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7 Tips For Buying New Construction Homes
by Eric
Bramlett
New home
communities are more popular than ever! With good reason - new
home builders are using popular, open floor-plans, including
appliances, sod, and blinds, and helping make it easier than
ever to get into a new home with little or no money. New home
transactions typically seem a lot easier, as well. If a buyer
chose to, they could get through a new home transaction
without contacting anyone except the on-site sales agent!
However, this would open you up to HUGE losses. Take these
simple steps to protect yourself in a
new home transaction, and to ensure that yours is a
success.
1. Use an
Agent Who Has New Home Sales Experience
Many people
think that they can save money by not using, or don't need the
services of a Agent when buying a new
construction home. This couldn't be further from the truth!
New homebuilders typically try to monopolize a transaction -
they only give you their attractive incentive packages if you
agree, in writing, to use their lender, their title company,
and sometimes even their insurance company! An Agent will walk
you through the transaction and will make sure that you're
protected every step of the way. If you've agreed to use the
builder's lender, your Agent will make sure that you get a
fair interest rate & fair closing costs. Your Agent will
know what the industry standards are, and will make sure that
the builder doesn't try and stretch beyond these. And best of
all, an Agent with a lot of new home transactions under their
belt will have established relationships with your
homebuilder. Because of this, the homebuilder will be on their
"best behavior." The homebuilder doesn't want to run the risk
of getting a bad reputation in the Agent community, who can
potentially bring the builder lots of homebuyers in the
future.
2. Don't
Sign ANYTHING Until You've Worked Out Every Detail of the
Sale
Buying a
home can be very emotional - and it should be. You're not
simply picking out a house; you're picking out where you'll
spend the holidays next year, where your parents will come
visit you, and where you might raise your children. However,
the on-site sales agent will try and play on this emotion and
get you to "write up the contract so that no one else can get
your house." That's just fine, as long as you understand what
you're signing, and everything is okay with you. Just remember
- no matter what is said, everything will be done as it is
outlined in the contract.
3. GET A
HOME INSPECTION!!!
Most people
who buy new construction homes don't bother to get a home
inspection. Most new homes come with a one year ?bumper to bumper? warranty that includes everything, and many
homebuyers feel that they can find out if there are any
construction flaws during those 12 months. The problem with
this mindset is that many problems won't surface until well
after the 12 months. Remember, your home was built by humans,
and humans make mistakes. And, no matter how much experience
and reputation a builder brings to the table, it's still next
to impossible for that builder to double check every part of
the job their subcontractors have completed. A licensed
inspector will go through a very thorough checklist to make
sure that everything has been accounted for. At the very
least, get an inspection so that you can sleep soundly at
night, knowing that an independent third party has given your
new home their stamp of approval.
4. Don't
Agree to Use Their Lender
Production
builders (builders who can develop whole communities on their
own) are now large corporations, many of them traded publicly.
The corporations have realized that there is much more money
to be made than simply selling you your new home - they'll
also try and sell you a loan. Builders will offer HUGE
incentives to get you into your new home, sometimes up to 15%
of the value of the home. However, they will typically put one
BIG stipulation on those incentives - that you use their
lender. There are many problems that will come up when you
pigeon-hole yourself to one lender - higher rates and higher
closing costs are the two biggest. The on-site sales
associates will typically tell you that their hands are tied,
you have to use their lender to get the incentives. I can tell
you, from experience, that this is seldom the case. Remember,
the builder's job - first and foremost - is to sell homes. If
you refuse to sign on the dotted line unless this stipulation
is removed, you will be successful - most of the time. There
are rare occasions when a builder will lose sight of the fact
that they build and sell homes - and will absolutely insist
that you use their in-house lender. In these circumstances,
walk away, no house is worth taking a bad loan and paying
THOUSANDS more for that house in the long
run.
5. Research
the Builder
Most
builders are "good" builders. They take simple steps to
protect their neighborhoods. Research your builder, or ask
your Agent if your builder takes these simple steps to make
sure that your neighborhood won't instantly go down in value:
- Limit the # of investor
purchases - this makes sure that the neighborhood doesn't
turn into a "rental" neighborhood & allows the "pride of
ownership" to shine through.
- Continues to build equal
or greater value homes in the same and surrounding
neighborhoods. Builders who avoid doing this create a
"vacuum" in home prices and instantly devalue new home
purchases.
6. Choose
Your Appraiser
You're going
to pay for an appraisal one way or another! The lender will
require that you have an appraisal in order to loan you the
money for the home! Additionally, most appraisers charge about
the same money for the service - so why not choose your
appraiser? Ask around until you've been referred to a good
appraiser and request that they perform the service. Ask for a
copy of it and read it! Call your appraiser if you have any
questions. This will give you an in-depth knowledge of the
market area - and it's something you would pay for,
regardless!
7.
Research
City Plans
New
neighborhoods are typically on the outskirts of town - the
land is readily available and less expensive, which means that
you can buy a bigger house for the same amount of money. In
these outskirt communities, it's very important to know what
the city has in store in the way of roads, zoning, public
transportation, parks, and schools. These factors will dictate
whether your new neighborhood will become the next "big
thing," or the next "cheap thing." If you've decided to use a
reputable Agent, your job will be easy! Simply ask your Agent and he/she will be able to
provide you with lots of information about city plans that
have been approved, and city plans that are still being talked
about.
There are
many benefits to purchasing a new home - that's why they're so
popular! Make sure and protect yourself in any new home
transaction by using qualified professionals to protect your
interests. This will ensure that you'll not only love your new
home, but you'll feel comfortable knowing that you're a winner
in the transaction, as
well! |
