9 Things You MUST Know Before Buying A New Construction Home!

We all enjoy the excitement that comes along with the process of shopping for a new construction home.  However, there are many things to consider before leaping into a new construction home.  We have created this report to educate our clients and friends on the process and things to watch out for along the way.

9 Things You MUST Know Before Walking Into a New Home Sales Office!

1. Who does the on-site sales agent represent? 

• If the builder is representing both you and themselves, whose best interest do you think will take first position, you or the builder’s?  The salesperson works for and represents the builder, and although the builder does want you to have a positive experience, shouldn’t you also have independent representation?
• Employ the services of a professional Buyer’s Agent to represent you. Your agent will be paid by the seller/builder, so their services are FREE to you! Your own agent will represent you, be your fiduciary and is required to disclose the positives as well as the negatives about the transaction. Builder’s agents don’t discuss drawbacks.

2. Should You Automatically Use The Builder’s Lender?

• Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it’s one-stop shopping for a builder. But a builder’s lender might not offer you the best deal. Moreover, the builder may own the lending company.
• Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it’s one-stop shopping for a builder. But a builder’s lender might not offer you the best deal. Moreover, the builder may own the lending company.
• Insist that your lender guarantee its Good Faith Estimate. If the lender balks or makes excuses, go elsewhere, because reputable lenders will honor that request, even though it’s not required by law

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3. Have You Verified Option and Upgrade Pricing

• Determine which options and upgrades you want. Bear in mind that for many builders, the profit margin is highest in upgrades. Some builders can sell a home for almost bare construction cost because they make the bulk of their profit in the upgrades. Our agents can make recommendations on what upgrades are best done directly with the builder and which are best to wait on.
• Find out whether your lender will lend on all the options / upgrades you have chosen. If your lender will not finance 100% of your selections, you will be required to pay for it in cash.

4. Is The Builder You Are Considering Reputable?

• Find out whether the builder sells to investors. Some builders require all their homes to be owner occupied. Others eagerly sell as much inventory to investors as profit margins will allow. If the market suddenly dips, investors are typically the first to bail and, besides, part of the reason you are buying in a new subdivision is to be surrounded by other buyers just like you, not tenants.
• What is the general quality of construction with the builder you are selecting?  How are they recognized in the real estate community?  This is important to understand before selecting which community to build in.

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5. ALWAYS Hire A Home Inspector!

• Always, always, always get a home inspection when you buy. And hire a licensed and accredited individual to perform the inspection. Be there for the inspection and ask questions because a new home can and often does contain defects. The HVAC system might be too small or the plumbing could be installed backwards. Construction workers make mistakes. (And let’s not even talk about the mustard-stained McDonald’s wrappers and soda cans stuffed in wall cavities.)
• If the inspector calls for further inspection by another professional contractor, find out if the inspector is telling you there could be a serious issue or if the inspector isn’t licensed to address that issue.

6. Review The Builder’s Contract In Detail

• The builders will use their own, standardized contract template, filled with pages of legal and construction language and detail.  Once you get to the contract-writing step, reading through all of this information is time consuming and you may or may not understand much of it.
• Having a licensed real estate professional by your side who can review what you’re signing and help explain anything as it pertains to you and your rights as the buyer.  This includes the builder’s CC&R’s and the public report.  We are YOUR exclusive advocate!

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7. Is The Price The Builder Has Listed Negotiable?

• While the sales representative will always give the appearance that sales prices are non-negotiable, an experienced agent can use recent and historical sales data to aid in the negotiation.  This data is not always available during new construction, and the builders will not provide this information when evaluating the price you are paying.
• Builders are just as affected by local market trends as any other seller.  When a market softens, they are more willing to negotiate.  It may or may not come in the form of price.  But, other items can sometimes be negotiated such as window treatments, appliances, landscaping and/or discounts on upgrades.

8. Can I Purchase The Home For Less Money If I’m Not Represented By An Agent?

• It is a common misconception that builders save money when the buyer is not represented by an agent, and subsequently will pass that savings along to the buyer.  Most builders have already worked a sales commission for buyer representation into their cost model, but if there is not an outside real estate agent being paid, the builder will just absorb the savings themselves.
• The onsite agent is not given this savings, and the buyer is NOT given a discount for this savings.
• Another common misconception is that onsite sales agents try to “discourage” buyers from using an agent – the onsite agents appreciate the relationship between buyer and their agent. We have relationships with ALL of the Valley new home builders and quite a few of the custom home builders as well.
• The builder has budgeted for there to be both a commission for their agent and an agent to represent the buyer. Now if you work directly with the company agent then the Builder makes more money because they didn’t have to pay an additional Realtor fee.

9. Having Professional Representation Costs You NOTHING!

• The builder pays your agent for not only bringing you to the community, but for also being a selling advocate in order to complete the sale.
• Call or Text Brandon Howe today at 602-909-6513 to discuss FREE representation for your next new home purchase.

Get Instant Access to our FREE New Build Representation Program! Register Here Today!

Do you really need a Realtor® if you plan on buying a newly constructed home? Sometimes when the real estate market has many new constructed homes, buyers often consider purchasing without consulting a Realtor® first. Nevertheless, the benefits of using an agent as a new construction buyer’s representative are many. Call or Text Brandon today at 602-909-6513 to obtain FREE representation at any Valley builder.