Purchasing a New Build Home

Posted by Matt & Shalin Caren on Friday, November 4th, 2016 at 8:34am.

For many buyers who know exactly what they want in their new home, but aren't having any luck finding the features and or location they are looking for, new build homes can be a great solution.  With new build communities almost always having a sales office to walk into and begin the process at, it would seem that having a real estate agent represent you in the process would be unnecessary or even counterproductive to getting a good price on your home.  Because of these common beliefs, we wanted to take the time to go over some things you may not have thought about or known if you've ever considered buying a new home from a builder.

Probably the number one misconception about bringing an agent with you to a new build center is that you will have to pay more for the home so that the builder or salesperson can cover the cost of paying your agent a commission at closing.  This has never been the case with any builder we've ever worked with before.  In fact, we always make it a point to confirm with the builder than our representing the client won't in any way end up costing them more, because if that were to be the case, we would want the client to know that and decide whether they would still like our help, or if they would prefer to go at it alone and save the cost of the commission off the purchase price of the home.  This is not to say that a new build sales associate in the sales office won't sometime imply that if an agent weren't involved that the buyer would be getting a better deal (because we've had that happen in the past).  In these cases we will call the builder's corporate office and make sure to get the correct information to be positive that everyone knows whether there will be any potential negative effects to our client of us representing them in the transaction.  

Another thing we want to make sure buyers know about when signing a contract with a new build builder is that the contract is not always equally fair to both sides.  Now to clarify, this does not mean that you shouldn't sign it or that the builder is being shady or trying to take advantage of their buyers.  It is simply the builders way of protecting themselves against a buyer choosing to back out of their contract down the road after they have put in a fair amount of time and money building your semi-custom home.  If a buyer were to cancel their contract and walk away half way through the home building process the builder would be left with a partially built (or even completely finished) home based on that buyer's specific design choices and the builder will need to then sell that home to someone else who won't get the benefit of choosing their own floor plan and finishes and therefore would likely get a deal from the builder on price.  Our point in bringing this up is not to scare or deter anyone from buying a new build home, but to be aware of each item and clause in the contract before signing so that you are aware of the procedures and expectations at any given point in the building process.

To go along with the points made in the paragraph above, as the buyer you will be asked to put down a deposit of probably between $1,000-$5,000 when signing a new build contract which is not unusual in any real estate transaction, but the difference with a new build is that that money is usually non-refundable after day one.  In some cases with certain builders or higher priced homes, multiple deposits may be due at different points throughout the process which can sometimes add up to tens of thousands of dollars.  This possibility is something that will be outlined in the contract, so be sure you read it because the sale person in the new build center may unintentionally forget to mention any number of items in the contract to you, especially if you're someone who doesn't like to read every word of a contract prior to signing.  Even if you do read everything in the contract in detail, the wording may not be all that clear to you if your not a lawyer or experienced in reading real estate contracts on a regular basis.  When we read these contracts, we often have additional questions for the builder's sales person about items which, while clearly written, may not specify every possible situation that could arise.  If we see something that we can't clearly explain to our buyers or that doesn't specify certain specific situations that we feel could potentially occur, we would ask for a further explanation in writing (typically an email) to get our questions answered before signing the contract to make sure the buyer is protected and aware of the builder’s rules.

While in almost any normal situation, a new build home is going to be more expensive than a similar resale home (just like a new car vs. a used car), this doesn't mean that you can't negotiate for a better deal or more upgrades from the builder.  As is true in any negotiation, knowing what the other side is after and what their goals are is always a key factor in getting the best possible situation for your side.  When we negotiate with a builder, we will go about it in different ways depending on a number of different factors from who the builder is, what phase they're at in the overall building of the community (did they just open or are they about to close out), is the home the client is buying a spec home or has the builder not even broken ground, and are there any spec homes available that might work for the buyer rather than having to build from scratch?  All of these factors make a difference in knowing what areas to start our negotiations in because for example, asking a builder to take off money from the base price will almost never happen so wasting time arguing that isn't worth the effort.  Asking for things like window blinds or plantation shutter (which are not usually included) is usually something that you can make a deal on.

Finally, don't ever assume that just because a sales person in the new build office tells you that there likely won't be any two story homes built on the empty lots surrounding your home (assuming 1 and 2 story homes are a part of the floor plan options in the community) that they are going to be correct.  If the types of homes around your lot are important to you and the lots are still empty, don't buy that lot on the assumption that the next buyers are going to build all 1 story homes around you because you never know what's going in next door until that buyer signs on their dotted line and breaks ground.

We hope this helps anyone who is considering buying a new build home, now or in the future and if you have any questions for us that we didn't touch on above or you would like clarification on anything we did discuss, give us a call at (602) 777-MOVE or email Info@TheCarenTeam.com.

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Listing information last updated on October 13th, 2019 at 6:03pm MST.