Buying a new construction home is a little bit different from buying an existing home. It’s true that you don't have to deal with the emotional attachment a seller has to the home, which often influences negotiations, but that doesn't mean it will all be smooth sailing. Before you rush off to start touring model homes, take a moment to get your ducks in a row and position yourself for success with these tips.
New Construction Buying Tips
Buying a home is the biggest financial investment you'll likely ever make. The last thing you want to do is rush into it and jeopardize your long-term satisfaction with the home. The tips below will help you prepare mentally and financially for becoming a homeowner and can help protect you and your investment for the long-term.
According to Re/Max Advantage Plus Realtor Jason Walgrave, "The builder's agent will always have the builder's best interest in mind." Meaning that trying to get the highest price for the home, not the best price for the buyer. Having your own agent protects your interests and makes the entire process less stressful on you.
Buyer's agents can help with negotiations, finding a lender, home inspections, and generally help you get the best home you can afford with the least amount of hassle. Real estate agents do work with buyers who are only interested in new construction. Just be sure to bring your agent with you the very first time you visit a development, otherwise the builder could refuse to pay them their commission. Sellers pay commissions, which is why builders like to use their own agents.
Kerron Stokes, a Real Estate Agent with the Resource Group at RE/MAX Leaders in Centennial, Colorado agrees that when lenders have to compete for business, buyers generally benefit: "Knowledge is power, but if you don't have anything to compare your experience to then you don't know if you're getting the best service".
Ask for a Good Faith Estimate from each lender. This document breaks the loan down for you and shows you the annual percentage rate, or APR. You can use this information to compare your loan options to one another. It will tell you exactly what your costs are, including closing fees.
"It's absolutely critical for new homeowners to know what they can afford based on their income, debt and credit score," says Rosy Messina, Vice President of Sales and Marketing for ICI Homes in Daytona Beach, Florida.
The danger in browsing without getting pre-approved is that you could fall in love with a house and then realize it's out of your price range. By this time you've become emotionally attached to the home and might be much more willing to go along with the builder's financing promises, which almost won't be in your best interests. Many homebuyers have found themselves stuck with mortgages they can't afford and going bankrupt or losing the home. It's much better to start out knowing your price range and sticking to it.
"I think the important message is that buyers should never be afraid to ask. The answer may not always be yes, but there's no shame in asking," explains Brian Hoffman, Vice Chair and CFO of Red Seal Homes in Northbrook, Ill.
"Newer homes can have just as many problems as older homes, and it's always better to know what you don't know, before the last piece of paper is signed. In the case of a newly built home, a good home inspector can help identify problems before a builder's warranty expires," says Angie Hicks, Founder of AngiesList.com.
Diane Saatchi, a Senior Vice President at Real Estate Firm The Corcoran Group's East Hampton, N.Y. office advises maintaining a good rapport with the builder, even after punch list items are fixed and the sale has closed, "because there is no predicting what problems will suddenly surface years after the home was bought".
Ready? Go Fall In “Luv” With Your New Home
Now that you know how to best protect yourself as you become a new construction homeowner, it's time for the fun part – finding that perfect house! Get started today by visiting HomLuv and start dreaming of the possibilities!