3 Things to know about buying a new home

Hank Bailey
Hank Bailey
Published on October 3, 2019

Will this be the year you buy a brand-new home? Don’t be discouraged by news reports claiming that “U.S. home building fell,” or “housing starts dropped.”

The scary-sounding numbers are due to a drop in multi-family home building, not single-family.

In fact, the single-family home construction market across the country is set to be just fine, with a surge in new building permits late this summer.

Moving into a newly-built home is a lot like the first time you sit behind the wheel of a new car. You know, nothing beats that “new car smell!” Nothing compares to virgin leather seats and all that new updated technology and design that might be a facelift to what you’re currently driving!

With a new home, the “nose knows” because there’s no strange smells from whatever it was the previous occupant was cooking, no greasy range hood and kitchen walls, no dinged-up baseboards – everything is new and pristine.

While these aspects may make you starry-eyed, there’s reality to contend with as well. Today we share with you some things to watch for when taking on the purchase of a brand new-construction home.

The builder’s real estate agent

When you drive up to the new home community you’ll notice quickly how you’re directed first to the model home before you get to the homes they actually have for sale. That guy or gal sitting in the office isn’t a receptionist, but the builder’s real estate agent.

He or she will show you a map of the buildable lots available, talk to you about the community’s amenities and available homes, before sending you on your way to view the models. Sometimes they’ll offer to ride around and show you the way.

If you fall in love with one, which is every builder’s goal, the builder’s real estate agent will encourage you to get the purchase process underway quickly. It’s a little like walking on a car lot or listening to a “time-share” sales pitch. They’ll want to strike while the iron is hot so to speak.

Hey, I don’t blame you, this is exciting stuff! And, what better and easier way to do it than to allow the builder’s real estate agent to get the ball rolling?

Ok, that’s the third time I’ve said it: “the builder’s real estate agent.” Why? To make your think. Sure, this agent can write up an offer for you to present to the builder, but ask yourself, who is this agent representing?

Think about this: if it were a legal proceeding with you on one side of the table facing the other party, would you use “their attorney” and hope they helped to negotiate a fair settlement between their client and you? A real estate contract is a legal document and disputes are handled in a very legal format so why would you let the seller’s/builder’s agent representing them handle this for you?

It is almost impossible for the builder’s agent to protect both the builder’s interests and yours in the same transaction. What’s sad, and a bit unfortunate, are the home buyers I’ve heard talk over the years who after the fact found out the hard way what skipping on having their own agent cost them!

Avoid this problem by letting the builder’s agent know, upfront, that you have an agent. Trust me, no matter what’s conveyed to you in order to build your emotion and enthusiasm over that perfect home and lot, it’ll still be there after you’ve had time to acquire an agent of your own!

Finally, I do things all the time for new home buyers that I work with that add value beyond just helping them negotiate a contract or going to inspections and walk thru’s.

For example, on a recent closing I negotiated a commission bonus provided to “buyer’s agents” by the builder, as an incentive to me as an agent, to help my buyer get a new refrigerator, blinds for the home and other upgrades that they needed without having to dig into their own pockets to make that new home complete at closing.

Other reasons you need an agent

There’s also the idea when discussing whether or not you need an agent of your own is the emotion factor. Sure, you as a home buyer you can attend open houses, call and deal with the logistical nightmare and hassle of dealing with listing agent after listing agent in scheduling to see the homes you want to see, but let me share a recent story. I had a client who asked me to write up an offer for them on a home they liked. All that night, after the offer was submitted during the day and they were waiting on seller feedback, they texted me to ask if they “should improve their offer and offer more.” Negotiations 101 is that you NEVER counter yourself. Never counter your own offer!

Through out the evening I counseled them in waiting for the seller to respond to our offer and when they did it paid off! The seller came down $10,000 more than they did on the previous contract they had with the last buyer and $15,000 below a recent bank appraisal!  That ability in that role as a non-emotional fiduciary and a professional negotiator helped them save $10,000 on their purchase, all the while the seller/builder is the one paying me for my time effectively through a share of the listing fees as noted in the MLS by the listing broker! Can you negotiate your own sale? Sure. Will it be as good as if I was in your corner? Emotion, when it’s your money and your next home, can work against you without the support of my experience by your side.

The builder’s lender

Hey, this is a one-stop shop, right? Of course!

Home builders understand that they need to hook the buyer when he or she is most excited so they offer all the services one might need to get the process started. This includes an “in-house” or “preferred” lender.

Now, unlike using the builder’s agent, there’s nothing wrong with using his or her lender, as long as you’ve shopped around and know that you’re getting a good deal.

Never feel that you have to use this lender, however, because you don’t.

The builder

Check out the builder’s reputation if you aren’t familiar with him or her. Start with the Better Business Bureau and then scour the city’s public records for lawsuits against the builder.

New to the area? No other better way when doing your due diligence in finding out more about the builder or neighborhood you have an interest in than asking your own agent their thoughts.  As an agent that sells a lot of new homes, I know which builders I’d have build a home for me and my family. I also know those that I wouldn’t waste the time to contact due to issues on their new construction and follow up after the sale over years.

If I’ve heard it once, I’ve heard dozens of stories that started out with, “The builder never told me ___________ when I bought.” Unfortunately, that just might be exactly right.

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