’re covered.

• The builder’s sales agents are paid to represent the builder, regardless of what they may tell you. Many will use high-pressure tactics to persuade you to sign the contract. Due to the high volume nature of brand new home sales, lots of builder’s agents are paid less than a traditional commission; some earn a salary plus incentives, so turnover is important to their livelihood.

• Hire a buyer’s agent to represent you. Most of the time, your agent will be paid by the builder, but sometimes the responsibility for the agent’s fee is open for discussion. Builders generally advertise how much they will pay a buyer’s agent. Rarely do they refuse, unless inventory is low and demand high.

Even if you have to directly pay your agent, you can probably add that fee to the sales price, and it would be worth it because a good negotiating buyer’s agent can save you thousands more than the commission.

• Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it’s one-stop shopping for a builder. But a builder’s lender might not offer you the best deal. Moreover, the builder may own the lending company. Ask if there is an incentive to use the builder’s lender. Sometimes you will get a break.

• Consider alternate sources to find a lender. Your own bank or credit union might offer you very attractive rates and terms, based on your banking history with that institution. Your agent may refer you to his or her private list of wholesale lenders.

• Before you sign a purchase contract, you might want to talk to a real estate lawyer. Standard purchase agreements are designed to keep everybody out of court, but they don’t necessarily contain language that protects the buyer. The laws in your state may require the involvement of a real estate lawyer.
• Ask questions about the removal of contingencies and your cancellation rights. Make sure you understand your liability and commitments.
• Find out if the materials used by the builder contain chemicals that are hazardous to your health. If your contract contains a warning about health issues, it’s probably because this is a valid concern and other buyers have gone to court over it.

• Determine which options and upgrades you want. Bear in mind that for many builders, the profit margin is highest in upgrades. Some builders can sell a home for almost bare construction costs because they make the bulk of their profit in the upgrades.
• Find out whether your lender will lend on all the options/upgrades you have chosen. If your lender will not finance 100% of your selections, you will be required to pay for it in cash.
• Ask about cancellations and whether you will be held liable for items the builder cannot return to a vendor.

• If a buyer has a bad experience with a builder, the word spreads rapidly throughout a community. But you won’t know if a bad rep is an isolated experience or if the builder repeatedly brings bad publicity to itself without checking and verifying the public records for lawsuits.
• Talk to the neighbors and scrutinize the construction quality of surrounding homes. Is the builder consistently building identical or larger homes in the area or is construction lagging and homes shrinking in size?
• Find out whether the builder sells to investors. Some builders require all their homes to be owner-occupied. Others eagerly sell as much inventory to investors as profit margins will allow.

If the market suddenly dips, investors are typically the first to bail, and, besides, part of the reason you are buying in a new subdivision is to be surrounded by other buyers just like you, not tenants.

• Always, always, always get a home inspection when you buy. And hire an accredited individual to perform the inspection, not your dad or your buddy contractor. Get a real inspector. Be there for the inspection and ask questions, because a new home can 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.

VAAL Real Estate was Founded with the aim of reducing the hassle of finding and buying homes. VAAL Real Estate has been successful in developing a brand whose main aim is to change the market by understanding and satisfying the needs of potential and future homeowners.