In some areas of the country, it is difficult to find an existing home to purchase and when you can find what you are looking for, the prices are usually very high. If this is the case where you are looking to buy, you may want to consider purchasing a new construction home that offers better safety and energy efficiency as well as amenities and layouts that better suit today’s modern family. These tips can help you avoid some of the common mistakes people make when they decide to build their dream home.
Shop Around for a Lender
Shopping around for a lender is a good idea even if you decide to purchase an existing home. However, some large builders have in-house mortgage lenders or preferred mortgage companies. To be sure the rates and fees they are offering are competitive, it helps to shop around to other lenders. You can still work with the builder’s lender but having information may actually give you more negotiating power.
Pay Attention to Builder Warranties
There are two types of builder warranties – implied and express. An implied warranty covers defects in workmanship which can impact the habitability, livability, and safety of a home. These are usually worded in vague terms and have a 10-year liability cutoff for the builder. An express warranty has more specific wording and spells out the problems the builder is responsible for and how they must remedy them. It also has a spelled-out duration and methods for disputing issues. A builder may ask you to waive their rights under an implied warranty if they offer an express warranty, so be sure to read both warranties closely. Have a real estate agent or attorney not connected with the sale look them over as well for added protection. Builder warranties usually do not cover products covered by a manufacturer’s warranty, like appliances or damage caused by regular wear and tear. They also do not usually cover lack of maintenance or neglect by the homeowner or defects in items the homeowners installed. Damage by natural disasters is also not normally covered.
Only Upgrade Items that will Increase Home Value
Builders may seem to have limitless options to upgrade your new home, from granite countertops to hardwood flooring and top-of-the-line cabinetry. When you decide to upgrade an item with the builder, be sure what you choose will actually add value to your home and is not just a cosmetic bonus whose investment will be harder to recover. Granite countertops and hardwood floors are sound investments and will recover their value when you sell. Spending an additional $20,000 on special cabinetry, however, will not provide as big a return on your investment. If there are items you can upgrade yourself, it might be better to hold off and do it once you move in rather than include it in your construction costs.
Choose a Real Estate Agent with New Construction Experience
There are real estate agents who specialize in new construction and they will have more insight into areas where you can negotiate. Many people believe that you cannot negotiate with builders on the construction of a new home but square footage price, lot lines, loan fees and more can be negotiated in some instances. A real estate agent can guide you through the process. Builders sometimes have their own real estate agents, sometimes even in-house, but you can still seek the advice of an outside agent before you agree to buy.
Know What You Are Responsible For
Many new construction homes are built in developments with Homeowner’s Associations (HOA). There may be items in the new home construction contract that the builder is not responsible for, such as landscaping. If you are building where there is an HOA, you may have just 30 days to get grass planted which can add a hefty bill as soon as your home is completed. Read the contract and the HOA agreement to see what you will need to do when you move in. Get estimates before the home is completed and begin setting aside funds to get those projects done right away. Also remember that there are items inside the home that the builder will not provide, such as window coverings, towel racks, and even some light fixtures.
If you are considering a new construction home purpose, contact Southdown Homes today to see how we can help you make that dream a reality. You can give us a call at 610-873-1900 or visit us online to learn more about the Southdown Experience.