What to Look For When Buying a New Home
A large percentage of homebuyers tell us they prefer to purchase new construction homes. Buyers like the idea of picking out the floor plan and lot that best suits their needs and love having the option to choose flooring, appliances, cabinets, colors and other finishes and upgrades that reflect their personal taste. In our current market, new homebuilders are offering incredible incentives to attract buyers to purchase their homes given the large number of homes on the market they are competing with. These incentives range from the builder paying buyer’s closing costs, builders including pools, appliances, offering low interest rate loans and paying homeowners dues for a year or more. It is a great time to purchase a new home. Here are some guidelines to follow when purchasing a new home.
Have your agent with you when you first visit the models. Most builders require this. If your agent is not with you when you initially visit the models, they may not have the ability to represent you. Remember the on-site agent is employed by the builder and their fiduciary responsibility is to the builder and not to you. Having an agent to look out for your best interest is important. In addition, on-site sales agents typically only sell one product. A professional buyer’s agent will educate you on all of the builders in the area that have products that fit your needs –not just one builder.
Investigate the builder. If there are homeowners already living in the neighborhood, ask them how their experience with the builder was. If not, ask for references in other neighborhoods the builder has built homes. Check the builder’s history, how long have they been in business and check to see if there are any complaints filed with the Registrar of Contractors, The Better Business Bureau and The Department of Real Estate.
Ask what the standard options are and what the upgraded features are. New home- builders understand better than anyone that homes are purchased on emotion. They play on this by making their models appealing by upgrading them with options and decorating and staging them to strike an emotional reaction in the buyers. These upgrades add up quickly. Make sure you are clear on what is standard and optional.
Keep resale of the home in mind. Most buyers truly believe they will live in the home for long periods of time. Statistically this is not the case. Things happen and the time a family lives in a particular home is getting shorter and shorter. Keep in mind the location of the home for resale. Does it back a busy street, is it located close to jobs, transportation, recreation and good schools? Keep in mind resale when choosing upgrades and floor plans as well. Would your choices and decorating appeal to others? If you have questions, ask your agent since they are in touch with what most buyers are looking for in a home.
Check similar homes in the area to estimate taxes. Taxes on new homes are not calculated until after the home has been completed and often times many months after the home is completed. Look at other similar new homes that have been completed to get an idea of how much they are being taxed. Call the county assessor’s office to get a worse case scenario of what the taxes could add up to.
Have a professional home inspection done. When buying a new home, many buyers think it is new and under warranty, therefore a home inspection is not necessary. It is difficult for a homebuilder to keep close tabs on homes being built. A good home inspector will visit the home at every critical point in the construction process. For instance, they will visit prior to the drywall being hung so that they can look at the framing, plumbing and electrical prior to it being covered up with drywall. Recently an agent in my office purchased a new home and the inspector found a broken rafter in the middle of the roof and discovered the island was so close to the stove that the stove door would not have room to be opened, and the kitchen cabinets were installed upside down. It was much easier to deal with these issues at the inspection time and the broken rafter likely would never have been discovered.
Make sure your earnest deposit is with an escrow account. Do not make an earnest deposit check out to the builder. Most builders will have you deposit your earnest money with a title company that will act as a neutral third party. If there is a dispute it is much easier to recover your money from a title company.
Ask what the percentage of investors versus primary homeowners is. Ask how many investors have purchased in the neighborhood. Investors are likely to rent and renters tend not to have as much pride as homeowners. Investors often flip homes and the result may be many homes for sale in the neighborhood that could cause the market values to drop. If investors are competing to sell homes, they are likely to drop prices to get their home sold fast.
It is a great time to take advantage of the inventory and incentives builders are offering. It is easy to become enamored with the appeal of a new home. Be prepared to ask the right question and do the appropriate investigations before jumping in.