When it comes to buying new construction homes, there’s a few things that differ than purchasing a resale – an existing build and previously owned home. As the wife of a high-end custom home builder, I’m incredibly familiar of the ins and outs of purchasing a new construction home, and the things that buyers need to be aware of when considering this type of purchase. These six tips will help give you a better understanding of the different forms, processes, and procedures you’ll encounter when going through with a new build purchase.
Builder Incentives and Seller Concessions, What are They?
Builder incentives
Are typically upgrades or additions to the new build that allow the builder to offer something extra in exchange for a contract stipulation like using a builder’s preferred lending company, paying the list price, making a considerable earnest money deposit, or closing within a certain time period. Depending on the stage of development the home is currently in, builders will offer upgrades like higher-end appliances, top-of-the-line flooring, added amenities, etc.
Seller concessions
on the other hand are a monetary amount for something the buyer has already invested in. For example, the builder could offer pre-paid property taxes, covering homeowner association dues for a year, and a percentage of closing costs and mortgage discount points. I always encourage my buyers to evaluate the money saved by builder incentives and seller concessions in comparison to upgrades and additions.
The Estimated Date of Completion is Just That, An Estimate.
Most new construction homes are sold prior to completion. When moving forward with a purchase, the builders will typically give an estimated date of completion. The contract should outline next steps if that date is to be delayed and what expectations will be set if that does occur. When working with buyers on new construction contracts, I prepare them to expect about a month after the estimated completion date. It’s important to keep in mind that this date is an estimate and you’ll want to plan some wiggle room to ensure things are in order.
Choose an Agent Who’s is Familiar with New Construction
A new construction contract has some key differences than a regular resale contract, so it’s important to work with an agent who is familiar with the mixture of forms and addendums. I always recommend that buyers begin their new construction search with an agent they’ve worked with before. Starting the search with your preferred agent means they’re familiar with your goals and understand your wants and needs. I’ve regularly worked on new construction purchases and understand the right negotiation tactics to use when discussing terms and incentives.
Research the Builder
This might seem like a no-brainer but it is something that is often overlooked. When starting your research, ask yourself these key questions:
- Is the builder reputable?
- Do the buyers have good reviews about the project/development?
- Are the homes built with quality construction?
While a new development may seem well designed, there are new homes out there that have a number of architectural problems that don’t exactly appear upon moving in. Do your research and ask as many questions as you can! It’s better to be over-informed in the search process than to move forward with a purchase and later realize there are some serious design issues with your home.
Whether you’re just beginning your search for a brand, new home or contemplating what type of home you want to invest in, I’d be more than happy to help. My top priority for my clients is to make well-informed decisions and have all options presented to them, let’s make your real estate goals work for you!
