Looking for tips to buy a new construction home? You’ve come to the right place. I’ll share the top 10 things you need to consider when going through the new construction home buying process. Let’s jump right in.
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Tips for Buying a New Construction Home
- Hire your own agent – you know I’m a huge believer that buyers should have their own agent. The agent sitting inside of the sales center works for the builder, not for you. You need an agent that’s dedicated to looking out for your best interest. And can negotiate on your behalf. When a buyer’s agent knows the market, they can validate whether or not the builder’s pricing and incentives are comparable in the market. Your agent should also be able to help you keep on track with your original desires of purchasing a home.
- Compare Lenders – a lot of builders will offer incentives if you use their lender. Incentives can include zero closing costs to free appliances. However, it pays to shop around. You might find that you get a lower rate with an outside lender. Ask your real estate agent if they have a lender they recommend for your particular situation and also check with your bank. Sometimes having an established relationship with a bank or credit union has its own perks.
- Hire an Inspector – I can see why people think you don’t need to hire an inspector when purchasing a new home. Because it’s new, right? What could go wrong? Well, a lot apparently. I’ll spare you the horror stories, but just know that your inspector can check for radon, like plumbing leaks, gas leaks, or even give you life expectancy for builder-grade materials. This way you’ll know what you’ll need to be prepared to replace in a few years. It’s so much easier to negotiate repairs before you’ve purchased the home than it is after closing. And let’s just say that your inspector doesn’t find anything wrong with them home. Great – you’ve got total peace of mind for just a few hundred dollars.
- Confirm standard finishes – it’s important to understand what’s included in your home purchase. Confirm if what you saw at the model home will cost more when you get to the design center. Ask for a detailed list of available upgrades and their costs. This will help you keep track of how much you’re spending so you can stay on (or under) budget. Also confirm what construction items are standard. And give your budget a break. Some upgrades are better left until after you move into the home.
- Create a budget with margin – so let’s just cut to the chase. The price you see for purchasing a home is what I call “the entry fee”. It’s like going to the movies and thinking your not going to buy any popcorn. Or going on vacation and thinking your not going to buy any souvenirs. You’d just be lying to yourself. When you purchase a home, there will be plenty of opportunities for you to spend more than you budgeted for. So, add some wiggle room in your budget.
- Research the builder – I’m sure you’ve heard rumors about certain builders, because they all have reputations. Some builders are known for quality and high-level finishes that come at a premium. Other builders are known to work exclusively with lower cost products and helping first time home buyers get their first house. But I would also recommend asking your agent, using Google and even asking people who’ve purchased from the builder and getting their opinion. Some builders talk a good game and have great marketing and incentives but are a nightmare to work with. You’d rather know up front what you’re getting yourself into.
- Confirm warranty coverage – I used to work with a well-respected regionally known builder. He was known to only build quality homes with an amazing warranty, and people were willing to pay a premium for it. Unfortunately, rumor was so strong, that some people didn’t bother to read the contract and thought that the builder would replace anything in the home for as long as they owned it. Not quite! Don’t just take the builder’s agent at their word – read the contract. After all is said and done and you officially own the home, what’s written in the warranty is what holds. Take a careful look at the structural, plumbing and electrical portions of the warranty contract.
- Visit the construction site often – create your own punch list. Going through the building process when buying a new home is a different experience for most people. I happen to enjoy it! When we purchased our current home, we lived and worked within minutes. So, I told our builder up front that I’d be at the site every day. And I was. He was a builder that enjoyed an involved buyer, as this gave him the opportunity to explain to me what had happened that day and what he had planned for the upcoming days. A few times he had questions, I was able to be there and clarify. And when the wrong lights were shipped and installed, I was able to quickly let them know. What you don’t want to have happen is get to your final walk through and realize that your brick and grout colors are different from what you picked out in the design center. Yes, it’s actually happened before.
- Floor plan trumps design – it’s so easy to fall in love with the professionally styled model home that you don’t even realize that a particular floorplan doesn’t even work for you. Builders pay interior design firms a lot of money to stage a home so that it’s so visually appealing that it sells itself. You however, need to focus on the actual floorplan and its functionality for how you want to live. Getting sucked into the gorgeous design will lead you straight down the pathway of picking a home you’ll soon regret.
- Read the contract – you’d be surprised by how many people don’t do this until it’s too late. You should definitely read the contract and ask for clarification from your agent, lender and builder whenever you have questions or concerns. A key question to ask when buying a new home construction is “what happens if the home isn’t completed on time?”. If this were to happen, you don’t want this to throw your plans off track. Understanding this will help you plan your move, schedule movers, set the move out of your current residence, and request any time you may need off work. Another important question is “what happens to your earnest money if you get denied for the loan?”. You don’t want to assume that you’ll get your money back when the contract clearly states that you won’t.
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Tips for Buying a New Construction Home
We just covered tips to buying a new construction home. Thinking through these top 10 things will help make your home buying process a lot smoother. The next best thing to help you is to download the free Down Payment Savings Tracker today.