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Purchasing a new-construction home is quite different from buying a resale home. Here are some things you should know when purchasing a new home.

1. Hire Your Own Agent (It’s FREE)

It is important with a new-home purchase that a buyer hire a real estate agent to represent them in the process. The agent should have experience with newly constructed homes. Builder contracts and the building process is different from what most real estate agents deal with on a daily basis, so having new construction experience is important.

As friendly and cordial as new-home sales staff might be, the fact is they have a fiduciary duty to their builder client. What that means is they ultimately represent the seller and no one is looking out for your best interest as the buyer. You will not have their ear during the process to answer questions or ease your fears. Builder contracts are written heavily in favor of the builder and you need someone who is not essentially an employee of the builder to explain the ins and out of the contract and procedures.

Remember, it cost you nothing out of pocket to secure a buyer agent to represent you. Although a buyer’s agent has a fiduciary duty to you the buyer, they are paid by the seller. Thus, the buyer secures representation FREE.

Ideally, your agent will accompany you on your first visit to the new home site. However, if your just out driving around and happen to stop into the new home site. Notify the onsite salesperson that you have an agent and preferably leave your agents card. If they have you fill out any type of contact card be sure to indicate your agent’s information. Otherwise, you will be stuck in a dual agency situation with the builder’s on-site salesperson.

2. Builder sales prices

Builders usually don’t reduce their prices. If they do, it sets a precedence for future home sales. Builders are more likely to pay for closing costs or offer design center incentives than to drop their prices.

Builders are not like regular sellers. They are not emotionally attached to the property. They make decisions based on what is best for their bottom line. Look for builder inventory homes that have been on the market for 45 days or more. These are the homes in which a builder might be offering great incentives.

Some new-home buyers think that if they do not use an agent for their purchase, the builder will reduce the price of the home by the amount of the commission. This cannot be further from the truth. Builders instead add the commissions paid to a buyer’s agent into the marketing budgets of the homes. If a buyer goes to a new-home builder without a real estate agent, either the builder’s agent or the builder will pocket that money.

3. WYSIWYG

This is not a typo? But rather, an acronym for “what you see is what you get.” Or, in this case, what you see is not what you might get. A builder model home might not be a good representation of what comes standard with the home.

Often the model home is a high-end version of the standard home. It is the builder’s showcase home and a way for the builder to show off many of the stellar upgrades it can offer. The builder hopes a buyer will like these upgrades and ultimately add them to the purchase of the home. In general, these upgrades have good profit margins for the builder.

When touring the model home, find out exactly what options are standard, what options are available, and, of course, what any additional options will cost.

Each builder will have their own set of standard items that come with a house. A standard item for one builder might be an upgrade for another.

4. Research the builder

Not all builders are created equal. Do your research, and get to know the builders, their reputation and what they offer. To get an understanding of the builder and what they offer, visit other communities the builder has built in, try to speak with past buyers and look for online reviews.

5. The builder’s lender may not be your best choice

Builder’s love it when a buyer uses their preferred lender. In most cases, they will even offer some enticing incentives to ensure a buyer chooses the preferred lender. Even so, a buyer should not just automatically use this lender. They should shop around and find the best loan for them, not for the builder.


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