What To Look Out For When Buying A New Home

Most new home builders work in the same fashion and have the same steps from initial contract through closing. By knowing the steps and properly preparing for your purchase, you stand a good chance of getting a great home built. They sell you a “lot”, and you pick the floor plan and the options that will be built upon it. For locking in the price and the home, you sign a builder contract that will be very sided to the builder’s interests. What most people don’t know is that – although very rare – certain terms of the contract can be negotiated check this out. Did the homebuilder guarantee a certain date of completion? Ask that it be written in. Frequently, the builders’ agent sees that you are in need of a home by a certain date, and will guarantee that the builder will make that date to “close” the sale.

Then some “setback” forces the builder to have delays, and the home does not even come close to the original date. Of course, by this time you are stuck. If you walk away from the home, you lose your deposit(s). This is a trick that I have seen many times, especially to those who are in a true need of having a home completed on a fast schedule. If the builder’s representative guarantees a date, then have it in writing that it will be done by that date. If the home is not finished by that date, then you can cancel and receive 100% earnest money back, or the builder will pay some set amount of money per day that the home is not complete. I have seen anything from $90-$180 per day if the home is not completed by the original date promised.

As the home is being built, there are many other things I try to do to look out for my clients’ best interests. Here are a few that will certainly help you. Stay on top of what the current base prices for the home are and current incentives are being offered. Many times, people buy their home and they completely forget to check what the current market is doing. This is a huge mistake and one that will certainly cost you a lot of money. Pay attention to the base prices, incentives, and lot premiums being charged. If you check into them and they are much lower then you paid due to the builder having sluggish sales or increased competition, fight them! Ask for a reduction on your price as well, or ask to receive the same incentive being offered. Most times the builder will say, “I am sorry, the price is locked in and we cannot/will not renegotiate the price.” In my opinion, that’s ridiculous, and most of the time I can get the builder to match the current price or incentive. Now here’s where you need to be careful. The builder is in no way obligated to lower your price or give you the same incentive others are getting. In addition, they are literally throwing profits right out the window and they will fight you to not offer the better price. In most situations in Arizona, if a public report was issued and you signed off on it, the builder can take your earnest money if you decide to cancel the contract over the discrepancy. So be careful in your negotiation tactics. Don’t get too worked up and end up cancelling your contract then and there.

It’s a very delicate thing to work the builder down in price. As always, before you even start looking to buy a new built home, you should have a competent and knowledgeable real estate agent who either specializes in new construction or does a large amount of business in it every year and understands it well. Working with builders – especially the large ones who run billion dollar businesses – is honestly not an easy thing to do for most agents who don’t have extensive experience with it. It is far more difficult for you on your own without the help of anyone looking after your interests. Just to hammer the point home: MAKE SURE YOUR INTERESTS ARE REPRESENTED prior to buying any new home from any builder no matter what. Believe me, the builders know how easy it is to deal with the public. The new home business is so complex and there are so many facets to it, in my opinion, very, very few buyers can represent their own interests properly on their own without a knowledgeable and aggressive agent by their side. There’s just so much you DON’T know and the builder’s love that. But that’s not all there is to look out for.

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Region: Gold Coast Queensland Australia

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