If you are thinking about Luxury New Construction in the Orlando area, please put your seat belt on now. I am going to take you on a ride behind the scenes of buying a new construction home and it is not what you think.
Here is a true new construction luxury buyer story: this one I call “bait and switch”.
Buyer went to contract with a closing date of about 8 months out. The buyer was promised several “bonus” upgrades, but when I read the contract, only one “bonus upgrade” is mentioned...the builders representative forgot to include everything she promised. I remembered and made sure that it was added to the contract.
During the signing of the contract, the buyer was given a “feature” sheet which shows the selected elevation (how the exterior will look) and lists all the features that are included inside the home. The feature sheet had to be signed by the buyer to acknowledge the specifics of what the home is to have. No problem. So far, so good. Except as the construction is progressing, some of these “features” are not being included.
Six months into the build, the new construction home buyer is given a revised “feature sheet” that deletes many of the promised upgrades as the buyer is told that the builder is no longer offering the other “features” in the community. I compared the original signed feature sheet with the new revised one...there were 12 items that have been either replaced with something of lesser value or totally deleted.
I objected, and was told that the original feature sheet had “typo’s” and the new feature sheet was the correct one. I think not...there were no “typo’s”...a typo is a spelling mistake. This builder simply decided not to provide the gutters, or the extra window or pavers on the patio...plus 8 more changes.
Tidbit #1: If it is not written in the contract, you will not get it. Chances are the sales agent will not remember or maybe will not even be working at the same location. You must be vigilant and scrutinize everything...or...you need to include me as your trusted buyer agent. I do read the 100 page contract.
Tidbit #2: Builder cannot change what is signed. Once the contract is signed by the buyer and the builder, it is a legal and binding contract. The builder cannot change what was originally agreed to. Even if the builder needs to substitute something, it must be of equal value or quality. Stated in the contract.
Even more interesting: the builders agent insisted that we are the ONLY buyers in the community who complained about the “revised” feature sheet. Yes, I believe it, but that is not my concern. Other new construction Orlando buyers probably didn’t notice what they were entitled to unless someone like me pointed it out.
Many new construction home buyers think they don’t need to include a seasoned buyers agent, but when a problem comes up that needs to be addressed, buyers don’t know what to say or do, so they say “nothing”. Or maybe the buyer already has a broker that just signed them in with the builder and then disappeared until the commission checks are handed out. That does happen.
By the time buyers realize they are on their own, with no one on their side...it is too late to hire a Buyer’s Agent. So, they comply with whatever the builder wants...regardless of how unreasonable it is.
Some new construction buyers even mistakenly believe that if they don’t bring any agent that somehow they will get a better price, and everybody will be fair. That is absolutely not true...in fact, more than likely an unrepresented buyer will pay more and get less.
Most interesting: This particular builder in my story is not some small fly-by-night flake. This is a national builder that is well known and builds in most major cities.
3 Facts that all new construction buyers in Florida need to know
1. The builder’s sales person is not your best friend. They will be friendly, professional and likable. They will make you comfortable enough so that you spill the beans about how much money you have, how much you are willing to spend and how much you love these homes! However, they work only for the best interest of the builder, not you. This disclosure is buried in the small print of their 100 page contracts.
Their many titles may be builder salesperson, builder representative, builder agent, sales counselor and customer relations person. Their only job is to make you fall in love with the community, so that you will buy there...at the highest price and most favorable terms for the builder.
2. ALL builders pay the broker commissions. Builders market to real estate agents to encourage them to bring in their buyers. It is a fact that 80% of home buyers will use a realtor for their homesearch. Builders know that those are the more serious buyers, so want to capitalize on that.
New construction home builders are happy to cooperate with your broker, but you need to make them aware of who is representing you. You must either accompany the broker or advise the builders rep upfront and sign/register in your broker’s name at the new construction office. There is no commission rebate to you for coming alone.
3. What you see in the new construction model homes is not what you get.
All model homes are upgraded and staged to the max. Builders know that “the eyes buy” so they pull out all the stops to make it appealing. Yet, some rooms may not even be the same size or configuration of what will be built. I had a new construction client that figured out that the master bedroom shown in the model was actually 6 feet longer than the size indicated on the blueprint for that model being built. In addition, the windows were oversized and not standard...something that no builder sales rep mentioned.
Last month I was in a new construction community where the base price of the new homes started at $400K. This particular model that we were looking at had almost $300K in additional upgrades. So while the model looks fabulous, if you don’t buy the additional upgrades, your new home may be pale by comparison.
Lately, because the luxury new construction in Orlando is selling so well, there are less and less included perks and more outrageous pricing on some basic upgrades.
A good buyers agent will get clarification on what comes with the home and what is an extra add-on cost for the buyer. They will advise you of adding features that will make you money on a re-sale and not wasting your money on features that only add cost. The choice is always yours.
Selecting a New Construction Lot
This is one of the first decisions that you will make. It is the builder agents job to have you quickly pick your favorite spot in the community. Builders release only a few lots at a time to create a sense of urgency. Selecting the lot may not be as simple as it sounds and can be confusing to the buyer.
There are perimeter lots, oversized lots, lakefront lots, waterview lots, conservation lots, interior lots, cul de sac lot, lots with extended easements. All have different pricing and lot “premiums”...an added cost to the lot. Typically lot premiums can add anywhere from $5K-20K to the cost of the lot and sometimes can go as as high as $200K for a nice waterfront lot.
Recently, I have found some builders who are asking top dollar for lot premiums that are not premium lots. One builder is calling a perimeter lot a “conservation” lot which it is not...it does not back-up to any conservation….it backs up to another house. Very misleading. Of course, they are not explaining that to the buyer...they are simply charging a premium price for a non-premium lot...and unsuspecting buyers are paying the price.
In addition, the price of the premium does not tell the whole story...a higher premium does not necessarily mean that the lot is more valuable, just like a lower priced lot may be your best choice. We will help you sort out the best lots for the money.
Going to contract on your luxury new construction home
Builder contracts are written for benefit of the builder and never for you, so don’t
expect any help from the builders rep on that. Most builder sales people have never read the small print in their own contracts and for sure they are forbidden to explain it to the buyer.
Some builder contracts are subject to a financing contingency, some are only if you use their lender, and some builders offer no financing contingency on certain properties.
Same with appraisals...mostly no contingencies. I recently had a VA buyer whose new construction home appraised $10K short. This was a government loan so the builder was not allowed to force the buyer to pay the difference. Buyer was ready to “walk” away, so I was able to negotiate the price down to the appraised price. Otherwise per contract, the typical buyer would have been on the hook to come up with the extra $10,000 needed.
The reality is that the builder will give the buyer a short fuse to sign the contract electronically by docusign...they do not want the buyer to read or understand their convoluted 100 page contract. Most home buyers do not understand even a fraction of what they will be required to sign. Yes, that is one of the big reasons that you need to bring a good buyers agent with you.
Here is a news video on how one buyer lost $40,000 because he did not understand the contract. https://www.wftv.com/news/action-9-homebuyer-loses-40000-builder-home-he-nev/69651699.
Before my buyer goes to contract on Luxury New Construction in Central Florida, I like to get a copy of the contract prior so that I can highlight any “buyer beware” issues and make sure the buyer understands the terms.
Not long ago, I requested such a contract from the builders salesperson He sent me 92 pages of contracts and addendums the night before, most of which were not relevant to that community. Yes, I read and understood all.
The next morning, I disputed what the builders salesperson stated which was different from what the contract really said. I received an additional $16,000 in builder concessions for my buyer client. I also requested a reimbursement for the buyers hotel stay that was advertised on their website. That was several hundred dollars back to the buyers pocket. Builder concessions are not unusual if you know what to ask for.
What is negotiable on new construction?
It depends upon the builder, how popular the community is and even what time of the year it is. The best buys are usually "spec homes”. These are “speculative” homes that the builder may have built in the hopes of an easy sale because they are “ready to go”. Or it is a finished home that the current buyer is unable to close on. The buyers financing may have fallen through, they may have had a job transfer or maybe even a divorce...so they no longer qualify to purchase.
Builders typically do not like to negotiate the base price but will negotiate “other” things. That all depends upon inventory, sales that month or time of year. Buyers that go alone, will never get the concessions that we can get for them because they don’t even know what to ask for.
Hiring an inspector for your new construction property in Orlando
Don’t kid yourself that a new home cannot have problems. I have seen missing hurricane straps inside the roof, missing insulation, exhaust vents that are not connected and even hot water flushing the toilet. I have also seen sloppy finish work, keys that don’t fit, the wrong appliances and missing landscape that was not installed...
Just last week on a new build, they were putting in 4x4 posts for the structure when the building plans called for 8x8 posts. They did not fill the concrete blocks as required and it was too late for a re-do. The framed wall in the master was so crooked that they were going to put another fake wall over that so that it looked straight. Seriously.
You can hire an inspector to just inspect the finished home, or you can hire a “phase” inspector that goes out periodically to inspect what they are doing during construction.
Lately, I am seeing builder contracts that limit the builders responsibility after closing. So it is important that you do have an inspection.
How to find a good buyers agent for new construction
Just like any profession, not all buyer agent services are the same. Statistics put out by the Orlando Realtor Association show that 38% of local realtors have been in business less than one year and only 64% sold one or more homes last year.
How does someone with no experience negotiate all the twists and turns that do come up? Or even know what to ask for? The fact is that they don’t...so don’t sell yourself short. You deserve to have someone on your side experienced in Luxury New Construction in Orlando. Choose carefully...
You, the home buyer, need to ask the agent the hard questions:
How much new construction do they actually sell?
How often do they represent only the buyer?
What will they do to save you money?
What will they try to negotiate for you?
Ask about some of the ways they protected the buyer?
Do they really read the new construction contract?
Do they provide advice during the contract signing?
Do they attend the home inspections?
Will they do a walk-thru for you, if you are not there?
Do they review the closing statement for mistakes?
What happens if the builder puts in a smaller water heater?
What will they personally do to actively help you?
Picking the right Buyer Broker will save you heartache in the future. Read our 5-star reviews here. Call us for a no pressure chat to discover your best home buying options in Luxury new construction in Orlando area: 407-539-1053
In case you can not view this video here, please click the link below to view Luxury New Construction in Orlando Area on my YouTube channel: https://www.youtube.com/watch?v=m_HT-DQ0L8A&feature=youtu.be