Looking at new model homes can be fun and exciting. There is so much possibility; unlike purchasing a home that someone has already lived in, you get to buy a fresh new home that can be customized for you. There are some differences between buying from a homeowner and a builder that are important to note.
When buying an existing home from a homeowner, you might be able to negotiate on price. However, a builder’s top priority is to build homes that sell for a set price and move on to the next project. For them to finance the development, they have to sell for a specific amount, so it is unlikely that you’ll get them to lower the sales price. They’ll often tell you that if you use their Lender, you can get some fabulous upgrades. It’s not always in your best interest to do that. I have put together a list of tips to help get the best deal you when buying a home in a new development.
- Hire an agent at the beginning and bring your agent with you when you visit the new development. Do NOT register in the office without your agent present!
- Don’t think you have to use the builder’s Lender.
- Check the builder’s reputation
- Find out plans for the community
- Negotiate for upgrades
- Verify options and upgrades
- Hire a home inspector
- Know the home warranty. Consider having a third-party home warranty in addition to the builder’s warranty.
Check out the neighborhood and research what the plans are. What are your priorities? You need to decide if the community is a good fit for you.
The most crucial part of buying a home is finding the right team to work with, and that is your Realtor and Lender.
Shop for your money – Team up with a lender
You will want a Realtor when buying new construction.
You’ll want a Realtor who knows how to negotiate with a builder. Someone you feel comfortable with who isn’t afraid to tell you the truth whether it’s good or bad. The Realtor who isn’t afraid to tell you what you don’t want to hear is golden. Keep that Realtor around. They are the ones who won’t get intimidated easily and will fight to get you the most out of the home buying process.
You may think that by cutting out the Realtor the builder might give you a better price, but that is unlikely. Builders rarely budge on price.
You want a Realtor who knows how to secure you the best deal possible. You might not get a lower price, but your Realtor can negotiate with the builder to get you upgrades that are worth thousands of dollars. Working with a builder without a Realtor could cost you thousands of dollars because the Realtor knows how to negotiate and without someone working for you, the builder isn’t going to offer those things if they don’t have to.
Your Realtor will get everything in writing and secure a completion date. You wouldn’t go to court without a lawyer, and buying new construction is no different.
You might think that buying a new construction home means you won’t need a home inspection, right? Well, that’s not true. Sometimes a home inspector will find things that the builder forgot to do. There could even be something that could be a potential problem down the road.
The builder may offer a home warranty, and you’ll want to know the specifics of what is covered and find out about securing a home warranty from a third party to be on the safe side. It may include more things than the builder if offering.
Your Realtor will guide you, protect you, and make sure that all parties are following through and completing all of the items agreed to in the contract within the time frames specified. And of course, your Realtor will do a final inspection of the property with you right before closing to make sure you received everything negotiated.
I asked Josh Tapp, from Sierra Pacific Mortgage, to weigh in on why you need your Lender when buying new construction and here’s what he had to say:
It is very easy for a new buyer to get caught up in the excitement of working with the Lender affiliated to a new builder. The builder can offer a slew of options like cash back at closing, better landscaping, maybe even upgraded appliances or new carpet if you work with their Lender.
It is important to step back and examine who benefits from all of this, and if their Lender will actually be acting on your behalf or
the builder. If the builder and Lender are financially tied together then they essentially are the same entity. They both profit from this so adding concession may sound nice, but no one is looking out for the buyers best interest.
The buyer may not be aware of any fees associated with those “concessions” or if they are aware of those fees are equal to the cost if the buyer were to make those improvements on their own.
It’s essential to do your research before going and seeing the builder’s Lender. Take time to find out how much new carpet installation costs, how much those new appliances will be etc. Shop around for your Lender to make sure you are getting the best deal. Another critical key is to include your Real Estate Agent in all of these negotiations with new builders so that you have someone who can fight for you. The last thing you want to feel is pressured into signing on the dotted line before you’ve had a moment to think which happens all too often in these scenarios.
I hope you found this helpful. If you or someone you know could use my services please get in touch. @sellwithchrysti