As with any homebuying process, it’s important to have an experienced real estate agent in your corner. An expert can review contracts and ensure that your best interests are represented.
In addition to a knowledgeable mortgage lender, you should also research builders and communities. Check out business reviews, public records and interviews with past buyers.
Choose a Builder
If you’re interested in buying a new construction home, it’s essential to choose the right builder. You can start by reaching out to a local builder association and asking for a list of builders who construct homes in the area. A real estate agent is also a valuable resource at this stage, as they can help you narrow down your choices by providing information on each builder’s history and reputation.
In addition, a real estate agent can help you negotiate with the builder to ensure you’re getting the best possible deal on your new home. This is particularly important when it comes to negotiating price reductions and upgrades. You should also make sure to discuss the builder’s warranty, which will cover any issues that may arise after you move in.
It’s also a good idea to talk to a mortgage lender about financing your new construction purchase. Most builders have a list of preferred lenders, but you should shop around to find one that offers competitive rates and can walk you through the process. You should also ask about rate lock periods, which protect you from interest rates going up while the home is under construction.
Find a Community
As you search for your new construction home, it’s important to find a neighborhood that fits your needs and lifestyle. Look for communities with reputable builders and modern floor plans, as well as amenities like parks, schools, and shopping centers. In addition, consider whether the community will have a homeowners’ association (HOA), as this can affect your ability to customize and modify your new construction home.
Choosing a local, experienced real estate agent is also essential. Those who routinely work with new construction homes will understand the process better and can anticipate and resolve any snags that arise along the way. Plus, they will know how to review builder contracts, as they tend to vary from one builder to the next.
In addition, an experienced buyer’s agent will be able to negotiate with the builder on your behalf. This can save you a lot of time and money in the long run. And don’t forget to talk to a mortgage lender, as many builders have preferred lenders they work with. It’s also a good idea to get preapproved, as this will help you determine your buying power and communicate it effectively to the builders you’re working with.
Get Pre-Approved for a Mortgage
Get pre-approved for your mortgage before you start looking at homes. This will remove the guesswork and help you know what you can afford in your price range. A good lender will guide you through the process, explain your financing options and recommend an appropriate loan type for new construction. Look for a lender that offers self-service pre-approval, so you can complete your application online and receive a verified approval within 24 hours.
Once you have your financing in place, it’s time to start building! Most builders have a deposit structure where you pay a percentage upfront, then continue to make payments until the home is finished. It’s important to be prepared for any delays that may come up, such as weather or construction issues.
An experienced buyer’s agent can review your builder contract and advocate for you. They can negotiate things like an express warranty, which will state what problems the builder is responsible for fixing, as well as how long the warranty lasts. They can also make sure you’re aware of any HOA dues that are likely to be billed and how that will impact your budget. Lastly, they can ensure you’re getting the best rate for your mortgage by reviewing all your loan options.
Make an Offer
Whether you’re buying a new construction home or an existing property, the first step is to get preapproved for a mortgage. This will help you determine what you can afford, and it will also help your agent negotiate on your behalf.
While many buyers assume that the best way to negotiate with a builder is to ask them to drop their price, this approach often backfires. Instead, buyers should focus on negotiating upgrades that add value to the home and increase its appeal. An experienced real estate agent can help you find the right upgrades for your budget, and they can counsel you on whether certain design features are worth the investment.
Additionally, buyers should consider discussing rate lock options with their lender. It’s important to know how long you have to complete the home purchase before rates rise, so that you can plan accordingly.
During the building process, buyers should conduct their own inspections of the home to ensure it’s being built as promised and that all work is up to code. Additionally, buyers should review their builder warranty to understand what is and isn’t covered. Once everything is finalized, buyers will attend closing where they hand in their earnest money deposit and officially become homeowners!
Sign a Contract
A real estate agent with new construction experience can assist with the negotiations on financial details, timelines and contractual issues. This is especially valuable with production homes, where buyers are interacting directly with the builder’s sales team.
Another thing to keep in mind, Devries says, is that pricing for new construction homes is often non-negotiable, as it’s predetermined by the builders based on current market analysis of the area. However, there is often room to negotiate with the builder for things such as upgrades, closing costs, the first year of homeowners’ association dues and a home warranty.
Additionally, because most new construction homes require a home loan to purchase, it’s important to work with a lender familiar with the process. Having one can make it easier to meet deadlines and ensure the loan is closed on time. Builders usually have a list of recommended lenders or may even offer incentives like lowering the price of the home to encourage you to use them. The right real estate agent can also counsel you on which upgrades are worth the investment and which ones don’t add value. After all, the goal is to get you into a home that’s both affordable and comfortable for your lifestyle.
Schedule a Final Walkthrough
A final walkthrough is a last chance for buyers to verify that their new home is in the condition they expected. Typically, this inspection occurs after the seller has moved out and before closing. During the final walkthrough, you can make sure that all agreed-upon repairs are complete and that no damage has been done to the home since the initial inspection.
If you’re buying a new construction home, you can expect a more in-depth final walkthrough than is typical for a traditional sale. This is known as a blue tape walkthrough and is an important opportunity to address any minor issues that haven’t been addressed yet.
It’s also a good time to ask your contractor for a warranty on any unfinished work, and find out whether you’re eligible for a homeowner’s warranty from the manufacturer. Buyers should bring a final walkthrough checklist, a camera to document issues, and a copy of the contract and home inspection report to this meeting.
If you’re ready to buy a new construction home, a real estate agent with experience in new construction homes can help you negotiate with a builder, advise you on upgrades and design options, and ensure that all of the contractual details are taken care of before you close on your purchase. To get started, visit Rocket HomesSM and get matched with an experienced, local real estate agent.
Close the Deal
When buying a new construction home, buyers usually have more room to negotiate, especially when it comes to closing costs and credits. This is another area where a real estate agent who has experience with new construction can be of value. They can go over the contract with you and ensure that your best interests are represented. They can also help you make sure that you understand what the builder warranty covers (which varies from builder to builder).
When it comes to closing, most builders will try to get you to use their preferred mortgage lender to save time and money. However, you should still shop around with other lenders to find the best rates and terms. You may also want to ask your mortgage lender about rate lock options. These are typically available for a few months, and they can protect you from interest rate increases during the construction process.
In addition to negotiating price and terms, the right real estate agent can also counsel you on upgrades that will add value to your home. For example, they can help you determine whether specialty paint colors or light fixtures are worth the investment. They can also help you avoid wasting money on upgrades that won’t add value or appeal to your family’s lifestyle.