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How To Buy A New Construction Home
In This Section:
You'll find everything you need to know to come out ahead when buying a new construction home, including, finding the right
builder, how to find good deals, finding the right location and avoiding scams
If you're buying a used home instead, Click Here For Tips On Buying Used
Homes.
New Construction Home
One advantage to buying new construction is that you can customize many things such as color schemes, flooring, kitchen cabinets, appliances, TV and phone
wiring, speaker wiring, etc. The builder generally will not let you put in your our TV, phone and speaker wiring, due to inspections and code regulations.
But having this done by the builder to your specifications, will saving you a lot of time and effort later.
BEWARE OF DISREPUTABLE BUILDERS!!!
Search out a reputable builder. One of the keys to purchasing a new construction home is finding a reputable builder. Ask friends, relatives or co-workers for
recommendations. Ask people already in the development about their experience with the builder. Also, check out previous construction done by this builder. Check
with the better business bureau. The builder's reputation is everything. A disreputable builder can ruin the entire new home buying experience. Just because you are
buying a high priced home does not mean that you are getting high quality construction. For example, some builders may use polybutylene pipe instead of copper for
plumbing. This type of practice does not only happen in low end houses! Builders will cut cost wherever possible. If there are already houses under
construction you should check out the quality of workmanship and materials being used in the early stages such as the foundation and plumbing.
We have found a great resource to help avoid getting scammed by a new home builder. It is a downloadable
book written by industry insiders called Home Building Pitfalls. It's not free but it contains an
incredible amount of detail about what goes on in the home building industry and how to avoid getting screwed.
Click here to learn more about the Home Building Pitfalls downloadable book.
LOCATION, LOCATION, LOCATION
Once you have found a builder that you feel comfortable with, it's time to research the neighborhood. Check out any vacant land in the surrounding area. Find out
what that land is zoned for and what plans have been submitted for development. A good source of information is the local town or city zoning board. Nice vacant
fields will not stay vacant for long. Will it become high end houses that will increase the value of your new home or will it become yet another strip mall that
will trash the value of your home. Don't believe everything that the sales droid tells you. They will most likely be long gone before your house is completed.
Before purchasing a home several years ago when I was in high school, my parents were told by the sales jerk that 1/2 of the homes in the development were being
sold to families with children living there. Well, guess what, it was more like a retirement community with 2 or 3 families other that ours. If you have or
plan to have children make sure to research the local schools. If you are buying a home in a suburban area pay attention to the proximity of major highways.
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THE GREAT FLOOD!!!!
Make sure to wait for a good rain storm before you sign any contract. You want to see how the area drains in a heavy storm. You don't want to need to build an arc
to get to work in the morning.
HouseBuyingTips.com Law of New Construction Home Buying #1
Never be fooled into thinking that you can buy a home for the "starting at" price advertised by a development. This price is just used to get you in the door. The
home that is offered for that price will be bare bones, with no options and will be compared against the better homes in the development when you sell your home.
Floor Coverings-Builder's stuff or Get your own?
This is a big question that seems to have no correct answer. The answer to this question is based on individual builders. Just because you're getting a good buy on
the home does not mean that you're getting a good buy on the floor covering. Normally the standard floor covering is garbage. Carpeting is cheap and padding is a
thin as single ply toilet paper. Tiles are generally smaller in size than optimal. Keep in mind that this may vary from builder to builder so make sure you know
exactly what you're getting. Allowances or credits for getting your own flooring will also vary from builder to builder. Generally you have 2 options with flooring.
The builder will probably offer several upgraded high quality flooring packages but you will pay more through the builder than you would pay if you bought the same
quality flooring on your own later. The other option is to let the builder put in the standard package and have it replaced after closing. One advantage to buying
an upgrade from the builder is that it is less of a hassle and less of a mess. Also, sometimes you can negotiate the price down so that it is closer to what you'd
pay on your own. The areas that must be covered with flooring to get a Certificate of Occupancy (CO) vary from location to location. Know the local laws!!!! It's a
pretty good bet that at least the bathrooms and laundry room must be covered to get the CO. If you are going to get your own flooring later, cover the mandatory
areas with the cheapest material possible like linoleum. Here is a trick I have learned over the years. Ask the builder not to glue the linoleum to the floor saving
the labor costs to have the temporary flooring ripped up. The same rules apply to other items such as appliances. Many times the refrigerator will be way to small
for the house you are buying and the dishwasher may as well be a noisemaker. Over the years we've seen appliance packages vary from very substandard to adequate.
Pay close attention to this detail. Some builders will give you a credit for appliances that you don't take so you may want to take the credit and buy what you need
later.
HouseBuyingTips.com Law of New Construction Home Buying #2
A well appointed kitchen will keep the wife happy.
WARNING
Beware of low ball Home Owners Association dues. Builders generally artificially keep the maintenance fees low while the community is being developed. For example the builder might
be spending $150 per lot and only charging $49.95 and absorbing the difference while the development is being built.
HouseBuyingTips.com Law of New Construction Home Buying #3
Your maintenance a year after the builder is gone will never be what the builder claims it will be.
Types of new construction
Spec Homes
Good deals can be had here! The clock is ticking on the builder, because they are paying for the loans they took out to build the house. The longer
the house sits vacant, the more it costs the seller in interest. Because of this, generally the further along the construction is, the better deal you
can negotiate. One negative of buying a spec home is that depending on how far along the construction is, you may be locked out of choices, colors,
options, etc.
Since, with a spec home, the construction is well under way, the time you will have to wait for the home to be ready is greatly reduced. You don't have to
wait for plans to be drawn up, permits to be issued or construction to begin.
Pre-Construction
Prices for homes are always lower at pre-construction phase of a project. The earlier in the project you buy, the lower the price will be. This is not for
everybody. Some people are able to envision the house based on the floor plans alone, others need to see a similar model, while others need to see a completed
model.
Builders Close-out
Be careful here! This can be one of the best ways to buy new construction if doneproperly. This term seems to be used to liberally and way too often by
builders. Lets take a closer look at "builder's close-out" deals. When a builder completes a development, of lets say townhouses, he may not have sold all the
units in the development. Since the development is completed and the builder is moving on to the next project, they don't want to sit on the one or two
remaining unsold units in the development. Keep in mind that the builder wants to close the sales office at the completed development and move the staff and
equipment to the next location. A successful builder will generally always have the "next" development going when the newly completed development is winding
down. This is where the good deals can be found. The last few remaining unsold units are complete and the builder is looking to move on. Not selling
the units is costing the builder time and money! If you can find a situation like this and a home that you like, it is an excellent time to make a "low ball"
offer and ask for some extras on one of these last remaining units. If things likes the appliances are not already in the unit, you may be able to get them
included or upgraded. The down side is that the unit is complete, all the color choices have generally been made, options have been chosen, and the flooring
has been put down.
I find that builders use the term "builder's close-out" way to often. This can be a very powerful marketing tool, used to lure potential home buyer
into a builder sales office. Buyers think that they are always going to get a great deal at a "close-out" sale. Be careful, a builder might only be
changing models, closing out some slow selling units (poor location or floor plan), he might be starting a new phase at the same location or just trying
to attract customers.
Taxes
When buying new construction, make sure when buying a new construction home, make sure that the builder is contractually obligated to pay his fair pro-rata
share of the taxes. This is especially important when buying a spec home because once the home is finished the taxes will accrue at "completed home" rates.
New home warranties
Implied warranties vs. extended warranties. Most states have laws which give the buyer protection against the shoddy workmanship of cheap
builders that cut corners. The implied warranty will normally cover defects in materials and workmanship. Extended warranties are purchased by the buyer
and cover the same type of defects but for longer periods of time.
Inspections
Before closing on the home you will be allowed a walk through inspection of your home where you will create a list of defects that the builder agrees to
fix after closing. Since most of us are not professional home inspectors, it may be wise to hire an inspector to participate in the walk through with
you. Online resources to help you find a qualified inspector include The American society of home inspectors (ASHI) and the
National Institute of Building inspectors (NIBI).
Negotiating the contract
Coming Soon.
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