Tips for buying a newly built home
The thought of buying a newly built home is exciting for almost anyone. However, one shouldn’t overlook the important questions. Here are some tips to consider when buying a new house.
Hold out for custom features
Try to persuade the builder to change a few things before you move in, in case things aren’t exactly as you’d like, National Association of Home Builders Director of Economic Services Stephen Melman told Bankrate. With a new house, it may be easier to accomplish than with a pre-owned home, as materials are likely to still be on-site.
If changes aren’t done before closing, a new house buyer should escrow some money as an incentive, suggests former National Association of Realtors president Ron Phipps.
Builders typically offer “the kind of choices that didn’t exist 10 years ago and weren’t common five years ago,” said Melman. That flexibility works to the discriminating buyer’s advantage.
Explore your financing options
As builders often work closely with banks, new home buyers may be able to explore a variety of financing options. Get pre-qualified with your lender of choice, and don’t assume that builder-arranged financing is always the best deal. As with most anything, shopping around is advisable.
Enjoy the buyer’s market
While the recession has made the market for previously owned homes the largest buyer’s market the U.S. has ever seen, newly built home buyers are also in the driver’s seat, notes Melman.
“There is such price pressure on the builder,” he said. And that means negotiating power. “Prices haven’t been this low in years.”
The longer economic life of a new house, not to mention the relative ease with which the buyer can personalize it, are prized characteristics for many buyers, but there is always a cost associated with such wish fulfillment.
Know your warranty before you buy
Make sure your warranty specifies that if there are problems with your new house, the builder will come back to make repairs. Read the fine print to discover how long the warranty lasts (one to five years is typical), and exactly what it covers. Finally, note whether the builder or a third party backs the warranty.
In some cases, a warranty may include an arbitration clause. If you sign off on this, you waive your right to file a lawsuit in the even that something goes wrong. You’ll be at the mercy of an arbitrator that the builder has selected, which isn’t always bad, as it can speed the complaint process along at less expense. However, the potential for the buyer to be taken advantage of is higher.
If you don’t want an arbitration agreement, you have have to find another builder. Before you sign anything, however, it pays to have a lawyer review the verbiage on your behalf.
Future features, guaranteed
In the event that the builder has guaranteed that future features like a swimming pool or tennis court are on the way, get the guarantee in writing. Many municipalities require builders to post bond for unbuilt shared amenities. In order to discern whether this is the case in your new housing development, consult your local building department, a trusted agent or an attorney, advises Bankrate.