New Home Purchases & How Not To Get Bent Over

New construction homes are an easy product to sell, especially to first time buyers. Here's a list of ten things you should remember when buying from a builder.

1. The builder will do everything in their power to monopolize the transaction. They want the loan, the inspection, the appraisal, the Title Company and they'd love for you to not have a Realtor. These combined factors maximize their profits, not yours.

2. If it's not in your contract then don't expect it to be true. This really happens when sales counselors promise neighborhood amenities and even proposed streets & thoroughfares.

3. Sales Counselors are not Realtors and they are not bound by any Code of Ethics. The New Home business has litte oversight when compared to Realtors who are overseen by the Texas Real Estate Commission.

4. Many sales counselors will SHOVE you their preferred Realtor. In essence, this "Realtor" really works for the builder and NOT you. The builder will provide the selected Realtor a steady stream of potential clients and in return they will expect the Realtor to keep their mouth shut when the buyer buys the new home. The agent will typically list your home for only 3% so they can get PAID on the buy side - with the builder. A Realtor's job is to always represent the best interest of the buyer and ONLY the buyer.

5. Builders have a tendency to shark a buyer for the loan throughout the buying process. They'll say things like. "We'll provide 3% towards closings costs if you use our lender!" That 3% can equate to big dollars. Of course they'll make that money back, and the some. The builders APPRAISER will rarely torpedo a deal and undervalue a home as this would kill the transaction. An OUTSIDE lender, one the BUYER chooses won't be so lenient when it comes to true value. NEVER use the builders appraiser.

6. Builders also have a preferred home inspector. This inspection company is also getting their bread buttered by the builder with truck loads of inspections. This steady stream of business is valuable to the inspection company. HIRE YOUR OWN INSPECTOR!

7. Sales Counselors know their market, their neighborhood and that's about it. They do not have access to comparable sales on the multiple listing service. They cannot provide you savvy real estate advice about the home you have to sell. In many cases they do not even know what homes are "reselling for" in their own community. Again, they don't have access to "comps" on the MLS.

8. What NEW homes are re selling for is critical. You don't want to pay $225,000 for a BRAND NEW HOME when you can get one that 1-3 years old for $190,000. You'll be upside down on the home for a LONG TIME.

9. Sales counselors have quotas. If they don't sell X amount of homes they'll get fired. Realtors are independent contractors. We have to sell too, but we aren't under the gun of getting fired everyday. Most sales counselors last about 1.5 years per company they work at. As soon as the subdivision is built out they are assigned to a different community to start the process all over again. You, the buyer, are left behind with whatever decisions you make. Realtors want your business for life. Sales counselors typically want your business today as the likelihood of you buying another new construction home with the same sales counselor is almost ZERO.

10. Often buyers will buy in new communities only to find out that the developer has changed their minds about the vacant land by their new home. It isn't uncommon for shopping centers, gas stations and tire shops to pop up on that "giant vacant lot" the builder told you would be a reserve. Remember, if it's not in the contract then don't assume it's going to be built.

Not all builders are shoddy or unethical. I have always had great experiences with David Weekly, Lennar, Trendmaker, Meritage, Pulte and a few others.

I always tell my buyers to avoid KB Homes, Centex, Obra, Perry and a slew of others. I have endured one too many bad experiences. The horror stories seem to never stop.

Always do your research. Don't be impulsive or quick to sign. Hire an agent that isn't a puppet for the builder. Perform your own inspections, use your own lender and never let a sales counselor who used to be a Realtor tell you about the market. There's a reason they "used" to be an agent.