Buying a brand new a shiny, un-lived in home has a certain amount of appeal. There is no previous homeowner who has affected the home or who has emotional ties to the home that will factor into the negotiation process.
In many ways, buying new construction is an entirely different animal than buying an existing home. While you still need to determine your budget, decide which home features are must-have and secure financing; the process of buying new construction involves a number of different steps.
- Always have Independent Representation
- Learn about the Development(s)
- Research the Builder(s)
- Be cautious with Upgrades and Extras
- Hire an Independent Home Inspector
- Shop for Lenders
REPRESENTATION... Always have independent agent representation when considering new construction. The builder will have sales agents of their own, but they are paid to represent the builder's interests, not yours. Many will use pressure tactics to encourage you to sign the contract.
A buyer's agent will act as your fiduciary and provide unbiased information on the pros and cons of any potential transaction. If you find developments that you are interested in learning more about, channel everything through your own independent representation. Protecting your own welfare is paramount.
DEVELOPMENT(S)... Buying a home in a planned development necessitates careful research of the development and neighborhood itself - more effort than you might otherwise put into learning about an existing neighborhood surrounding a resale.
- Drive around the neighborhood to get the lay of the land. Are street grids easy to learn, or confusing. What community amenities are in the development, and how conveniently are they located in relation to available homes?
- Are homes built right on top of each other, or does each lot have breathing space between houses? Are houses laid out such that similar models are not side-by-side, or does each street have an overly "cookie-cutter" feel to it?
- Visit open houses for any home models that fit your budget, size requirements and general home needs. You may need to allot several days to this task to avoid rushing through each open house. Bring a camera to document details of each model - this way you don't have to rely on either your memory or marketing materials provided by the development.
- Inquire with the city or county planner's office to learn about what is in store for the area around the development(s) you are interested in. Is that bucolic country neighborhood destined to besiegement from an array of shopping complexes and office parks? Is a seemingly too-distant neighborhood due to be linked by future mass-transit into core areas?
Research the bylaws and rules of the homeowners association, if one exits. Some subdivisions have HOA's with strict rules and regulations restricting things such as exterior paint colors, outdoor sheds, landscaping and vegetable gardens. Violating these guidelines can result in expensive penalties, while living by them may be too stifling for some.
BUILDER(S)... Accurately and fairly reviewing a builder's history is a crucial step if you're considering the purchase of a newly built home. Don't rely on information provided by representatives of the builder or subdivision, as it will be their goal to represent the builder in the best possible light.
Go to the courthouse to see if any liens or lawsuits have been filed against the builder, and verify how they were resolved. Check with the Better Business Bureau for any serious complaints against the builder registered by past homeowners or subcontractors. If at all possible, contact homeowners currently living in homes previously constructed by the same builder to see how they feel about the quality of craftsmanship after having actually lived in the home. Experienced real estate agents should also have a good understanding of which builders have a good reputation locally, and which do not.
UPGRADES *Cautious*... Upgrades to the home itself are features (such as hardwood flooring or high end appliances) that you pay extra for to improve the home based on your tastes. Builders can make a lot of money on upgrades, because they get the parts and labor at favorable rates and generally tack on a large markup.
Make sure you know the base feature list of the model you are purchasing by heart. When the builder offers upgrades, make sure you understand exactly what is being offered by asking questions and taking notes.
Do your own research to compare the cost of the feature plus installation as offered by the builder with what it would cost to have the work done independently after move in. If the builder's version is far and away more expensive, bidding the work out to independent contractors after you move in is probably the smart move. If the costs are similar, however, it may be less stress to have the work completed by the builder in advance.
HOME INSPECTOR of your own... Many people who purchase new construction fall into the trap of thinking that because the home is newly built, the important step of getting a detailed home inspection is unnecessary. Simply put, new construction does not guarantee sound construction, and skipping a professional inspection can leave you open to future problems that might crop op as a result of building flaws or cut corners. Even homes built by the most scrupulous contractors can have defects that are not obvious to the untrained eye.
Many builders will proved an all-inclusive home warranty as a part of the purchase agreement. This should not dissuade you from getting an impartial inspection: most warranties have a limited lifespan, and many original issues with home construction may not become apparent until many years later
LENDER - SHOP AROUND... Builders almost always have a preferred lender (sometimes even an in-house mortgage company), and will typically try to steer you to using this lender to secure the mortgage for your new home. Some builders will even offer deals on the purchase price of the home or free upgraded - contingent upon you using their lender.
Using the builder's lender, especially without first shopping around for mortgages and other sources, is highly problematic. A mortgage provider who has a working relationship with a builder or development is out to make sure they can get you into a loan for the property. What they aren't necessarily doing is making sure you get the best deal. Always shop around for the best possible rate, lowest closing cost and fewest hassles.
Information from Dan Vick of RE/MAX kc, 816-453-7400
One thing you can get for sure is that planning is mandatory as well as taking into account the three main axis of every project, namely: Time, Cost, Risks, this way you can either buy a new house or get an used one even thou it requires upgrades, you may have already included it in the plan!
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