Opting for New Home Construction
Whether to buy an existing home or have one built is yet
another decision to make during the home-buying process. If you decide
to go with new construction, a real estate agent can be a powerful
advocate in your corner as you negotiate upgrades, a move-in date and
other terms with the home builder.
Below are some basic pointers to prepare you for the journey ahead.
Selecting a builder
Shopping for a large production or custom home builder can
be a daunting task. Start by defining what architectural styles appeal
to you and then seek out the builders in your area who offer those
styles. Due diligence is essential. Ask friends for referrals to get
firsthand accounts; verify the builder’s state license status, if
applicable; and check whether they’re certified by the National
Association of Home Builders.
The builder representative and your real estate agent
A builder representative’s ultimate goal is to sell you a
home. His or her role is to provide a wide range of information to help
you in your decision-making, from building restrictions, roads and
easements to inspections, warranties, rebates and upgrades. A real
estate agent knowledgeable in new-home construction will be able to help
you wade through all the data and point out the downsides and upsides
of each line item. Your agent also can look out for your interests in
reviewing the builder’s contract, which often contains more legal jargon
than consumer-friendly language.
It’s all about timing
Market conditions greatly dictate a builder’s incentive to
make a deal you cannot refuse. When a builder has inventory on his
hands, his carrying costs start adding up. When this happens, a builder
might be more amenable to strike a favorable deal, whether it’s throwing
in upgrades or taking a bit off the asking price. A real estate agent
can help you know when market conditions are right for these benefits.
Also, watch for builder close-out sales. Builders promote these special
events when a new subdivision is near completion but empty inventory
A word about paying up
While there are always exceptions, most builders require a
deposit when a purchase agreement is signed. They also require that the
buyer pay for any upgrades prior to closing. If you back out prior to
closing, unless the agreement states otherwise, you will lose that
money. Make sure you understand every detail in the builder’s contract
before signing it.