Buying a new construction from a builder..

DH stumbled upon an ad for 2 new homes being built by a builder. It's in the area we've been looking at. He called the builder and got some information. Basically the builder is not using the services of a real estate agent. Given the descriptions of the future house and the price, we are interested. I'm technically a real estate agent as I have my license but I don't practice it (may in the future). But I have access to the MLS, can find comparables and DH and I have been researching this area for 3 years and know what is a fair price.

What should I look out for if we end up wanting to go into contract? I googled the builder and the company and couldn't find anything. He is currently building condos 20 minutes east of where we are looking so that is no help. I did some research and I know I shouldn't feel pressured to use their lender and I should arrange for regular home inspections while it is being built. I already have a real estate lawyer already who is great. I closed on my previous house with him and always felt like he was looking out for us. Anything else?

Re: Buying a new construction from a builder..

My BIL did and nothing went according to schedule and my DH ended up installing the appliances, plumbing lines, etc. It was a humongous headache, but it was worth it after the fact.

My DH doesn't like new constructions as he thinks they're cheaply made (he works on new constructions as a plumber).

Re: Buying a new construction from a builder..

Need to be careful when you go to contract what is included in the house

does the house include what types of floors, number and type of fireplaces, level of windows, kitchen cabinets, appliances, siding, counter surfaces, and so on

can you upgrade anything and what is the cost

will they install grass or sod?


also be careful of the company name - some builders create smaller companies to limit liabilities - so if they have a lot of companies it can be a red flag

also as for locking in an interest rate - you want to make sure your lock at least 3 months longer then expected time. Wells fargo has some long locks without any costs

also the contract should give you an out if it is not delivered by a certain time.

we bought a new construction condo and it is great but it is very high end.

Re: Buying a new construction from a builder..

I have some more time now to post.

When my BIL bought his new construction, it took 6 months longer than planned to complete, and they were renting once their old house sold. Sod took forever to be planted, lots of odds and ends were not completed properly by the time they moved in. As the house is settling, there's tons of imperfections and you can kinda see that some stuff was probably just rushed so they could finally finish.

If time and money were no factor, I'd rather buy land and use my own builder than some of the mass-produced cookie cutter homes in developments.

Re: Buying a new construction from a builder..

Re: Buying a new construction from a builder..

One thing... Check the windows. My parents bought a 2yr old house and 10 yrs later they woke up to their bedroom window hanging out by a thread. They were told they were all anderson windows, turned out only the windows in the front of the house were the rest no name. Now they're shelling out to get them repaced.

My coworker just bought a new construction and I told her this . She inundate out the same was true for her house, but she said they were ok with that.

Hth

Re: Buying a new construction from a builder..

I would do some further research into the builder. It seems odd that you can't find anything on the builder.

All of the builders who build new homes in my area (southeast Nassau) have websites with information on their company, the type of homes they build (usually they have a few standard models that can of course be customized), and what's currently being built/for sale. Often when a home is being built, a builder can refer potential buyers to a similar home that has been built so that the buyer can judge the quality of workmanship, albeit in a different home.

You can also check sites like The Better Business Bureau to see if the builder is accredited by them, has had any complaints against them, has resolved those complaints, etc.

The advice to make sure EVERYTHING that is to be included in the home is spelled out in the contract is very good. Most new builds don't include any landscaping, including grass seed or sod, for example. I've seen many completed new builds that have closets that are empty shells (no rods, shelves, etc.). I've seen new builds that did not include a refrigerator, although other kitchen appliances were there. Most don't include a washer/dryer. So if you expect these things to be included, you have to negotiate them at the outset.

Make sure the lawyer you plan to use is familiar with new construction purchases and has experience... they are a bit different.

Some builders require a certain percentage down payment from a buyer (e.g., I know one in my area that asks for 25% down, although like everything else, that's probably negotiable). Also, builders expect buyers of new construction to pay the NY State Transfer Tax, which is customarily paid by sellers. It's $4 per every $1K of the sale price, so it's not a huge amount of money, but on a $600K home, it will add about $2400 to your closing costs.

Some of my customers have been concerned about the tax liability with new construction. There is no way to know exactly what the property taxes will be until the final assessment, which will come after the house is built and sold. So even finished new constructions that are on the market just have "estimated" taxes. And in my experience, the estimated taxes are always much too low to be realistic. A new construction house in Bellmore was recently on the market, and estimated taxes were listed at approx $13K, and I believe the final taxes wound up being in the $17-18K range.

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Message edited 7/16/2012 3:01:37 PM.

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Message edited 7/16/2012 3:01:59 PM.