Tips For Buying A Newly Built Home
There are differences when buying a newly or custom built home and an already built or pre-owned home. For example, when you buy a pre-owned home it is fairly obvious what the neighborhood looks like and how it is going to develop.
However, with a newly built home, the neighborhood may still be developing and it may be much harder to envision how the completed neighborhood will look. When considering buying a newly built house, here are some things to consider before making your purchase.
• Custom features are easier with a newly built home. If you don’t like the wallpaper in the bath or the paint in the guest room, it is fairly easy to get the builder to make these changes before you move in. You can probably even change kitchen appliances and flooring as well because today many builders provide a range of options and are much more flexible than they were ten or fifteen years ago.
It is a good idea to escrow money for these changes or upgrades, however, just in case the changes are completed before you are scheduled to move in. This can provide incentive for the builder to get the work completed by your move-in date.
• It is a buyer’s market. The pace of the economic recovery is still placing a great deal of pressure on builders, especially with new homes, so buyers are still in a very good position. Buyers can still negotiate on the price of the home, although for the same square footage a pre-owned home will be less expensive.
The benefit of a new home will be the new technology, new appliances, and new construction. The new appliances will result in energy savings as well.
• Financing Options. Buying a new home may provide additional financing options for buyers, but you should always get prequalified with your lender before you begin looking. Then you know how strong your credit is and what type of borrower you will be.
It is always good to know your options. Builders may have other financing options available as well and you may be able to use one of these to negotiate a better deal with your lender.
• New homes typically come with a warranty. A new home warranty means the builder will come back and fix problems with your home. This will not be available with a pre-owned home. When considering a new home, read through the home warranty very carefully and know exactly what the warranty covers, what repairs it offers, and how long it lasts.
New home warranties can vary widely, but typically run from one to five years and it is as important to understand what the warranty does not cover as it is to know what it does, so be sure to read the fine print.
• Does the contract include arbitration? Some new home builders include arbitration clauses which require that buyers give up their right to sue the builder, but instead must use a dispute resolution process.
• Does the contract include arbitration? Some new home builders include arbitration clauses which require that buyers give up their right to sue the builder, but instead must use a dispute resolution process. If a builder tries to include this in the contract, you have several choices: use another builder, buy a pre-owned home, or remove the arbitration clause from your contract. Before signing a contract, have your lawyer review all documents.
• Get amenities guaranteed in writing. If you are purchasing a new home based in part on the amenities promised to be part of the community, get the promised amenities and what happens if those promised amenities do not happen as promised in writing in the contract.
Additionally, most developers or builders must post bond with the municipality to guarantee any projected or planned amenities. You can also check with your local zoning department to see if this has happened.
It is also important to know who backs the warranty. It may be the builder or a third-party company and also to know what the criteria are on such items as response times, emergency contact, co-payments, etc.
