Many home buyers are choosing to buy new construction homes for reasons that there is a lot of flexibility to put personal signature on these homes, they are more energy efficient, and they require less maintenance compared to existing homes. While these are really good advantages, buying a new construction home is not without some pitfalls.
If you are thinking of buying a new construction home, here are some pitfalls to watch out when buying a new construction home:
Failing to Know the Builder’s Reputation
When you buy a new construction, the reality is you cannot see everything what the builder has done. To know if the builder is good you have to look at the builder’s previous works. Digging into the details of a home builder’s previous works can give you an idea of what to expect from them. Try talking to owners who have purchased to that builder or find reviews, that way you will have an inkling of the quality of their work.
Failing to Shop for a Mortgage
The builder may offer you incentives when you use their preferred lender and it may look attractive but it’s still best to shop around for the best mortgage rates. After all, the interest rate charge on the loan ultimately determines the cost of your mortgage and how much your monthly payments will be. Think about the bigger picture and the long term benefit if you’ll go with the builder’s lender.
It is important to keep a good communication with the builder throughout the entire construction process. Poor communication may lead to costly mistakes. Everything about the homes construction should be discussed in detail, even construction delays which sometimes happen. Making periodical calls to the builder is recommended to make sure that both you and the builder are on the same page.
Not Visiting the Site during Construction
It is best to make regular visits on the house during the building process to make sure that everything is going according to plan. The last thing you want is to be surprised of unexpected changes on your home without your consent or found out too late about error in construction.
Assuming that the purchase price and terms are non-negotiable
Like resale homes, prices and terms of a new construction home are also negotiable. You can negotiate the purchase price, closing costs as well as upgrades. Even though most builders are less receptive to negotiating the price of the home, you can still get a great deal on your new home by negotiating the incentives and upgrades.
Not Doing an Inspection
Just because the home is new, there’s not going to be anything wrong with it. It is recommended to do inspection before the drywall is installed and then a final inspection. Most of the time there aren’t major problems but when there are problems there are problems. This is one of your largest purchases so you want to make sure that there’s nothing wrong with the house. The money that’s going to cost your inspection is absolutely money well spent because you’re just ensuring that you are purchasing a home that is truly move in ready.
Not Working with a Real Estate Agent
Do not assume that the agent sitting on site in that community is there working for you. That agent or agents on site work for the builder and their job is to represent the builder’s best interests not yours. When you have your own agent, he or she is going to negotiate for you the best possible price and terms. Having your own agent will also prevent you from making the two pitfalls which are assuming the price are non-negotiable and not doing an inspection. It’s not going cost you any additional money that builder is already built into the cost of the home so there’s really no reason to not use an agent when buying a new construction home.
Forgetting About the Punch List before Closing
The ‘punch list’ is the list of problems that have to be completed at the end of the project. A reliable builder should provide you a punch list. Never close on a new-construction house without ensuring that all of the punch-list items have been completed. Watching contractors finishing work or touch ups while you are trying to enjoy your new home is the last thing you would want.