The 5 Must Do’s When Purchasing New Construction
#1 – Always use a Realtor
First things first, ALWAYS use a Realtor, and hopefully me! Make sure it’s someone who has experience working with New Construction but is not affiliated with the builder. It is really important to involve an agent on this type of transaction so you can have someone looking out for your best interests. The best part, the builder pays your agents commission.
#2 – Look at upgrades from a resale perspective
Your agent can help with important things like helping to pick out the best lot, and they can advise on items that will help for resale value. Just because you upgrade every single item at the design center does not mean you will get the money back in return when you go to appraise the home or resale.
#3 – Look for different routes to negotiate
Does the builder negotiate? If the home hasn’t been built yet, typically the builder will not negotiate on price. The reason builders don’t like to negotiate on sale price is that when future buyers come to the site, they will expect the same price and it brings down the value of the whole neighborhood. Builders are more likely to negotiate on the “back end” so typically you will see builders offer to pay for closing costs or free upgrades rather than lowering the price.
#4 – Get EVERYTHING in writing
Get everything in writing and don’t sign anything until everything has been negotiated, agreed upon and written into the contract. This is another reason why you need an agent to represent you in the purchase of new construction. The sales representative in the model home works for the builder, not you; they will not be looking to represent your best interests. If you’re considering purchasing a home that is not yet complete, it’s very important to get in writing how the home will be finished, what will happen if construction is not completed on time and the dates and deadlines for decisions that will occur through the process. Verbal conversations are not binding, so make sure everything is put in writing and signed by all parties. Builders use Builder Contracts in place of standard Contract To Buy and Sell. Ask your agent to get a copy of the builder’s documents to review ahead of time.
#5 – Get an inspection
Do you need to have an Inspection done on New Construction? I would advise my clients who purchase New Construction to hire a third party inspector to perform an inspection on the home. New homes have problems too. An inspector can make sure everything is safe, clean, and up to code. Even though new homes are required to pass permit inspections, hiring a qualified inspector is money well spent. In many cases, the builder will allow buyers to conduct an independent inspection and agree to repair code issues. There is also a blue tape walkthrough where the buyer can go through the home and tear off pieces of blue tape indicating to the builder that an item needs to be repaired. Such items that come up might be dings or chips in the wall or other damage you might see around the home.
Purchasing a new home is a great option but can also come with a lot of risks. Before you go see a builder, talk with me first and I would be happy to walk you through the whole process and represent your best interests in the purchase of New Construction.