Close your eyes for a moment. Think back to the day you bought a new car. Remember that smell and the glee you felt when driving those four wheels off the lot? There is a similar experience when buying a newly constructed home – but on a grander scale (well, many grand more than the car!).
Owning “brand new” comes with many plusses … and some precautions. These are just a few tips and considerations when thinking of buying a new-construction home (not to be confused with a one-off, custom-built home), compiled from various real estate sources. Here goes:
Financing your future – Before stepping foot onto a new construction site or sales presentation office, consider speaking with 2-3 lenders. Ask each one if they work with new-construction home purchases and how that would differ during the loan-approval process compared with the purchase of a home resale. Many builders offer their own financing through their lender(s) as an incentive to keep everything in-house (like an automaker provides financing for a car purchaser). It is typically difficult to beat a developer’s lender package of competitive interest rates, longer rate lock-in period and the wrapping in of additional items, such as closing costs, into the loan. An outside lender generally will not allow the extra costs of, say, an outdoor patio or other incentives into a loan. Do the math and weigh the cost of convenience.
Find a Realtor® – Walking into a model home can be a pleasant experience until you realize there are contracts, warranties and ownership rules (often know as CC&Rs) that should be reviewed without pressure. It’s important to have a real estate professional with you every step of the way. The sales representative showcasing a perfectly appointed home is probably a licensed real estate agent, but he/she is working for the building developer and marketing team that is selling the new development (or new condo). He/she is not really looking after your best interests. A broker can ask questions on your behalf, drilling down into more salient points and possibly uncover surprising answers.
Have a real estate attorney on stand-by – There is far more paperwork with new-construction home purchases than a traditional (resale) transaction. Most of the contracts and addenda are dense and loaded with legalese that protect the developer and their business partners. Have an attorney read the documentation before you sign. For example, not all builder warranties will cover your home for replacement/repair of items after a year. Why not? Good question, and one that your attorney may be able to reconcile – with a developer-funded extended warranty or possibly home-warranty service contract from a third party to cover unexpected defects in later years. (A Realtor® can assist in this function but cannot practice law.) BTW: There is no state law that requires builders to provide any warranty. Also, ask the attorney how he/she gets paid – a flat fee, a portion of your real estate broker’s commission or a combination.
Research the builder – Speak with your Realtor®, attorney and friends about the builder and the company’s credentials. Your home-buying team can help research the businesses and collect details from industry colleagues. Are the companies local or international? What is their track record? Did they file for bankruptcy protection during the Great Recession? The onus is on the buyer to perform his/her due diligence before signing on the dotted line.
Ask about options – Many model homes include all the bells and whistles from the builder’s menu of options. That could include the jet-spa bath, top-of-the-line appliances, motorized blinds and other smart-tech features. These homes are often available – but for an additional price and certainly not part of the base model that buyers may have their eyes set on. Understand all the options available – paint color, type of kitchen cabinets, carpet vs. wood flooring or tile – and ask about the costs for each. Ask the sales rep to see a portfolio of the builder’s past work – photos or links to similar new homes – in case there is a chance a different option can work for your home.
Make a record – No, I don’t mean make your own soundtrack at Sub Pop studios! I mean keep a record of each visit to the building site or sales gallery. Take notes and photos of the key visuals (drawings, model homes, price sheets) if not available as a digital or hard copy. Photos of each room, distinct features and the views from every window (if available) will help shape your decision on whether to buy or which home/unit would be a better match. Also, carry a tape measure or take advantage of apps on your phone to measure rooms and odd carve-outs as well as to determine which direction the sun appears. (But don’t go out and buy that new sofa for the living room until your lender says so!)
Strategize with your Realtor® – Sale prices on new-home construction are not typically negotiable. The costs to construct homes – while budgeted at the start and factored into sales prices – are a moving target over the course of a project. (As an example, lumber prices have soared since the start of the pandemic prompting some new construction home prices to jump.) Work with your Realtor® to develop a list of 2-4 items during the purchase negotiation. That could include asking for one of the above-mentioned options like a smart thermostat, or seek out extended warranty protection, free or discounted HOA dues for an initial period. Your real estate rep can act as your negotiator. Remember: The salesperson earns a commission for every transaction (if not a small salary on top) and wants to make their monthly numbers. Throwing in an item or three may help close the deal.
Inspection – Don’t rely on the builder to make things right when pointing out a defect once you’ve moved in. Once the site receives its certificate of occupancy inspection, hire your own home inspector to provide an independent assessment of the property, if possible. Present the key inspection findings to your developer/sales team to seek remediation. Follow up to see the response to your concerns during the final walk-through of the home. You should be satisfied before completing the deal (as well as after).
Nobody’s perfect – That includes the builder, plumber and electrician. There will be the occasional defect with the home after move-in. It just happens. The kitchen floor doesn’t lay right in one spot. The shower head drips. A crack has developed above a doorframe. Moisture appears between glass panes. We have seen it all (well, I guess there’s always room for something new!). Expect the imperfections and quirks with each new home and be ready to have your builder and his/her specialists address them. Most new-home teams follow up with a visit after the first 4-8 weeks and around the 11th month to ensure issues are addressed. Read your contracts to make sure you are protected and are following timelines and protocols to discuss issues.
Neighborhood watch – Don’t just focus on the home when thinking of making a big purchase. This applies for any home purchase, especially in a new development or condo: Inspect the neighborhood at different times of the day and on weekends and weekdays. Listen for traffic noise, watch for whether people are out and about walking dogs and pushing strollers. Get a feel for the area before making the final decision on purchasing the home.
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The experience of walking through a brand-new home – with the fresh smells and shiny floors – starts before that first time. There is a sense of awe when standing curbside and soaking in the view, anticipating the turn of the key to access your home.
Awe is related to reverence, respect and wonder. This awe can put home buyers a little off-balance at first – and that’s okay – as that opens many of us up to learning and welcoming a new experience such as seeing inside that front door.
A surprising result of experiencing awe is that it feels like time slows down. People record these moments like film or video capture important memories in life. It’s a marvel in our fast-past, wired world that – for one fleeting moment – we can slow down, drink in the sights, sounds and smells of something new and different.
This moment happens to all of us – at the theater, a sporting venue, a family occasion, a trip to the museum … and at this special time when you see your dream home for the first time. In that setting, it opens the spirit inside each of us in a way other, more routine, experiences do not.
Cherish that special moment … and your new home.