Buying a New Construction Home

Real Estate Agent with Keller Williams Realty Professionals OREA# 201211562

Buying a New Construction Home



buying a new construction home



New Home Buyers Benefit Having Their Own Broker


Buying a new construction home is a complex process and very different from buying a pre-owned home. Having your own experienced broker with you from start to finish, negotiating, asking the right questions, is how you can save a bundle of money on your new construction home.   


The new home builder’s sales team works for the builder. They are typically well trained and look after the builder’s interests, not yours! Buyers often think they can get a better deal if they go direct to the builder’s staff. This simply isn’t true: builders don’t lower their prices for unrepresented buyers. In fact, builders firmly resist lowering their prices because it sets a precedent for future home sales in the community. New home builders plan on paying outside broker fees and build it into their budgets - typically the marketing budget. If you don’t use your own broker, the new home builder just pockets the extra profit.  




Negotiations and Pricing


While new home builders resist negotiating on price, there are several ways to reduce a buyer’s cost when buying a new construction home. From discounted lot premiums, no-cost upgrades, lender credits, phase of development, to the time of the year...working with an informed broker who asks the right questions can uncover more value for you. That’s a distinct negotiating advantage for new home buyers and can help you get the most value for your money with the least amount of hassle and frustration.


Buying one of the builder’s model homes can be an excellent choice. These homes were the builders showcase, full of upgrades and extras. They’re still basically new...just gently used by the sales staff and visitors. The downside is you don’t get to choose the flooring, cabinets, or finishes, but model homes tend to sell for market value, so you can get all the upgrades at a significantly reduced cost.


Always confirm that all builder credits, upgrades, and concessions are made in writing and included in the final contract. Verbal agreements and promises are not binding in real estate




Upgrades and Options - Making Smart Choices


When buying a new construction home, builders will offer a wide array of options and finishes, making it easy to get overwhelmed. The models are generally an upgraded version of the home builder’s standard version. It’s their showpiece. Understanding exactly which features are standard, what options are available, and what these options will ultimately cost is important. Builders will each have their different options and design choices...a standard feature for one may be an option for another. Some new home builders will add/change rooms and windows, others will not.


An experienced agent can relieve some of the stress by; helping to define the standard features, making recommendations for upgrades that bring the most resale value, suggesting finishes that you may be able to do for less elsewhere, and avoiding over-improving the home for the community. And keep in mind, adding too many options has the potential to push the sales price above the loan appraisal, requiring the buyer to pay cash for the difference.  




Financing Options


New home builders generally work with a preferred lender, and in most cases, this lender will offer attractive incentives to buyers to use their services. It’s still a good idea to shop your loan around to find the best loan for you. Often, the preferred lender will match or sweeten their terms to match the terms of another lender. Yes, it can take a bit of time, but you’ve already gathered all the information. This simple step could save you a substantial amount of money when financing your purchase.


Unless you’re buying a model home or nearly completed home, timing is a consideration when financing your new home. Most lenders will not lock the interest rate beyond 60 or 90 days, and there is usually a fee to do so. Keep this in mind when talking to your lender and determining how much you qualify for. If you push to the very top of your price range at the start, a change in interest rates beyond the lock period could affect your ability to qualify for the full loan amount.   




Contract and Warranty Review


Many builders use their own purchase contracts and forms, which are different from the local area real estate board contracts. These contracts are written by the builder and can be slanted towards the builder more than the buyer. Some national builder contracts may include provisions that apply in one state but not another. A knowledgeable broker can review the contract with you and discuss any concerns you have. From floor plans, initial deposits, deadlines for requesting, changes, to completion timelines - understanding what you’re agreeing to, and what the contract terms are, helps to relieve uncertainties.


Pay close attention to the warranty offered by the builder. Builder warranties typically last from 12 to 24 months, and up to 10 years for major structural items. There are differences from builder to builder, but generally their warranty covers a new home’s materials and workmanship. This can include items such as the foundation, roofing, siding, windows, waterproofing, insulation, plumbing, electrical, carpentry, and paint. Items such as appliances are not covered by the builder, but are typically covered under the manufacturer’s warranty. Understand how to make a claim, the items covered, and the warranty timelines to be sure you’re covered if something goes wrong.   


Home Inspections

It’s a new why do I need an inspection? Just because it’s new home construction does not mean things can’t go wrong. Even professional workers and tradespeople can make mistakes. Always hire an accredited inspector to perform a full inspection. If an inspector sees something of concern, it can be brought to the attention of the builder for correction before the final walkthrough.


Here in Oregon and Washington, a sewer line and radon tests are advised for new homes as well. You never know if a backhoe bumped the sewer line off a bit during construction. If there’s an issue with the either of these inspection reports, better to know now and have the builder resolve it before you close.



Thanks for Reading Buying a New Construction Home.

Get the Best Deal and Protect Your Interests!

Don't buy a new construction home without your own agent at your side.

From initial selection, negotiations, inspections, to the final settlement,

we’re with you every step of the way. Feel free to call: (503) 680-9390





Feel free to reach me directly... 

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John Van Hogen - Principal Broker Oregon / Broker Washington  

Oregon - 9755 SW Barnes Rd #560 Portland OR 97225

Washington - 2211 E Mill Plain Blvd #302 Vancouver WA 98661 

Keller Williams Realty Professionals

Each Office Independently Owned & Operated - 503.546.9955




Comments (1)

Lynn FISCHER Phoenix, AZ West Valley, Sun City, Active Adult, Sun City Grand
HomeSmart - Sun City, AZ

Excellent post, John Van Hogen on new build representation!  So important for clients to understand & be aware of as there are many misconceptions and misinfornmed assumptions (as we all know....). 

I have a bulletpoint list (very similar to your points) that I use to discuss with potential clients at first meeting, as part of "Buyer Representation" discussion.  It has made a huge difference for me, and it helped to increase my business in a large way as our resale inventory in Arizona, especially here in Phoenix, is very low.

Jun 21, 2019 09:08 PM