Wouldn’t it be great if someone had a magical cheat sheet that told you exactly what you need to know when you’re buying new construction? Your wish is our command, that cheat sheet now exists! The real estate process is no joke. There’s lots of jargon you have to know and a lot of steps involved. It’s easy to get lost, frustrated, upset, and all of the above. We know that you don’t have 30 minutes to spare looking up “what the heck does this mean” every time you come across something you don’t know. In this blog, we’ve summarized the top 6 things we think you should know when you’re buying new construction.
1. Research builders and ask a lot of questions
You’re making a big purchase so you want to make sure you understand things you’re confused about and you research the builders you’re interested in. You want to have some background knowledge of your builders – are they quick to help you solve problems; do they have a bad reputation, if so, why? Don’t be afraid to ask your future neighbors or do a little digging online. It is also completely reasonable to ask your builder rep a bunch of questions – what’s the warranty, who should be your point of contact, which features are included, when can you have inspections?
2. Model homes are meant to wow you
First impressions matter and that model home you walk through is probably going to look way more luxurious than what your new home is going to look like. A builder’s model home is going to have all the best upgrades and professional staging to grab your attention. It’s supposed to wow you and make you go “I want a home just like this.” But take a step back and remember that you’re buying your own home, not the model home. Make notes about details that you like and at the end of the walkthrough, talk to the builder and figure out whether or not certain upgrades are included and whether or not you think they’re worth it. Small things like certain hardware on cabinets can be upgraded yourself later on and will be much cheaper.
3. What are closing costs?
As we’ve discussed in our previous blog, there are many “hidden” costs to owning a home that may not be top of mind when you have bigger things to worry about (the big mortgage). At closing, you will be expected to pay a little more than just your down payment. Closings costs is an umbrella term for everything you could be expected to pay when you close. These can include mortgage origination fees, escrow or settlement fees, prorated property taxes, government recording fees, and broker commissions just to name a few.
Some of these costs are flat fees, and you’ll know what they are up-front when you apply for your mortgage. Your lender will provide you with this information. Other costs can vary depending on when you close.
When you’re buying a new build, there may be some additional fees that usually would be covered by the seller if you were buying an existing home, such as title insurance and transfer fees. However, builders will sometimes cover these costs along with your realtor’s commission fees.
4. Do you need inspections?
Yes! People make mistakes, including the builders and construction workers, so you want to have your own private or independent inspections routinely to make sure things are going according to plan. Ideally, you want to have your new construction home inspected twice. First, just before the drywall is hung so your professional inspector can examine the framing and electrical wiring, essentially the bones of your home. The second time you want to make sure you get an inspection is right before you move in, just to make sure things are in order and work properly.
5. New construction homes are negotiable
Just like when you’re buying an existing home, you can negotiate with the builders on your new construction. However, you will most likely be unable to negotiate on the actual purchase price, but instead, you can ask for certain upgrades or other incentives like closing costs and extended warranties. Selling homes at a lower purchase price may affect the selling prices for their future builds.
6. Work with a realtor who knows new construction
A lot of people aren’t comfortable with negotiating the price or asking for certain upgrades when they’re buying their home. That’s ok, you don’t have to be comfortable, because that’s our job. A realtor who specializes in new construction (us!) is going to be able to help you manage and traverse your homebuying process and help you negotiate the best deals so you can get into a home you love.
The bottom line
Buying a home is not an easy process. There are a lot of moving parts. And, when you’re buying a new construction it adds a whole lot of new layers to an already complicated and frustrating process.
Whether you’re buying a new home or an existing home, you will have to do your due diligence and make sure that you’re getting what you’re looking for and that you understand what you’re getting. It can be a strenuous and time-consuming process to research builders, read the fine lines, figure out answers to all your questions. But that’s where we can come in to do all of those things for you plus more.
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