New construction homes seem like a no-brainer if they're available and you can afford them, right?
While you might think there wouldn't be as much to do or to consider when buying a brand new home compared to a previously-owned one, there's still things you need to look out for to make sure you're making the best investment.
Here are the top four things to remember when buying a new construction:
#1. You aren’t buying the model home
Wherever you go see a new construction property, one of the first things you’ll do is walk through a model home. These model homes are usually gorgeous and outfitted with the best finishes in order to catch buyers' eyes. Unfortunately, though, if you choose to buy, you can’t expect your home to look the same -- at least not if you plan on paying the base sale price.
New construction homes work differently than previously-owned ones. Namely, what you see is not what you get. Instead, for the base sale price, you’ll get a builder-grade home, meaning that your home will be the same in terms of layout.
"Builder grade" tends to be a rosier way to talk about materials and finishes of a lesser quality. When drawing up the plans for your home and finalizing the details, you’ll be given the option to include certain upgrades or add-ons -- but, they’ll come at an additional cost.
Essentially, this means that whenever you look at a new construction option, much like when buying a car, you should be prepared for the price to creep up, if you plan on buying anything beyond the standard base model.
You won’t necessarily need to select every upgrade (these homes are made to your specifications, after all). However, it’s smart to leave some wiggle room in your budget, so that you can select the add-ons that matter most to you.
2. The agent on-site works for the builder
New construction properties can seem extra appealing because they feel like a one-stop-shop. Often, in addition to offering you a home that’s built to your exact specifications, these companies have their own agents on staff who are willing to draw up your contracts for you. Sometimes they’ll have an in-house lender, as well.
While it may seem convenient to simply utilize these services and cut out the middleman, it’s not wise to do so.
Simply put, these individuals work for the builder. Their goal is to protect the builder’s best interest, meaning that, if you use them, you’ll be on your own if anything goes wrong. Not only that, but the contracts you’ll sign with them will more than likely include language that absolves the builder of responsibility in the event of a problem.
At the end of the day, this is still a negotiation. You still need someone in your corner who will advocate for your best interest in the transaction. Your best bet is to find a lender you trust and to draw up the contract with a buying agent that has your best interests in mind. That way, you know you have someone in your corner.
3. You need to ask questions
Since you won’t actually be able to see what you’re buying, when you purchase a new construction property, you have to be willing to ask the tough questions.
Questions about the builder’s past work, financing, and scheduling plans are all fair game. They’re what will give you a sense of what to expect during this process and what you can do if something goes awry.
To give you a sense of where to start, we’ve listed a few common questions below.
Feel free to take these and make them your own or to expand upon them as needed:
- What are the builder’s other projects, so that you can drive past them and take a look?
- How long has this project been on the market?
- What percentage of the units have sold so far?
- Who can you go to if you have questions during the build?
- Which features are included and which are upgrades?
- What is the builder’s proposed schedule?
- What happens if there’s a delay?
- How often will you be able to tour the home during construction?
- What are your timeline and responsibilities?
Don’t be afraid to push for answers or to do some research on your own time. Go home, look up the builder, and read reviews before you sign on the dotted line. At the end of the day, the goal is for you to feel confident in what you’re buying, even if you can’t see the end product.
4. You’ll still want a home inspection
In a perfect world, we’d love to be able to assume that all of the work done in your new home has been done correctly and is of great quality.
Unfortunately, though, that isn’t always the case. As you get closer to closing day, you should protect yourself and your asset by having a home inspection done on the property.
Just like with a previously-owned home, the home inspector is there to verify that the home is in safe and livable condition.
If any of the work done is not up to par, the inspector will include it in his report and suggest a remedy. You’ll then have the opportunity to bring your concerns to the builder and negotiate a fix.
While this may seem like overkill, it’s for your protection. If there are any problems with the home, they should be spotted and solved before the home is handed over to you at closing. Hiring a home inspector is just another way to advocate for yourself and your new home.