The biggest investment many of us will make is buying a house, and
mistakes can be costly. To help weed through the home-buying jungle,
we’ve gathered the knowledge and strategies every home buyer should know
before beginning the hunt.
1. First, visit with your real estate agent.
Know how much house you can afford. If you currently own a home, you
need to know the net proceeds from its sale to calculate how much cash
you’ll have available. Your real estate agent can analyze this to narrow
down what that net proceed figure is likely to be. If you are a
first-time buyer, you should get PRE-APPROVED for a mortgage loan. This
will define just how much of a home you can afford. Your lender will
then provide a “Pre-Approval” letter which can be presented with any
offers made. This will always improve your bargaining position with the
seller.
2. Put experience on your side.
When considering the purchase of New Construction remember that the
sales agent in a model home represents the builder, not you. Unless you
have a professional real estate agent working on your side, you are not
being represented. Your real estate agent can help you to understand
new home construction, warranties, financing, and differences in price,
quality, and lot selection to help you obtain the best value.
3. Not all builders are created equal.
Some builders are known for their craftsmanship, while others are
known for innovative use of space, below-market financing, or
exceptional customer service during construction and after move-in. Your
real estate agent can help you find the best home for your needs.
4. Get the whole story.
Investigate the reputation and financial strength of the builder. Be
sure to obtain “spec sheets” that cover the home features, which can
cover everything from floor plans to energy efficient ratings, and from
immediate-delivery inventory to lot availability.
5. Negotiate with the builder.
Many buyers don’t realize that there may be room for negotiating in
the price, upgrades, or options. You often have the most possible room
for negotiation on the completed but unsold home. Builders may offer
discounts or special financing to help close a sale.
6. Make sure the contract works for you.
Be certain that your agreement with the builder includes some
safeguards for you. These should include putting your deposit in escrow,
itemizing your upgrades by description and cost, access to the site to
check on construction progress, a weekly scheduled appointment or
conference call with the builder, and a 30-day advance notice of the
closing date. In many states, new home construction contracts are NOT
regulated by your state Real Estate Commission. The contract is
typically written to favor the builder. Have your realtor review these
closely.
7. Financing can make or break you.
Builders may offer special financing packages. It is customary for
the builder to tie upgrade incentives to an in-house mortgage company,
so the builder may not offer those incentives unless the buyer is
willing to use the in-house mortgage company. But using the builder’s
financing is not the only option in the highly competitive world of
mortgage lending. You should shop everything, including interest rates,
points, and lender fees.
8. New doesn’t mean perfect.
New homebuilders typically use modern materials that are durable, low
maintenance, stronger, quieter, safer, and even wired for the next
century. But new doesn’t mean perfect. Your contract should provide for
the option of hiring a home inspector. You and your real estate
professional should prepare a list of items for the inspector to pay
particular attention. It is appropriate for you be present during the
inspection. It can be quite educational. Use what you learn from the
inspection to create a builder “punch list” to fix major problems and
complete touch-ups before closing.
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