Deciding to buy a home is more than just a little bit exciting. Moreover, knowing you’ve chosen to buy new construction adds another element of enchantment to your dreams of home ownership. But there’s more to concern yourself with vs. per-existing older home or new construction. In fact, there are many things to consider before you delve into your journey that knowing can make traveling the path easier. Here’s what happens when you buy new construction.
First Thing’s First | Money Matters
Whether you’re buying traditional or new construction, you’ve still got to be honed in on financial strengths. Credit reports should be in pristine condition with high scores. Debt-to-income ratio needs to be solid, down payment savings established, closing costs gathered, and that nest-egg you’ll need for unforeseen expenses, furniture and costs of home ownership. You’re not ready to begin the journey until you are financially prepared to take the next step. Get pre-approved for your home mortgage loan before you begin to shop.
Shop lenders, and take your time during this phase. Find a lender whose terms are right for your needs, whose programs are suited to your conditions, and whose rates are reasonable. Then go through the formal process of applying for your home mortgage loan. However, understand that each builder may require the use of their lender.
Knowing Your Needs
There are a lot of reasons new construction is attractive to house-hunters. There’s something whimsical about shiny and new. Never lived in, clean energy, and the promise of new beginnings weave their magic to create a charm like none other. But let’s drill down to the specifics of your needs.
Many new construction communities cater to the modern lifestyle. Homes have large, open floor plans with diverse uses of space. Is it the floor plan and modern design of new that holds the intrigue for you?
Communities of today are far different than those mature neighborhoods with tree-lined winding roads. Instead, new construction trades in the maturity for luxurious elements such as clubhouse, fitness center, community pool, parks and trails or other amenities. Is it the lifestyle that you find attractive?
The location has as much to do with your decision as anything else. Are you specific down to what schools you’d like to be near, or how the commute to work may be?
Finally, there are differences in builders. Some builders have stellar reputations with top-notch productivity with reliable materials, but that’s not always the case. In the gold rushes of real estate trends, builders can get in a hurry and start slapping together some pretty shoddy work. Are you shopping new specifically by builder because of reputation or design style?
Maye your reasons are a combination of some or all of these needs. But know them. Write them down. Prepare to discuss these thoughts at length with your buyer’s agent before you begin touring properties.
Choosing the Right Real Estate Agent
Even though you’re buying new construction, you still need the representation a buyer’s real estate agent. There are numerous benefits to working with an agent, among the best of which is that you don’t pay for them. Buyer’s agents receive compensation directly from the listing agents. However, in new construction, there are some restrictions about how the real estate agent works and gets paid for selling a home in their community. Your first order of business, then, is to seek out an agent with experience in new construction.
Remember that the agent on duty showing the homes in the community may greet you with open arms and be willing to assist you all the way, but that is the listing agent whose priority is the builder. Do not contact the listing agents directly. Only visit new construction homes with your agent present.
Once you know an agent is experienced in selling new homes, drill it down further by selecting from those agents the ones who are most familiar with the areas in which you’d like to live.
Pick agents that are familiar with the builders you’ve considered.
And make sure your agent’s personality is one you like and enjoy being around.
Once you’ve secured your funds and teamed up with the ideal buyer’s agent, you and your agent can begin researching builders.
Read reviews to discover what others are saying. As with any business, builders will have good and bad reviews but look for the trends and common threads to get an idea of what to expect.
Go to the courthouse to see if a lien has been filed against the builder, and then to the construction site. Talk with some of the subcontractors to determine if they’re being paid.
Check the Better Business Bureau for complaints filed against the builder.
Ask real estate agents is the builder is reputable.
Visit other homes and communities from the same builder. If you get a chance to introduce yourself to the current owners, ask how satisfied they are with the craftsmanship and how the home has stood up to the elements and the test of time.
Shopping Communities, Villages, and Neighborhoods
The community you buy into is as significant as the house. You’re making a long-term investment in the area. It should be in a neighborhood that suits you.
Many of the yards in new-construction homes are small and have little or no landscaping. Check out lot sizes in your comparisons.
Find out if the community is nearing the end of construction, or if it’s still at the beginning with lots of construction under way and in the future.
Look at the location and the specific subdivisions. Ask about Homeowners Associations, schools, work commute, stores, medical and emergency resources, and other community features.
Homeowners Associations are different from one another. They have different policies, bylaws, structures, and other elements you should fully explore before moving into an HOA governed community. Although there are benefits to having a committee overseeing the preservation and protection of your neighborhood’s integrity and resale value, there’s a downside to having to pay HOA fees and be subject to the rules, regulations, fees, and consequences of HOA membership.
Investigate what building plans might impact your community or your views. It would be awful to settle into a home for its remarkable mountain views only to have a tall commercial bank building go up in the neighborhood that blocks the view of the valley and reduces home values.
If the houses you’re looking at are being constructed in less developed, more rural areas, you may need to find out what utilities service the area. Just because a home comes pre-wired for the Internet does not mean there’s an Internet service provider in your area.
Problems to Consider
Before you dig too deep into your future, you’ve got to come up with some “what if” back up plans. What happens if you have to move within the first few years of buying? This is information you should know going in, just in case.
Some builders have it in their contracts that homeowners will not list their homes for sale within a certain number of years of purchase. This is similar to a non-compete agreement. In other cases, there are no requirements from the developers, but the resale value on these homes is severely impaired while construction is still underway.
If you’re one of the first new homeowners in the infant community, your home may be stuck in the eye of a construction zone for years to come without gaining value. If you choose to sell within a set number of years, you could lose money. Before you agree to buy, find out how long they intend to build and whether or not there are restrictions on when you can sell.
Inclusions and Upgrades
One of the undeniable perks of purchasing a new construction home is your ability to select many of the finishes and select between standard or upgraded features.
When you’re touring model homes, you’ll notice a combination of standard items and upgraded features. Get used to asking, “Is that standard, or is that an upgrade?
When you hear the word, “upgrade,” you should also see dollar signs in your eyes. On the one hand, it’s convenient to say, “Yeah, throw that in there!” But it’s another thing entirely to pay serious markup prices to have the builder do now what you could do later for cheaper. In other words, you can start basic and upgrade items one at a time. Maybe it’s okay to start out with the standard refrigerator and upgrade to a state-of-the-art refrigerator a little later on down the road.
If you’re going to select upgrades, do so wisely and purposefully. Having the right floors from the beginning may make swapping out appliances easier later. Or, if you are serious in whipping up the kitchen yum, you may find it worth it to upgrade just the kitchen appliances.
Negotiating with Builders
Don’t expect to talk your builder down in price the way you could with an individual seller. Builders are known for their inflexibility with pricing. They don’t budge. They will, however, sometimes take off a bite of the closing costs or throw in a few upgrades to offset negotiations without coming off of the price tag. This negotiating power is also particularly effective when the builder wants to close out a community quickly with a “flash sale” and move on to their next project.
Completion Dates & Contracts
Your home is being built from scratch. Many things can delay building plans. How do you know your new house will be ready when you are?
The idea is to get everything in writing from the beginning. From the sales price to the upgrades and negotiated features, the inventory of appliances, and every other documentable item in your transaction – get it all in writing. You should have a timeline of completion and be able to follow that timeline to make sure progress in on track.
Yes, the home may be brand new, in an upscale community, constructed by builders with an excellent reputation, but imperfections happen, especially in high-volume new construction. An independent inspector will look the property over to make sure it’s free of faulty systems like plumbing or electrical. You may pay a pretty out-of-pocket penny to have the home inspected, but it’s well worth it for peace of mind, especially since you know you won’t be paying for home maintenance or repairs for quite some time. The builder will usually be happy to fix any problems before you move in.
Warranties and Guarantees
There may be all sorts of warranties and guarantees wrapped up in your house from a home warranty to warranties on individual building materials such as windows, and appliances such as the stove or dishwasher.
Ask ahead of time if the home comes with a home warranty and which items are covered.
On the down side, new construction communities can have small yards, young trees and shrubs incapable of creating shade, and a lack of community spirit that builds only between time and neighbors. However, there are a ton of yummy perks to new construction, too. New construction offers more spacious and open floorplans with modern design, customizable upgrades, and the exciting aspect of all new.
Get your finances in order first and get pre-approved for your home mortgage loan. Then select a buyer’s agent to represent you in your search for the perfect home. Research communities as well as builders to determine not only what amenities might be available to you, but also what additional construction may lower the quality of your living experience or home values. And verify what utilities and services will be available to you near the home you buy.
Remember that even builders with excellent reputations in highly-regarded areas still make mistakes. Inspect the home carefully or high an independent inspector to verify the condition of the home.
You have the luxury of being positioned as a founding member of a brand new community. There’s some nostalgic wonder created when households grow alongside their surroundings, where children grow up next to fledglings that become trees. The first generation to make a reputation in a neighborhood.
Call The Wright Choice Team today at 804-307-2589 to tour available homes for sale in the Chesterfield County area.