Top six Tips For Buying New Construction Homes
New home communities are more popular than ever! With good reason - new homebuilders are using popular, open floor plans, including appliances, sod, and blinds, and helping make it easier than ever to get into a new home with little or no money. New home transactions typically seem a lot easier, as well. If a buyer chose to, they could get through a new home transaction without contacting anyone except the on-site sales agent! However, this would open you up to HUGE losses. Take these simple steps to protect yourself in a new home transaction, and to ensure that yours is a success.
Tip #1 - An Experienced “Buying Agent Realtor” Will Save You Time, Money & Headaches.
Many people think that they can save money by not using, or do not need the services of a Buying Agent when buying a new construction home. This could not be further from the truth! New homebuilders typically try to monopolize a transaction - they only give you their attractive incentive packages if you agree, in writing, to use their lender, their title company, and sometimes even their insurance company! An experienced Agent will walk you through the transaction and will make sure that you are protected every step of the way. If you have agreed to use the builder's lender, your Buying Agent will make sure that you get a fair interest rate & fair closing costs. Your “Buying Agent” will know what the industry standards are, and will make sure that the builder does not try to stretch beyond these. BEST of all, a Buying Agent with a lot of new home transactions under their belt will have established relationships with your homebuilder. Because of this, the homebuilder will be on their "best behavior." The homebuilder does not want to run the risk of getting a bad reputation in the Agent community, who can potentially bring the builder lots of homebuyers in the future. For a list of preferred Buying Agent’s who will represent your best interest, please call (407) 355-3192.
Tip #2 - Do Not Sign ANYTHING Until You Review The Contract With Your Buying Agent Realtor
Buying a home can be very emotional - and it should be. You are not simply picking out a house; you are picking out where you will spend the holidays next year, where your parents will come visit you, and where you might raise your children. However, the on-site sales agent will try to play on this emotion and get you to "write up the contract so that no one else can get your house." That is just fine, as long as you understand what you are signing, and everything is okay with you. Just remember - no matter what is said, everything will be done as it is outlined in the contract. BE CAREFUL, an on-site sales agent is NOT a buying agent realtor.
Tip #3 - Get a Home Inspection
Most people who buy new construction homes do not bother to get a home inspection. Most new homes come with a one-year bumper to bumper warranty that includes everything, and many homebuyers feel that they can find out if there are any construction flaws during those 12-months. The problem with this mindset is that many problems will not surface until well after the 12-months. Remember your home was built by humans, and humans make mistakes. In addition, no matter how much experience and reputation a builder brings to the table, it is still next to impossible for that builder to double check every part of the job their sub-contractors have completed. A licensed inspector will go through a very thorough checklist to make sure that everything has been accounted for. At the very least, get an inspection so that you can sleep soundly at night, knowing that an independent third party has given your new home their stamp of approval. Please note your Buying Agent has access to several licensed home inspectors for you too choose from.
Tip #4 - Builder’s Preferred Lenders Can Cost You BIG Money
Production builders (builders who can develop whole communities on their own) are now large corporations, many of them traded publicly. The corporations have realized that there is much more money to be made than simply selling you your new home - they will also try to sell you a loan. Builders will offer HUGE incentives to get you into your new home, sometimes up to 15% of the value of the home. However, they will typically put one BIG stipulation on those incentives - that you use their lender. There are many problems that will come up when you pigeonhole yourself with the builder’s preferred lender - higher rates and higher closing costs are the two biggest. The on-site sales associates will typically tell you that their hands are tied, you have to use their lender to get the incentives. I can tell you from experience, that this is seldom the case. Remember, the builder's job first and foremost is to sell homes! If you refuse to sign on the dotted line unless this stipulation is removed, you will be successful - most of the time. There are rare occasions when a builder will lose sight of the fact that they build and sell homes - and will absolutely insist that you use their in-house lender. In these circumstances, walk away, no house is worth taking a bad loan that will result in an over-inflated monthly mortgage payment and THOUSANDS OF DOLLARS more for that house in the long run. Remember, there is no free lunches in life. If it’s too good to be true, it probably is.
If you want to save money, use a professional licensed mortgage broker that is NOT affiliated with the builder. Mortgage brokers will look out for your best interest and save you time, money and headaches in the long run. Furthermore, mortgage brokers have access to wholesale money and can pass the savings onto you. Plus - a professional licensed mortgage broker has more lenders and loan products to pick from that will best fit your financial needs.
Tip #5 - Research the Builder
Most builders are "good" builders. They take simple steps to protect their neighborhoods. Research your builder, or ask your Buying Agent if your builder takes these simple steps to make sure that, your neighborhood will not instantly go down in value:
- Limit the # of investor purchases - this makes sure that the neighborhood does not turn into a "rental" neighborhood & allows the "pride of ownership" to shine through.
- Continues to build equal or greater value homes in the same and surrounding neighborhoods. Builders who avoid doing this create a "vacuum" in home prices and instantly devalue new home purchases.
Tip #6 - Research City Plans
New neighborhoods are typically on the outskirts of town - the land is readily available and less expensive, which means that you can buy a bigger house for the same amount of money. In these outskirt communities, it is very important to know what the city has in store in the way of roads, zoning, public transportation, parks, and schools. These factors will dictate whether your new neighborhood will become the next "big thing," or the next "cheap thing." If you have decided to use a reputable Buying Agent, your job will be easy! Simply ask your Buying Agent and he/she will be able to provide you with lots of information about city plans that have been approved, and city plans that are still being talked about.
There are many benefits to purchasing a new home - that is why they are so popular! Make sure and protect yourself in any new home transaction by using qualified professionals to protect your interests. This will ensure that you will not only love your new home, but you will feel comfortable knowing that you are a winner in the transaction, as well!
For more information on New Construction Purchases, please feel free to call Magic Funding Group, Inc (407) 355-3192 so one we can assist you in finding the best in getting the best loan program to fit your financial needs.
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