Buying a new construction home is very different than purchasing a pre-existing property. An experienced real estate agent who knows new construction can help you navigate these differences.
While buyers often think the best way to negotiate with builders is to have them drop the price, experts say focusing on upgrades can be more effective.
Buying a New Home
A new home has all the latest features, including smart home technology, energy-efficient windows, and open floor plans. Plus, you’ll likely pay less for insurance because the house will meet up to current safety and building codes. But it’s important to think about the cost of these upgrades and how much you are willing to spend on them. Your real estate agent can help you determine if any of these modern additions are right for your budget and lifestyle, or if an older home with more traditional features may be a better fit for you.
If you’re looking to buy a new construction home, it’s a good idea to get a pre-approval from your lender so you’ll know how much you can afford to spend. This step will also give you an idea of what your monthly mortgage payment will be. It’s also a good idea to avoid opening any new credit cards or taking on additional debt while you’re in the process of buying a home.
When you’re ready to start shopping, your Realtor(r) can provide you with a list of builders in your area and help you narrow down your choices. They can also help you create a budget and define your must-haves.
Builders often offer incentives to buyers who work with their in-house lender. But it’s a good idea to shop around with other lenders as well. This allows you to compare rates, terms, and closing costs to make sure you’re getting the best deal.
Whether you’re purchasing a new construction condo or co-op in NYC, it’s always a good idea to have an experienced Realtor(r) represent you during negotiations. Buyers sometimes think they can save money by skipping the Realtor(r), but builders are unlikely to budge on price. A seasoned Realtor(r) is also more familiar with the ins and outs of new construction homes, so they can help you navigate the process more smoothly.
You’ll also want an experienced real estate agent to help you with the financing of your new construction home. Although most lenders can provide a home loan, it’s often more efficient to work with a lender who specializes in new construction loans. You can ask your real estate agent for a recommendation or search online for “new construction home loans (city, state)”.
Finding a Builder
The most important step in buying a new construction home is finding the right builder. Fortunately, buyers have plenty of options to choose from, with builders ranging from local to nationwide institutions.
Look for a builder with experience in your preferred neighborhood or development and ask real estate agents about builders they have worked with. You should also make sure the builder is licensed and insured. Check with your city and state housing departments to ensure builders comply with all regulations. Cooley recommends reading online reviews and social media profiles to get a sense of the builder’s reputation and how they treat their customers.
It’s helpful to find out what kinds of upgrades the builder offers and how much they cost. It’s also a good idea to ask previous homeowners about their experiences with the builder and what was included in the price of the house. This information will help you understand the level of customization you can expect from a particular builder and how it compares to other builds in the area.
Another important consideration is the home-building timeline. You should consider how long you can afford to wait for your new home, especially if you need to sell your current residence and move into temporary living arrangements until the new one is complete. Finally, ask about warranty coverage and be sure to review all contracts carefully.
As with resale homes, it’s best to have an experienced buyer’s agent working for you. A seasoned agent will be familiar with builders and their quirks, and can help you negotiate the most favorable terms for you and your family. They can also counsel you on which upgrades add value versus those that are simply cosmetic.
You can also learn a lot about builders by reading the real estate section of your local newspaper and examining developments with their model homes. Take your time and be sure to take notes to reference later. Talk to your friends and neighbors, too, to find out who they like working with and which builders are building in their neighborhood.
Financing Your New Home
A new construction homebuyer will likely need mortgage financing for their purchase. Though there are mortgage lenders who specialize in new construction homes, a buyer can also choose their own. However, a good real estate agent should have relationships with mortgage lenders and be able to help buyers find the best one for their particular situation.
As with any homebuyer, buyers should always get preapproval from a lender before they start shopping. This allows them to understand their budget and helps them to avoid paying too much for their new home. It is particularly important for buyers of new construction homes because the builder may not be able to provide complete information about the house’s features and specifications at that point in time.
New construction loans typically have higher qualification requirements than traditional mortgages. They may also have different disbursement schedules and fees. A mortgage lender who specializes in these types of loans will be able to walk a buyer through the process and answer any questions they may have.
Buyers should also review the builder’s warranty policies and terms of sale before closing on their new home. In addition, they should carefully evaluate the area, including crime rates, schools and proximity to amenities and work locations. A real estate agent who has experience working with new construction can be invaluable in this regard, as they can provide their clients with valuable insights into a builder’s reputation and track record.
In addition, buyers should have an inspector look at the property and provide a report before they sign on the dotted line. The inspection can catch any major issues that might have been overlooked by the builder. Buyers should also be sure to thoroughly review their homeowners association (HOA) agreement, as these documents can have a significant impact on homeownership costs.
A good real estate agent will also be able to explain how HOA dues are billed and collected and how they may differ between the builder’s communities. They can also advise buyers on the impact that the length of their loan term will have on their monthly payments and overall housing cost.
Closing on Your New Home
Whether you’re buying a new construction home or a resale property, closing is the last step of the process. Closing involves signing your name to several important documents, including a loan agreement, closing disclosure and a transfer of title. While some lenders require specific paperwork for closing, most borrowers will have the same documentation needed as when they applied for their mortgage. This includes paystubs, bank statements and details of other financial commitments. It is also wise to bring a copy of your homeowners insurance policy to closing as well.
Closing on a new construction home is usually faster than the closing process for resale homes, since there is much less to sign and approve. However, delays are common in real estate transactions and it’s a good idea to keep your expectations realistic. People get stuck in traffic, documents can get lost and other unforeseen challenges pop up. By staying calm and having a team of professionals by your side, you can handle these setbacks with confidence.
One advantage of closing on a new construction home is that your builder may help pay some or all of your closing costs, which can save you hundreds or even thousands of dollars. It’s something worth asking about during the sales process, but it will vary from builder to builder.
Another benefit of closing on a new construction home is the ability to customize your kitchen, bathroom and flooring choices. Some builders even allow you to change the color of your cabinets and other features during construction, so make sure to ask your MasterCraft Home Consultant about these options before you begin the sales process.
It’s a good idea to schedule a final walk-through of your new home before you move in. This allows you to catch any issues that could arise between the initial inspection and moving day. It’s also a great opportunity to meet your neighbors and see the community you will be living in.
It’s also a good idea to have your wire or ACH transfer set up ahead of time, so the funds are available to you on closing day. This way, you can avoid delays caused by a busy transfer system or unexpected problems with a wire connection.