Buying newly constructed real estate isn’t much different from buying an “already used” home. What variances there are, however, can make all the difference between buying a diamond or a lemon.
Here are a few tips to keep in mind when buying new construction:
Tip #1: Don’t Use The Builder’s Sales Agent – Hire Your Own
If they’re the builder’s agent, they’re being paid to represent the builder, no matter what they tell you. Your own [city] real estate agent, who is representing you, is required to tell you the negatives as well as the positives. The builder’s agent doesn’t have to tell you the drawbacks of the transaction.
Tip #2: Find Your Own Lending Agency
Again, if you go through the builder, the lending agency may offer you a deal that isn’t in your best interest. In addition, the builder may actually own the lending company, and will have full information on your personal progress.
Your real estate agent can refer you to a reputable lender, if you don’t already have one of your own.
Tip #3: Talk To A Real Estate Agent Or Lawyer
Although standard agreements are made to keep everyone out of court, they aren’t necessarily in your best interests. Ask about cancellation rights and make sure you understand both your liability and your commitments. Also, check your contract to make sure it doesn’t contain warnings about health issues.
Tip #4: Decide What Options Or Upgrades You Want
Remember that the profit margin for many builders is highest in upgrades. Find out if your lender allows the options and upgrades you’ve chosen to be added to the loan. If your lender doesn’t allow this, the cost of the upgrades will come out of your pocket in cash.
Tip #5: Research The Builder
It’s amazing how many people think a builder is good, simply because they can build a house. Unless you’re a licensed home inspector, the chance of you catching a cut corner or shoddy building practices is slim to none.
Check out the neighbors’ homes and talk to them. Are the homes a consistent size or are they shrinking in size? Do the neighbors have consistent complaints about the quality of their homes? Also, check public records for lawsuits.
Owning newly constructed real estate and knowing that you’re the first person to live in the home can be a wonderful, exciting experience. Make sure that you protect yourself so you can enjoy it!