Buying a new construction home is a dream come true for any buyer. To get the home you’ve wished for with as few bumps as possible, you’ll want to start the process with some homework. Unfortunately, many people enter the process unprepared for all the things that can go wrong. And often, the financial consequence is steep in the buyer’s pocket. But with the proper advice and a little research, you can avoid costly mistakes and disappointing decisions. We begin this four-part series with EIGHT crucial things to do before starting the new construction process.
1. Get Someone to Represent You. By relying on the builder’s representative for all your new construction advice, you’re missing out on a lot! The builder representative almost never has a Real Estate license, and while they may seem very helpful, first and foremost he or she is a full-time salesperson representing the builder at all times, not you. Buyers mistakenly assume that using a Realtor to represent them when buying a new construction home will increase their cost—it doesn’t. Builders include agent commission in their marketing costs whether you have an agent or not. Choose a Realtor with solid experience in working with new construction homes. Bring him or her with you on the very first visit to any new construction sales office or model home to ensure proper representation.
2. Research Builder Reputations. Ask as many people as you know about their building experiences and conduct your own online research BEFORE you get invested with a builder. Personal experience can shed a lot of light on the honesty and service a builder provides. Of course, online reviews often contain a lot of negativity, but you can get a picture of what the general trends are in consumer satisfaction.
3. Visit a Variety of Lenders for Rates. Don’t assume the builder’s lender will give you the best rate on your new construction mortgage. It can get confusing because, while you do want to explore incentives, you don’t want to choose the builder’s lender if the incentive doesn’t benefit you in the longer term. For example, if the builder’s lender offers $15,000 in incentives for choosing them, but another lender charges a quarter of a percentage point less in the interest rate for the life of the loan, the builder’s lender could cost you more. Bottom line, shop around for mortgages.
4. Don’t Confuse the Model Home for the Base Price. What you see is not what you get. Of course the builder uses the finest upgrades in the model home to entice you to buy. The problem is that instead of the base price of $390,000 being advertised, the model could cost you $490,000 with all the top tier upgrades. When you have your own Realtor, he’ll ensure you’re aware of what’s included in the base price and what will cost extra. Base prices only include builder-grade finishes, which may not be up to your standards or tastes.
5. Visit the Design Center BEFORE You Sign a Builder’s Contract. This is advice that only an experienced Realtor will give you. Normally buyers will work with a builder and sign a contract with a price based on a specific floor plan and elevation. The builder ensures buyers that changes can still be made after they visit the design center, which is true. However, a buyer who walks into a design center and gets shocked by the price of upgrades now finds that they are stuck in a contract to build and cannot afford the type of finishes they had thought were possible. Get a clear handle on the cost of upgrades before signing.
6. Get Verification on Prices of Upgrades. Don’t go by the builder’s salesperson’s rough estimation. He or she may not have an accurate figure. This is another reason to have your own Realtor, as he will help ensure you get verification of prices in writing. Because there are so many choices to make in new construction, from cabinet knobs and handles to granite slabs and crown molding, prices can easily balloon beyond estimation.
7. Choose Brick from a Built Home, Not a Design Board. It’s difficult to imagine what brick will look like on the entire home from a sample design board. If you’ve ever chosen paint for a room based only on a tiny swatch of paper, you can understand the difficulty. Since the brick determines the major look of your home’s exterior, getting it right is important. Ask the builder for addresses of built brick homes to better see what you’re choosing.
8. Plan to Hire Your Own Home Inspector. You may wonder why a brand new home needs an inspection. In simplest terms, mistakes are always made somewhere. Sometimes they are quite costly mistakes that will cause water leakage in your home a year later, or foundation cracks over time, or plumbing problems when you move in. A builder might say it’s not worth your own expense since they have ample supervisors as well as county inspectors who are already required to check their work. But there are many examples why these checkpoints aren’t sufficient. An inspection is equally important for a new construction home as for a resale home, and not just when the home is finished. You need a multi-inspection approach that includes the foundation phase, pre-drywall phase, and the finishing phase.
The three phases of construction is where we’ll devote the rest of this new construction series as each phase presents the specifics of where problems can be identified by your own inspector before it’s too late to fix them.