Have you considered building or buying a newly constructed home? We talk to customers who tell us that they don’t need a Realtor to help them buy new construction homes. Take a few minutes to read this article and let us explain to you why you need experienced Realtors like Pierre Khoury and Gia Albanowski to represent your best interests!
There's something inherently appealing about a brand new house - you get to pick out the countertops, drapes, and appliances, and have everything designed just the way you want it. New houses often come with more space and better appliances, require less immediate fix-up work, and are more energy-efficient than older ones - and all at a seemingly competitive price. But there's a downside, too. Often, the advantages of new houses are overshadowed by problems such as shoddy construction, tricky sales tactics, construction delays, poor service - or worse, construction stoppages if the builder / developer runs out of money. Here are some suggestions on how to avoid problems.
1. Choose the Builder, then the House
The absolute number one, most important factor in buying a new house is not what you buy (that is, the particular model), but rather who you buy it from. A responsible builder understands that he or she has a reputation to protect, construct homes that live up to the promises, and remain available should issues arise. More than a few builders, however, take your money and throw together a house that starts falling apart on day one. Then when you call for help - they stop returning phone calls.
The lesson is, don't buy a house - buy its builder. To check out a builder, contact:
Owners who live in the development you're considering, if possible. If the development is run by a homeowners’ association - talk to the association members and the board of directors. If nothing has been built yet, talk to owners in a recently completed development by the same builder.
County planning or building department staff who deal with local developers.
Real estate agents who've worked in the area for some time. MOST agents don’t deal directly with new house sales so find agents who are EXPERIENCED with new construction, like Pierre and Gia.
The state or local licensing or consumer protection agency that oversees contractors, and the local Better Business Bureau. Ask whether any complaints have been filed against the developer.
Other homeowners, via homeowner-run websites such as www.hadd.com (Homeowners Against Deficient Dwellings) andwww.hobb.org (Homeowners for Better Building).
2. Be Wary of Optional Add-Ons
Many builders advertise houses at comparatively low prices to lure you to the site. Once there, commissioned salespeople show you models loaded with expensive extras such as a spa, fireplace, granite countertops and a luxurious master bathroom. If you become seriously interested the advertised price will rise as you decide that certain extras are essential or irresistible.
Buying extras lets you semi-custom design your home. But ask yourself what you really need and how much it will cost. Upgrades often add 5% to 20% to the cost of a new home. To get the most for your money follow these steps:
Take care of essentials first. Be practical, both for your own sake and for the sake of your home's resale value. A good yard and finished square footage are hard to add later. Budget for those items first.
Ensure prices are competitive. Some developers are less ethical in pricing extras than others. Steer clear of those who deliberately use poor-quality materials in highly visible spots in their models literally forcing you to upgrade to over-priced substitutes.
Watch out for compromises on function or quality. As the market changes developers have looked for clever ways to make a house look appealing for a lower price. For example, having windows that do not open or decorative beams made of Styrofoam. Look for such compromises and do not be “wowed” by aesthetics alone. Ask questions like, "Is that real?" or "Does that work?"
Negotiate. Ask for one free extra for every two you buy. For example, if you pay top dollar for good carpets and kitchen cabinets, ask the developer to throw in a better stove at no charge. And do not be afraid to ask for the right to buy and install extras on your own instead of paying high prices for builder options.
Read the fine print. Many new home contracts contain a clause saying that the model features, such as carpets and appliances, are not necessarily the same brands you will receive. You are guaranteed only the functional equivalent of what you see, which is typically different and costs the builder far less. Make a list of the precise features you are concerned about (with brands or makes and models) and include it in your contract. If one builder will not accommodate you, shop elsewhere.
Get it in writing. When dealing with a builder’s sales representative, get all promises as to what will be done, and when, in writing. Before you sign the purchase contract, make sure it includes every one of the agreed upon changes. If you have already signed the contract when you negotiate changes, write them down in a separate document and have the developer or the sales representative sign it. Do not rely on oral commitments, which are notoriously unreliable and almost impossible to enforce.
Learn the tricks that the builder’s sales representative use: The agent representing the builder is a trained negotiator and is paid a commission to sell that home to you and is always looking out for the best interest of the builder, not you. Take some time to understand the methods that they will use to “close the sale” before you walk into the sales center.
3. Have the House Inspected During and After Construction
Hire an experienced contractor or home inspector to visit the house you are buying at various phases during construction to evaluate the quality of the work. When a house is being constructed, it is easy to see whether construction standards are high or not. For example, the wiring can be checked before it is drywalled.
Also, you, personally should visit your home site regularly during construction and take a final walk-through to catch last minute finishing defects or deficiencies.
Ask the builder to allow your inspector or contractor to give the home a once-over at least these three times during construction. Make this inspection process PART OF YOUR NEW CONSTRUCTION CONTRACT:
- when the foundation is poured,
- when the framing is completed, and
- when the home is finished.
Have the inspector examine various systems as they are completed including the walls, roof, plumbing, electrical and insulation systems.
If the home is completed when you purchase it, hire a home inspector to give it a thorough examination prior to closing. Plenty of stories exist of homeowners who lit their first fire only to discover that the chimney was sealed over, drew a bath that sent a flood of water through the ceiling to the floor below, etc. There are many things that could malfunction causing major headaches that could have been discovered and these are just the obvious problems that appear within the warranty period.
Get a New-Home Warranty
You have probably heard horror stories about new houses that begin to disintegrate soon after the buyer moves in; the roof leaks, the basement floods after the first big rain, or the doors will not close. This should not be a problem if you buy from a reputable builder. However, not all builders are reputable.
What is included in your new-home warranty? Typically, new-home warranties cover workmanship and materials for one year; plumbing, electrical, heating, and air conditioning systems for two years; and major structural defects for ten years. Know your warranty and consider buying additional protection.
4. Protect Yourself Against Delays
It is best not to close escrow on a new home until the work is completed. You do not want to leave the builder an opening to delay construction into the indefinite future.
Unfortunately, however, the standard form contract's closing date may force you to close on a home that is not finished (or even started). You may be asked to sign a very one-sided purchase contract. You will be given numerous deadlines (to make deposits, agree to design changes, get loan approval, sell your present house, and close escrow), but the developer will have great leeway -- sometimes up to a year from the target date, to deliver the house.
Do what you can to negotiate a fairer deal. Most important, you want to establish a reasonable date at which you can cancel the contract and get all of your money back if the builder does not deliver the house. Again, make sure it's in writing.
Do you need real estate experts to help you with your new home? Consider contacting Realtors Pierre Khoury and Gia Albanowski. We are YOUR real estate, new construction and relocation experts. We understand that you deserve the services of dedicated real estate professionals. We are committed to put your interests above all others in the serious business of buying, selling or building a home. Pierre and Gia are recognized as Chairman Circle Award winners by Berkshire Hathaway HomeServices Real Estate. Chairman’s Circle Gold is awarded to the top two percent of the Network’s approximately 54,100 sales professionals based on gross commission income or closed units.
For more information call the #1 Cranberry Township Agents at Berkshire Hathaway HomeServices: Pierre Khoury and Gia Albanowski 724-964-6873