Newly constructed residential homes have been scarce for the past few years. As the housing market declined, many subdivisions were left with vacant foreclosed lots. Builders who were in the financial position to continue, began purchasing such lots at pennies on the dollar. This presented the opportunity to offer homes at prices much lower than those seen in pre-foreclosure days. If new construction is a possibility for you, keep in mind these points, as well as those mentioned in the previous post.
Step 3: Know What's Standard and What's Extra
Ask the builder about amenities and upgrades. Amenities are features that benefit the entire community like a clubhouse, health and fitness center or a gated entrance. Upgrades refer to added features or items you pay extra for to enhance your home, like certain types of flooring or appliances.
Get a feature sheet on the line of homes you're interested in and read them very carefully, then compare feature to feature. Find out what comes with the base home price.
If you don't understand exactly what the builder is offering, ask and take notes. There are no dumb questions. Not knowing can cost you real money. Some things to keep in mind:
•· If the stove is included, visit the showroom to see the model. If you're offered the basic stove and you're a gourmet cook, it makes sense to buy the upgrade.
•· Make decisions on upgrades early in the process -- every change costs money.
•· Have a good idea of what you need and want. They are two different things when it comes to upgrades.
•· Builders rake in the cash on upgrades because they can get parts and labor relatively cheaply. The markup is huge, so investigate each option you're considering to see whether it would be cheaper to bid it out after you move in.
•· Builders, in general, need to sell quickly to make a profit. If you're stuck haggling over price, get them to throw in the upgrades you want at a reduced cost or for free -- it's a way to get more value that's appealing to both sides.
Step 4: Get an Inspection and Home Warranty
Once you decide to buy a new home, make your sales contract contingent on a final home inspection by a professional you hire. Never assume that because a home is newly constructed, it isn't going to have defects. Municipal inspections for code violations are nowhere near as thorough as an independent professional inspection. If possible, have the home checked during each phase of building, when potential problems are easier to spot. If the builder objects to this, consider it a red flag.
Protect yourself with warranties. All new homes come with an implied warranty from the builder stipulating that any major defect of the structural integrity of the home must be repaired. Ask for a builder's warranty for a period of time following move-in (a year, for example) that covers any defects in craftsmanship. Preferably, this warranty should be backed by insurance.
Home warranties vary in length, what they cover and typically run from one to 10 years; the manufacturer covers appliance warranties. Make sure any warranty you receive explicitly states what is covered and what isn't, and what the limitations for damages are. For extra peace of mind, have your real estate attorney look over the warranty to make sure it's kosher.
Step 5: Close the Deal
Builders often have in-house mortgage lenders or ties to an outside lender. New homebuyers can use the builder's lenders or find their own financing. Ask your agent for information on special funding programs available for first time buyers. Contact at least two lenders and compare terms, fees, rates and points. You are committing 30 years of your life to the process of homeownership. Learn as much as possible about the mortgage process by reading everything you can find.
If you're not comfortable with the legal process, get an attorney. Remember, sign nothing until you fully understand the meaning of the words. Research, ask questions, and be comfortable with your exciting new purchase. You and your family will call it home for many years, and it will brighten the economy with much needed new jobs!
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