Shop Around for the Best Rate
Many builders will offer an incentive if you use their lender. They will tell you that they will cover a certain amount of closing costs if you use their lender. What do you do? You go with the builder’s lender, but wait, there’s more. Most of the time the interest rate is higher, so, is it worth it? Shop around and compare rates. You could come out better NOT using the builder’s lender and paying your own closing costs. You should run the numbers. Having a knowledgeable Realtor that represents you can save you BIG!
A Home Inspection is a MUST!
No home is perfect including new construction homes. You have the right to conduct your own independent home inspection. The builder may not be happy that you are doing your own inspection, oh well! The contractor or builder may have overlooked, missed, forgotten or installed something wrong. New homes are not immune to imperfections and faults. You should hire a professional home inspector who has experience with new homes. A home inspector can insure that everything is up to code and correct. Caveat, home inspectors are human, they can overlook things as well!
Custom Upgrades in New Construction Homes
Custom upgrades can be costly. Be careful not to assume anything when it comes to upgrades. READ the contract before you sign and make sure you and the builder are in agreement with all upgrades. They may forget to tell you it’s an upgrade but will have no problem adding it to the bill. It’s crucial that you pay attention to details when buying a new construction home. Make sure that you understand all features that are standard in the sales price. When you start adding upgrades the sales price will rise. This is imperative before finalizing a contract. Protect yourself and hire a real estate agent to represent you!
New Construction Home Warranty
Most new construction homes come with a builder warranty. While this may offer some peace of mind, you may be surprised what it doesn’t cover. The builder will cover defects in the home for the first year. After the first year the home warranty company assumes responsibility for any issues. When discussing warranties, you’ll hear the term implied and express warranties. Implied warranties will cover defects in workmanship that impact the home’s habitability and safety. These last about 10 years but some builders may offer an express warranty. This will be more specific on what’s covered and the cutoff times for varying parts of a new home. The builder's contract may want a buyer to waive their rights under an implied warranty if an express warranty is available. It’s important to make sure you understand the difference in the warranties. If you are unsure, don’t hesitate to get the advice from a real estate attorney. It might be a little bit more of an upfront cost, but peace of mind is priceless.
Will Builders Negotiate? YES!
It’s important to have your own agent representing you when buying new construction homes. The on-site agent will usually be nice to you. Just REMEMBER, they represent the builder, not you! You are entitled and should hire your own real estate agent to represent you. The builder pays your agent's commission. So, why would you not hire your own Realtor? Hiring a real estate agent means you have someone negotiating on your behalf, not for the builder. Some people think if they negotiate without a Realtor the builder will drop the price, not so. Commissions are already built into the price of the home. If the builder drops the price that can hurt the value of the other homes in the community. Many times you can negotiate price, upgrades and other items. If you don’t ask, you’ll never know. When the community is newer you are less likely to get the builder to bend. The best time to secure a great deal is when the builder is trying to close out the community.