April 7, 2020
4 MINUTE READ
If new construction homes are readily accessible in your area and they fit within your budget, it almost seems like a no brainer to consider buying new construction, right? After all, there’s nothing quite like that “new” smell in a home and let’s face it, pre-owned homes just aren’t the first choice for everyone.
But just because the home is new, that doesn’t necessarily mean that the home is a good value or even a smart investment. Buying a new construction home is actually quite different from buying a previously owned home. For one thing, if you’re designing and building your own custom home, or even buying a home that’s being built to spec in a new subdivision, you only have to work with the builder. When buying an existing home, you will often have to deal with the seller’s sentimental and emotional attachment to the home — which regularly influences the negotiation process.
If you’re considering purchasing new construction, here are # things that you should keep in mind.
If you’re shopping for a new construction home, you’re probably familiar with model homes, homes that essentially act as a showroom for the builder. These homes are often designed with the most premium upgrades that the builder offers, and they are built this way to show all the builder has to offer by letting potential buyers experience the full potential of the home.
But before you find yourself falling in love with the model home’s cabinets, appliances, or design finishes, it’s important to remember one thing — those beautiful model home configurations most often are not reflected in the base sales price of the homes. Most base prices are configured using “builder grade” materials that, while still quality materials, are noticeably less premium.
Fortunately, designing a new construction home is similar to designing a new car to spec, in that your options are usually very flexible. You can decide which things you want to splurge on to upgrade — and which things are fine to leave at the base model.
In addition to offering a home that can literally be built to your specifications, many builders will also have people on site who can help you along every step of the process, including financing your new home. As with buying any home, one of the most important first steps is to complete the pre-qualification process. Not only does your pre-qualification help you narrow down and firm up your budget, it will also help determine your time frame for buying, the areas or neighborhoods you will be shopping in, and your starting price point.
Of course, this doesn’t mean that you have to work within your builder’s network of contacts for financing. Take the time to really understand all of the different loan options that are available to you when purchasing new construction, including conventional mortgage loans, FHA loans, VA loans, and even jumbo loans.
And make sure you’re talking with multiple lenders to make sure you’re getting the best deal. A 2018 study conducted by Freddie Mac revealed that borrowers can save, on average, $3,000 over the life of a loan by getting quotes from 5 lenders.
Skipping the home inspection may seem like a great way to save some money if you’re buying new construction, but many buyers are surprised to learn that even new comes can have significant structural issues. After all, mistakes happen. For this reason, it’s always a good idea to have any home that you purchase inspected by a professional, licensed home inspector before closing.
Most builders handle any necessary county inspections, and many even employ a third-party company to oversee quality control. Keep in mind, though, that this doesn’t replace an inspection by a licensed professional. Just as they do with existing homes, your inspector is there to make sure your home is safe, properly built, and up to code. If he or she finds any issues, they will make a report of it and suggest a remedy. Then, you can bring your findings to your builder and work together to negotiate a solution.
At Reali, we offer honest and transparent real estate service, with experienced local agents, big savings, and zero pressure. Reali can still help you buy a new construction home and get that cash back rebate. When you’re ready to find a realtor, we’re ready to help! Learn more about new construction houses to buy today!