10 Insider Tips for Buying New Construction

Read this BEFORE you Visit Your First Model Home. When shopping for your home, you’ll discover that most homes on the market are resales. One out of four homebuyers purchases a new home. Both new homes and re-sales offer advantages. Before you make a decision…COMPARE THESE POINTS!

New Homes:

• Offer innovative use of space and style
• Have greater energy efficiency
• Offer a choice of options and upgrades
• Are new and modern throughout

Existing Homes:

• Are less expensive on the average
• Often are in established neighborhoods with mature landscaping
• Have already settled, eliminating possible problems that arise from this happening after the purchase of the home

As you can see, there are advantages to both. Most people consider both new and existing homes before they decide to purchase. Should you be thinking about buying a new house, here are 10 points to consider before you visit your first model home.

1. Get in touch with your agent BEFORE you visit your first model home. Sit down with your agent and do your homework. You’ll want to be prepared so that you can determine a comfortable price range for your hew home. If you own a home, you’ll first need to know the net proceeds from its sale to determine how much cash you’ll have to work with. Don’t simply estimate this – carefully calculate every possible selling cost. If you are a first-time buyer, you’ll need to first qualify your income. Determine the size of your down payment, and then work out a monthly debt load so you can determine a comfortable price range.

2. Know the Difference Between Sellers’ Agents and Buyers’ Agents. Here’s a good point to remember. The sales agent in the model home represents the builder, not you. They are known as sellers’ agents. As a buyer, you can work with a buyers’ agent at no additional cost. It is his or her business to best represent your needs by being knowledgeable about home construction, warranties, financing, and differences in pricing, quality and even lot selection so that you get the best value for your money.

3. Shop Around for a Builder that Meets Your Needs. Like all tradesmen, builders vary in their fields of expertise. For example, there are builders who specialize in craftsmanship, others who are known for their innovative use of space, and those who offer below-market financing or customer attention during construction and after move-in. Determine your own specific needs or preferences, then shop around for a builder that will best address your requirements.

4. Get the Facts About Your Builder. Before making a final decision, it is wise to check out the reputation and financial strength of the builder. Get “spec sheets” on home features covering everything from floor plans to energy efficiency, including lot availability and delivery.

5. Check Out the Neighborhood.
   • Learn as much as you can about the community
   • Discover what amenities it has to offer
   • Investigate if financial reserves have been set aside to build or replace major amenities such as schools or community roads.
   • Find out from local land –use officials what else is planned or could be constructed in the area, especially where vacant land is applicable
   • Review the rules for the homeowner’s association, or find out if one will be set up
   • Think of how you will be affected by commuting routes and times.

6. Choose Options and Upgrades. The less expensive that base price of the house, the more options and upgrades you can add without fear of overpricing it for the neighborhood. Options are items the builder installs during construction such as adding usable space like a sunroom or a powder room. These features can add the most to the resale value of your home. Upgrading means selecting quality materials above builder-standard, such as carpeting, ceramics, detailing, kitchen fixtures, and appliances. Be sure to take advantage of builder incentives that offer free upgrades or credit off the sale price. Remember, you can add a deck, finished basement, or landscaping later and sometimes for less money.

7. Realize that there May be Room for Negotiating Price, Upgrades, or Options. For example you have some scope for negotiating with the builder if she or he has a completed home but hasn’t sold it. Also, some “premium lots” are priced higher and are sometimes saved to be sold last. Keep in mind that usually all lots cost the builder the same, so be sure to inquire about lot pricing. Builders may offer discounts or special financing to help close a sale.

8. Be Sure the Contract Works in Your Favor! When spelling out the particulars of an agreement with your builder, ensure you protect yourself by having safeguards’ written into the agreement, such as the following:
   • Placing your deposit in escrow
   • Detailing your upgrades
   • Allowing you access to the construction site to check on progress
   • Giving you a 30-day-advance notice of the closing date
   • Explaining what the fine print means in the warranties of the builder and manufacturer.

9. Determine What Financing is Best for You. Some builders, especially in high-volume communities that place large numbers of loans, can offer special financing packages. However, because home loan lending is highly competitive, you have many financing choices other than those being offered by the builder. Shop around for everything from rates to lender fees. Appraisal, Inspection, Survey, attorney and closing fees can vary as well.

10. Just Because it’s New Doesn’t Mean it’s Perfect. Yes, it’s new and usually it’s built with modern materials that are durable, low maintenance, stronger, quieter and safer. But because nothing is perfect, even if it’s new, consider hiring a reputable, licensed home inspector. Then create a builder “punch list” from what you’ve learned to address any problems before closing. Consider budgeting for items to be modified or added later on. Many new homebuyers use a real estate agent to help them negotiate the best price and terms with the builder.

Buyer Advantages Your Builder May not Reveal.

Here’s a fact that you may not be aware of. Some builders have newly constructed homes available for immediate delivery. Usually these homes are ready to move into within 30 days. Even if some builders are eager to sell, they’ll probably keep that knowledge to themselves. Immediate delivery homes are often available for various reasons:

• The community where new homes are being constructed is nearly complete so the builder has the on-site contractors build “spec” homes. (Homes built on speculation for sale on the last lots.)

• The model home is for sale

• The contract on a home has fallen through.

• Builders include construction homes for immediate delivery for buyers who are relocating or who have sold their homes may be more desirable because sometimes builder offer financing incentives or free options. This may be done in place of chopping prices to appeal to buyers purchasing later in the building phase. An immediate delivery home is an advantageous way to purchase a home if you need to move quickly or need a physical space to walk through and see before you sign a contract. Be sure to inquire.

About Ashley Leigh

Ashley Leigh is one of North America’s most productive residential Realtors of all time selling over 4,500 homes and over $2 Billion in sales in his 20 year career.  Ashley’s highest level sales performance has earned him mentions in The Wall Street Journal, Fortune Magazine, and The Washington Post.  Ashley continues to work full-time along with his local sales team.