Read This Before You Buy From a Developer

My husband and I recently bought a new house.  While we had no intention of buying from a developer, after many conversations and much investigation it was clearly the right choice for us.  My wonderful husband Chris is used to me talking about houses and the real estate market non-stop so he was not surprised when I asked him one day if we could stop by a builder’s sales office on our way out of town to spend the day with our nephews.  Truth be told, I think he was actually warming up to the idea that it was time to move although you would be hard pressed to catch him admitting it.  My intentions were really just to understand the new phase being developed by the builder as I do with all the new developments in Oakville.  I wasn’t serious about buying for ourselves and yet there we were 6 days later, standing in line overnight waiting to purchase a new home.

When we arrived at the sales office for the first time we were practically laughed at for being so naive as to think that the homes being advertised were still available (how silly of us!).  We were promptly told that they were released a month earlier and already sold out for weeks.  All I will say is that it was truly an interesting experience to be sitting on the client side of the fence.  Even though I live and breathe the local market and knew all the reasons why this was a great investment, my emotions ran high throughout the whole experience.  To be honest, if it wasn’t for my knowledge of real estate, I’m not sure I would have been prepared enough to actually purchase new.  New home buyers tell me all the time that they wish they had done more research before they bought and I couldn’t agree more.  Remember, that while the builder’s sales representatives are available to help, they ultimately represent the interests of the developer NOT you as a buyer.  The only way to really know whether or not you are making a wise decision is to do your homework.  Below is a list of steps that my husband and I undertook prior to the purchase of our home.  As a realtor, I highly encourage anyone thinking of buying from a developer to do the same.  Without further adieu, here they are...

Before You Buy From a Developer:

1. Compare the builder’s price to comparable homes in the resale market – how else are you able to determine whether or not the home you are about to purchase is a wise investment?   The market has seen several years of steady growth so most new home buyers have enjoyed significant gains when they’ve sold but this upward trend isn’t a guarantee.  New homes should ALWAYS be compared to resale homes to determine their value.  Don’t just take the builder’s price for granted without doing your research first.  Some new home values are much more attractive than others.  The best way to compare homes is to look at recent comparables that have sold in similar areas. 
2. Confirm the local schools, than expect them to change – Even if you are not planning on having children, it is important to understand your new home’s local school.  The majority of new developments attract families with children and this can play a significant factor in resale.  Remember that your local school boundaries are likely to change as your neighbourhood continues to experience rapid population growth.  Do your homework to understand not only current but also expected future local schools.  If you have school age children, the possibility is strong that they will have to switch schools due to changing boundaries so be prepared. 
3. Choose your builder wisely – Understand that picking your builder is equally as important as picking your home’s location and layout.  You want a builder who has a good track record of customer care both during and post build.  I would look at JD Power and Associates New Home Builder Customer Satisfaction Survey in addition to speaking with friends and searching for new builder forums and chat rooms on-line.
4. Talk to people who own a home from the builder you are considering – I personally think this is an essential step.  You will never get a truer picture of the quality of a builder than from the people that have already gone through the experience.  I strongly encourage you to knock on some doors of older homes built by the same builder and ask the owners what they think of the quality of the home and their experience with the builder.  If you aren’t sure which areas are built by the same builder, call a local realtor.  I for one am happy to answer people’s questions.
5. Review the zoning and zoning applications of neighbouring areas – The future development plans of the areas surrounding the lot you are interested in is really important.  If you don’t want to live next door to a warehouse, major throughway or strip mall, then it is important to review the zoning around your neighbourhood.  That vast field next to your lot may not remain that way forever.  You can check zoning by visiting the Town of Oakville’s Planning office.
6. Ask lots of questions – Don’t feel pressured to buy just because everyone else tells you it’s a great deal.  Instead of just dropping by the sales office, book an appointment with one of the sales representatives for some one on one time and use this time to ask questions about the developer, development, floor plans, etc.  Do not leave until you get answers to all your questions. 
7. Visit homes still in the building phase - This isn’t possible for every development but if you should be lucky enough to purchase from a developer who has other homes still in the construction phase, try to visit the site after hours.  Walk around the properties and pear through windows to check the quality of workmanship and take note of things such as electrical outlets and structural walls as well as the home’s flow and layout – basically all the things you can’t be sure of from a floor plan.  My experience has been that you will often find other snoopy home buyers on the sites after hours that can all provide valuable tips about the builder and model you are interested in.
8. Factor In Upgrade Costs BEFORE you buy – Everyone knows that builders often have hefty mark-ups on upgrade costs however these costs vary significantly from builder to builder.  A purchase price of $500,000 can easily turn into a final price of $600,000 from one builder and $550,000 from another.  It all depends on what the builder includes as standard features and what they charge for each upgrade.  If you can’t get your hands on a complete upgrade price list, at least ask your sales rep or design centre for price lists on popular upgrades (ie: staircases, cabinets, granite, etc).  This will at least give you an idea of how much you will spend and how big the builder’s mark-up is.
9. Be ready to visit the site often and expect errors – there are literally thousands of components that go into building a home.  As a former project manager, I know that not even the best run projects run perfectly.  Mistakes should not be large and should not be commonplace but they do occur.  Best to be prepared for some mistakes and check in with your builder and home while it’s under construction to make sure things are ticking along as planned.  How a builder handles mistakes is very telling so ask other people who have bought through the builder how their issues were resolved.
10. Don’t expect a custom home – There is a huge difference between buying a common floorplan from a major builder and building a custom home.  While there is nothing wrong with customizing certain aspects of your home, you must realize that to do so will 1) cost you money 2) result in a larger margin for error and 3) may not turn out the way you expect.  My personal take is that it is okay to make some modifications to a home but if you need to change too many structural elements, you are probably better off picking a different floor plan altogether.
11. Understand that the early bird gets the worm – If you decide that the home is right for you, ask the builder’s sales rep when they expect people to start lining up.  Our sales rep told us that people started to line up at 5 am for an 11am opening during the last phase they released.  We showed up at 12:45am and were 4^th in line.  It sounds crazy and it is but it is not uncommon in today’s market for people to start lining up 2 days in advance of a release of homes.  Find out what is reasonable for the development you are interested in and be prepared to show up even earlier for choice lots and layouts.
12. Talk to a local realtor before you buy – realtors speak to home buyers for a living.  There is no one better to advise you on layouts, lots, colour choices and features that are attractive to buyers.  Why not take the time to review your thoughts with a local realtor for a second opinion?  You don’t have to follow their advice but it’s better to know before you buy whether or not your home’s features will appeal to resale buyers.  I believe most realtors will be happy to discuss your options with you if for no other reason than to build customer relationships and goodwill in the community. 

Best of luck to those of you buying a new home.  Chris and I are excited to see the progress on our own home and will keep you updated as things progress.  If you have any questions or comments about buying new, please let me know.  I can be reached at www.lindsaywalls.com, lindsay@remaxaboutowne.com or 905.338.9000.

All the best,

Lindsay