The lack of existing inventory for sale here in the Colorado real estate market has forced many home buyers to look at new construction. When you buy a newly constructed home instead of an existing (resale) home, there different things to think about.
To ensure a hassle-free process, here are 6 tips to keep in mind if you are considering new construction:
1. Hire a REALTOR.
First and foremost, hire a REALTOR, just like you would when buying a resale home! Many buyers don't realize that you CAN and SHOULD have your own Buyer's Agent representing you when you buy new construction. People walk into those beautiful model homes and ooh and ahh over the gorgeous upgrades, and before you know it, you're under contract on a new home! With no one looking out for you! Keep in mind, the builder's sales rep is working for the builder. NOT YOU. They aren't looking out for your best interests and they won't disclose things to you like plans for a huge oil & gas fracking site next to the new elementary school.
It is entirely your right to have your own Buyer's Agent representing you. Your agent will be able to recommend the best upgrades that will give you the best resale value down the road. They will also be there to hold the builder accountable. Your agent will be your advocate. And your agent will be able to negotiate with the builder on price, or even get you some upgrades or closing costs (aka "incentives") thrown in. It doesn't cost you anything to have a Buyer's Agent working on your behalf, AND you won't be getting a discount from the builder if you don't have an agent.
Note About Contingencies: IF you have a contingency (you have a house to SELL before you can buy), DO NOT use their REALTOR! Many builders now have a list of Realtors they'll give to buyers who will list your home for free and then also be your Buyer's Agent.
"What's wrong with having a Realtor listing your house for free" you say? Think about it. They aren't getting paid anything on the sale of your home and may not give you the best service, and may not make the best recommendations. They will often recommend listing your home at a much lower price, to get it sold more quickly. They may not market the property as well, such as not hiring a stager or professional photographer. Keep in mind that you get what you pay for. In the end, you may not make as much money on your home as you should.
2. Hire an Inspector.
Your Buyer's Agent will likely recommend hiring your own home inspector. Despite the fact that builders must comply with town and city regulations, a home inspector will have your best interests in mind. When buying new construction, you will have between 1-3 inspections, depending on your preference (the foundation inspection, the pre-drywall inspection, and a final inspection).
These inspections are important because the inspector will often notice something that the builder missed. If possible, you and your agent should attend the inspections so that you can ask questions about your new home and make sure the builder fixes any problems found by the inspector.
3. Maintain good communication with your builder.
Starting with the pre-construction meeting (where you will go over all the details of your home with your project manager), establish a line of communication. For example, will the builder email you every Friday with progress updates? If you are an out-of-state buyer, will you receive weekly pictures of the progress via email? Can you call the builder and if so, how often? How often can you visit the site?
4. Look for builder’s incentives.
If you have a Buyer's Agent, they can negotiate the best incentives from the builder. The good thing about buying a new home is that you can upgrade the cabinets, flooring, add a laundry tub, install AC, or add a covered deck. However, there is always a price for such additions, and they add up quickly!
Some builders offer incentives that can help reduce the amount you spend on your home. Your Buyer's Agent will do their homework and see what sort of incentives the builders in your area are offering and might even be able to get more for you.
Depending on the builder, they may tie these incentives to their lender. In other words, they'll make you agree to use their in-house lender in order to get the $10K in upgrades. This may or may not be worth it. Your agent will help you understand if using their lender is worth the extra upgrades or not. OR they may even be able to negotiate the upgrades without you having to use their lender.
5. Schedule extra time into the process.
There are many things that can impact the progress on your home. One of these things is the weather, especially if you are building in the fall and winter. Rain or snow can delay the pouring of a foundation as well as other necessary steps at the beginning of construction, while snow can freeze pipes and slow your timeline.
Most builders already have a one-to-two-week buffer added into their timelines, but if you are also in the process of selling your current home, you must keep that in mind! Nobody wants to be between homes for a couple of weeks.
6. Visit the site often.
As I mentioned earlier, be sure to schedule time with your project manager and agent on a regular basis to see the progress on your home. It’s easy for someone who is not there all the time to notice little details that the builder may have forgotten or overlooked. Additionally, don’t forget to take pictures! You might need them later to see exactly where that pipe is or where those electrical connections are once they’re covered up with drywall!
Bottom Line
Watching your home come to life is a wonderful experience that can sometimes come with hassles. To avoid some of these headaches, keep these tips in mind AND hire a REALTOR!
If you are ready to put your current home up for sale and find out what new construction is available in your area, call me! I can help you with the sale of your current home and the search for your new one.
Sally Grenier
Broker Owner
Metro Brokers / Grenier Real Estate
303.475.4508 CELL
sally@sallygrenier.com
www.sallygrenier.com