New New or New to You?
New construction is absolutely gorgeous! Its shiny new and made just for you. So what could be wrong with that? Well, if you are one that loves older charm, character, history etc. new construction will not bring those things. New construction tends to be cookie cutter and that can almost drain some personalities.
Im not adding this because I am a Realtor. Im adding it because I promise its necessary. The nice happy lady that greets you in the model is a agent of the builder, her job is to sell their homes while saving THEM and making THEM as much money as she can with every home sold. Is she going to point out to you PRIOR to signing a contract that while that upgrade you’re in love with looks amazing, you will not recoup the expense of it when you decide to sell. Probably not, she represents the builder. You need someone sitting beside you that represents you. Someone that knows contracts, what to look for and is familiar with new construction and the avenues worth taking that their reps will not tell you. *Note: Its important to get an agent before visiting the model. Most builders require your agent to be with you on the initial visit otherwise you forgo having representation should you choose to purchase a home from them. That alone tells you something.
Get to Know Your Builder
Its likely that this isn’t this builders first property, so that works in your favor. Online research is a no brainer, but feel free to take it further. Visit some of their previous properties, walk around, ask the residents about their experiences. No matter how great a product is, you’re sure to find some that have negative reviews, but with enough research on your part their overall reputation will become apparent.
Choose Your Lender
You have the right to shop around for your lender. The lender associated with the builder may offer an incentive of some sort should you utilize their services. That sounds great, but you’ll never know how great it is or is not unless you shop around to see what others have to offer you.
First, Last or in Between
Decisions. Decisions. Being informed helps you to make the best ones. So lets dive in. You can purchase when the builder first begins building. At this stage, the prices are generally at their lowest as the builder has yet to see how the market will respond. Getting one of the first releases will allow you to make deals that may be harder to make as the community progresses. The closer you get to purchasing towards the end of the property closing out, the higher the prices go, the harder it becomes to make deals. The last home to be sold is the model, which is also usually at a good rate. Purchasing the model comes with its share of pros. The discounted rate, landscaping is likely to be superb, an extended warranty may be offered, it has a good level of the upgrades etc. The cons? Of course you want to be sure those upgrades won’t overprice your home for the area. The carpet and home will be a bit worn given literally ALL of your neighbors and plenty of others have been through the home. You will have to wait until the property either is or is practically sold out before you can take possession. You will not get to select your preferences in finishes or fixtures. You’re likely to be at the entrance of the property, which means you’ll have a bit more traffic then say the middle of the property.
Know The Masterplan
Is the view staying or is someone going to come along in two years and build a factory to block it? Again, the builders rep will not offer that information unless its something that the state law requires the builder to disclose. For this reason, masterplans are public. Check with your local planning and development office to find out what changes are happening in that area in the forth coming years to help you make an informed decision.
Base or Upgrades
The model will be a mixture of base level and upgrades with more upgrades than not. You loved the foyer when you walked in because the crown molding was to die for – the crown molding is an upgrade though and your number just jumped up. Seeing is not believing in this case. It is imperative that you ask and know the price associated with the base home, what features come with that and what the upgrades are as well as the prices associated with them. Price the upgrades out against upgrading it yourself and see if the price is fair.
Negotiations Still Exist
Most believe that new construction prices are set in stone, they are not. However this is also why …(see number 2). Admitley no builder likes to lower the price, understandably so. It will affect their future sales. However negotiating upgrades and extras make a lot of difference. Especially if those upgrades or extras add value to the home.
Know your HOA
Don’t play any game unless you know the rules. I place emphasis on this golden rule when speaking about real estate. After signing your contract you will be given the HOA handbook. You have a window of time that will allow you out of your contract should you feel you do not want to adhere to the rules of the HOA. Deciding to break the rules or not pay fees may not land you in jail, but they will cost you. The HOA usually reserves the right to limit your use to common spaces (the pool, clubhouse etc). Its also within their right to associate fines with infractions against the rules. As a professional skim reader myself, I generally advocate for skim readers all around the world and our ability to get the gist of things without having to go word for word…this is not one of those times. I strongly suggest you read, and process word for word.
Bring Your Own?
Im sure some handy individual discovered this fact, and I thank them for it. Some, not many, but some builders will allow you to bring in of your own materials should they not offer that same item as an option. If the builder allows it at all, they generally will also give a credit as well. For example, if you prefer the $1000 counters you saw elsewhere instead of the $500 builder grade, the builder will credit the $500.
Cost Escalation Clause Included
Do not underestimate this clause. Lets say you have a set price after you’ve signed your contract, then the price of lumber goes up to some obscene amount for some crazy reason or another. If most builders have it their way, you will assume that charge and the price of your home just jumped up drastically. Its important that you and your Realtor knows if this clause is in effect before signing anything.
Inspection Still Needed
The pretty superficial will not tell you the someone forgot to do something essential during the build. The home inspector can though. Although its new, it was built by humans, we make mistakes. The extra couple of hundred that the inspector costs could save you a major headache and/or several thousands in the long run. Do not skip this step.
Know The Warranties
One of the great benefits of purchasing new is that warranties are guaranteed. With that said, don’t assume that they are all the same or that they will cover everything in the home. Ask about these warranties before signing. While they all generally cover major systems and structure, the amount of time for each can vary vastly. Be sure you are comfortable with whats being offered as well as the length of time.
The “F-ing Front Foot Bill”
I have seen a vast amount of my neighbors come through our Facebook group in anger asking “did anyone know about this (bleeping) front foot bill!” This tells me that more often than not, people are not reading this section at settlement. The front foot bill is the charge for the new sewage lines and such to be ran for the property. This could run you several hundred dollars a year for 30 years after the property has been built. Meaning that even if you sell your home after ten years, the new buyer will take on that fee as well and so on until the term of the actual bill is done.
I hope these tips are helpful to you in your search. Per usual, I’m always available for clarity, resources, or help in any area of your real estate needs. #HappyHunting