Buying a new home may sound easier; after all, you aren’t buying someone else’s problems. However, there are other factors you must consider when building a new home. Keep reading to learn the top tips you should consider before signing a contract for a new home.
You Can Negotiate When Buying a New Home
Negotiating the purchase of a new home may look a little different than negotiating the sale of an existing home. Typically, builders want a specific price for the home and they won’t go lower. They may, however, offer other incentives in order to avoid losing the sale.
If you do it right, you may be able to get the builder to cover your closing costs or give you a fat credit for options to use while in the design center. Either way, you could save thousands of dollars on the purchase of the home. While the base price remains the same, you’ll have to come up with less cash at the closing or have more upgrades in your home than you may have been able to afford on your own.
It never hurts to ask, either. The worst the builder’s representative can say is ‘no.’ Then it’s up to you – do you stay with the sale or walk away? Figure out how the price works with your initial budget. If you aren’t happy with it, there are likely other homes you can build in the area.
You Can Use a Real Estate Agent When Buying a New Home
Real estate agents aren’t just for existing homes. They can be a great resource when buying a new home, just make sure you choose an agent with experience with new home sale agents. Also, make sure the real estate agent doesn’t work with the builder in any way. You want a neutral third party that can negotiate for you and see things from your perspective.
If you do use a real estate agent, make sure you start the process off with him or her right away. Most builders have a policy that you must register the agent before you see the homes or get any information. If you wait until you’ve already been to the development, the builder can refuse to pay the agent’s commission, which could leave you without a real estate agent.
Understand the Options
Don’t assume that the model you walked through is what your completed house will look like because it probably won’t. Builders typically stack the models full of options to make the homes look more enticing. If you are unsure about what the home includes, ask to see the included options in writing.
This includes things you see, such as upgraded cabinets or upgraded trim, but also things you don’t see, like building materials. Once you know what’s included and not included, you can make a list of your wants and needs. Decide which options are non-negotiable and which you can live without.
Remember, builders typically mark upgrades up significantly, as this is where they make a lot of their profit. If there’s an option, you are on the fence about, think about whether you can add it down the road. Chances are you can get it cheaper by hiring someone on the side. Structural options may be hard to add on, but anything cosmetic or minor in nature shouldn’t be a big deal.
You May Want an Inspection
You probably think a new home is in perfect condition, right? But they have issues too. Remember, it’s humans building the home, so the process is prone to human error. Paying a few hundred dollars for the inspection would be well worth the investment.
You may not get the same ability to walk after the inspector looks at the home if there are problems as you would with an existing home, but you’ll know what problems exist, if any. This gives you room to go back to the builder and demand that they fix the issues before you close on the home.
If the issues are serious enough, your real estate attorney can get involved in the process. He or she knows your rights and the builder’s responsibilities. If there are serious issues with things like the plumbing or HVAC system, it’s well worth taking the time to sort the situation out before buying what could be a problem home.
Do Your Research on the Builder
The internet is a wealth of information for new homebuyers. Use it to your advantage before you even visit a homebuilder. See what others have to say about their reputation and building quality. Read the good and the bad and then try to talk to people in person that own a home built by the same company.
Ask specific questions about the building process, the sales process, and closing. You want to know the good, bad, and the ugly. Buying a home is a large investment, so knowing upfront what you may be dealing with is crucial. It could make or break your decision.
Use Your Own Lender
Builders have a way of enticing you to use their lender by offering incentives, but you still may be better off with your own lender. Don’t let the builder tell you that you won’t find financing elsewhere. Find this out for yourself. We recommend securing at least three quotes from different lenders. This can include the builder’s lender if there’s enough incentive to do so.
Once you have the quotes, you can then compare the offers and make a decision. Having quotes from independent lenders helps you see what you truly qualify for and to make a solid decision. Builders like you to use their lender because they make more money and are in control of the financing. If it doesn’t work to your advantage, though, don’t be afraid to bring in your own lender.
Buying a new home is exciting, but it does require you to do a lot of work. Don’t just assume everything will be perfect since it’s a new home. Do your research and take the time to do the legwork to make sure you get the best deal when buying a new home.