Ann Arbor Realtor

Homebuyer’s Guide to New Homes

10 tips to getting a good deal on a new home

One out of every four homebuyers purchases a new home instead of an existing one.  Which one is the better choice?  That is obviously up to you and this article will explore some tips and things you need to know before you go to look at the model home in a new home community.

There are advantages to both new homes and existing.  The latter are generally less expensive, closer to town and are in more established neighborhoods.  The former offer more modernization, such as energy efficiency and great use of space, as well as customization with options and upgrades.

Most people look at both new and existing homes when deciding to buy a home.  Here are ten inside tips to know before you make your visit to the first model home.

1.                  Know your budget.  First see your real estate agent to find out exactly how much house you can afford.  You’ll need to know exactly how much you can expect to net from selling your current home if you own one.  If this is your first home, you’ll want to pre-qualify how much home you can afford based on your income.

2.                  Get representation.  The sales agent in a model home represents the builder, NOT YOU.  Make sure you have professional representation to protect your interests in this purchase.  Realtors make it their business to know the ins and outs of new home construction, warranties, financing and the differences you can expect in quality, price and lot selection and how all of those factors interplay to help you get the best value.

3.                  Builders are not created equal. Different builders are know for different things.  Some may be known for the below-market financing, their attention to customer details, their innovative use of space or simply for their craftsmanship.  Realtors can help you match the traits you desire with the proper builder to make sure you get the best home for your money.

4.                  Check everything out.  Double-check all the details, such as the reputation and financial strength of the builder.  Get “spec-sheets” on the home features covering details like floor plans, energy efficiency ratings, lot availability and immediate delivery inventory available.

5.                  Consider the community.  Look around the community surrounding your prospective new home.  What kinds of amenities are there.  What is the land zoning of land around you, specifically vacant land.  What could be built there in the future.  Read the homeowner’s association if there is one and investigate to make sure funds have been set aside to maintain and replace the amenities like a community pool or roads.  Check out the commute times for the routes you will be taking.

6.                  Be careful with options.  Chosen wisely, options can enhance your new home and build it’s resale value.  Also, the higher the base price of the house, the more upgrades you can add without becoming over-priced for the neighborhood.  Take as many builder incentives as you can, typically free upgrades and credits off the sale price.  Upgrading is selecting materials that are above the “builder standard” for flooring, detailing, appliances and fixtures.  Options are extra things the builder installs while building the house.  Options that build the most value add space to the house including things like sunroom or a home office.  Also generally good values include fireplaces, extra bathroom and built-in storage.  Keep in mind the costs though, as some improvements can be added later for less money, like a deck, finished basement or landscaping.

7.                  Negotiate, Negotiate, Negotiate.  There may be plenty of room for negotiating price, upgrades and/or options with the builder.  Your best bet for negotiation is with a completed but unsold home.  You may be able to get the builder to offer discounts or special financing to help close the sale.  One example is the “premium” lots – they are typically priced higher and saved for last to sell, but each lot most likely cost the builder the same amount, so ask about lot pricing.

8.                  Read the Contract.  Make sure the contract works for you.  Include in the agreements some safeguards such as putting your deposit in escrow, itemizing your upgrades, allowing you access to the site during construction and a 30-day advance notice of the closing date.  Count on your realtor to help you understand how new homes are built and the fine print of builder and manufacturer warranties.

9.                  Get the Best Financing.  That doesn’t always mean using the builder’s financing.  While some builders offer special financing packages, especially high-volume builders) make sure you shop around.  The mortgage lending business is very competitive and you should shop all aspects of your mortgage around, from rates and points to lender fees and also appraisal, inspection, survey, attorney or closing costs.

10.              New Isn’t Perfect.  While new home builders use modern materials that are durable, low maintenance, stronger, quieter and safer, just because it is new doesn’t mean it will be perfect.  Consider utilizing a home inspector and create a builder “checklist” to fix major problems before closing or get the builder to give you money to put aside for fixing them later.  

Almost half of all new home buyers use a real estate agent to help them with a new home purchase.  You may not realize that there is no cost to the buyer to have representation and most builders are happy to cooperate with agents.  Call us today to see how we can help you.