Buying New Construction? Take Time to Plan Ahead
The idea of a newly constructed home is exciting, and it is one of the few truly handmade products still available to us today. With new construction, you gain the opportunity to customize your home inside and out. Unlike buying an existing home, you select the design, the colors and overall look of your home. It can be an exhilarating experience, but if you decide on this option you should take time to familiarize yourself with important details regarding new construction.
The first rule of thumb is to always use professionals. Choose a realtor who has extensive experience with new construction, and ask for his or her involvement from the very start. Your realtor will look out for your best interests in a way that your builder will not.
Before selecting a builder, be certain to investigate their background. Make plans to visit a subdivision the builder worked in previously, and talk to a few of the homeowners there. Ask them if they were satisfied with the construction process and if the builder followed through on repairs and completion dates.
Another factor to consider is the builder’s financial strength and stability. Successful builders with solid reputations are more likely to hire the best subcontractors and suppliers. These subcontractors are largely responsible for the actual building of your home. It is crucial to find a financially successful builder who will still be in business during the warranty period of your home.
Before making an offer, you should be aware that the list price of a new home is usually non-negotiable. However, you may be able to negotiate some upgrades with your builder such as tile or carpet or even upgrades in exterior features. Some builders may offer incentives if you obtain your mortgage with the lender of their choice. Such incentives could include covering all or part of your closing costs. If a builder makes a promise such as this to you, ask them to put it in writing.
Before building your new home, always think about resale. For example, a special feature such as combining two small bedrooms into one large room may be attractive to you, but may be a negative to a future prospective buyer.
In general, you should set an expectation that your home may not be completed on the day specified in the contract. In fact, some contracts will include a range of completion dates since construction could be delayed by weather, inspection delays and/or material shortages.
Prior to signing your final contract, review in detail all possible “add-ons”. If you decide to add on extra items at a later date, this could affect the completion date and invariably cost more.
As a buyer, it is in your best interests to secure your own independent home inspector. Although this creates an additional expense, it is well worth the cost to have an inspector observe the construction process during various stages of completion. Even though builders must follow strict guidelines in home construction, an independent inspector will recognize poor quality and mistakes that could result in major repair costs down the road.
You will have a final walk through before your closing, and in most cases, a “punch list” of to-do items will be created at this time. These items will be completed after the closing, but within a specified time period agreed upon by both you and your builder.
Lastly, maintain a paper trail of all documents, change orders and lists. Should there be a dispute of any sort in the future, you will be covered.
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