Buying a new construction home can be a great way to get into a house that is move-in ready with all the upgrades and amenities you want. It can also be a difficult process if there are any problems or delays in completing your beautiful new home. Here are some mistakes people often make when buying a new construction home:
1. Not interviewing multiple builders.
One of the biggest mistakes people make when buying a new home is not interviewing multiple builders and selecting one based on price alone. Once you've narrowed down your selection to a few final contenders, it's important to sit down with representatives from each company and find out how they will work together, their construction time-line, and their customer service after the sale.
2. Not getting pre-approval from the bank for a mortgage.
It's a good idea to get pre-approved before starting your new home search process, but not all lenders will offer you a specific loan amount until you have found and begun negotiations on a new build property. If you're not careful, you could fall in love with a house that is much more expensive than you were approved for, which could leave you in a difficult situation.
3. Relying on the builder to pick colours and finishes.
One of the benefits of buying a new construction home is having complete control over your renovation choices, so don't hand that control over to your builder right away. Most builders have their preferred suppliers for cabinets, countertops, and other remodeling materials, but it's important to research these companies yourself and pick out some of your own finishes too. This will ensure that you get the look you're hoping for in your new home.
4. Not ensuring your builder has an established reputation.
When choosing a good builder, experience and a reputation for getting the job done well is key. It's important to work with a company that has been in your local market for at least 5 years, although 10 years or more should be your aim when looking into any builder. Remember, even experienced builders can encounter problems from time to time, but established companies will come up with a solution and complete the project to your satisfaction.
5. Not asking how long the construction process will take.
Every builder has a different construction time-line and they might not be as aggressive as you would like. If you don't ask about their construction time frame, you could fall in love with a house that won't be ready for another year. It's best to find out how long they expect the construction phase of your new build property to take before you start looking.
6. Not having the home thoroughly inspected before signing on the dotted line.
If you are buying a new construction home, have it carefully inspected BEFORE you sign the contract. Make sure everything that was promised to be completed is finished or scheduled for completion on time! If there are any problems with the roofing, plumbing, electrical work, etc., then have these fixed before you sign the contract or ask for a price reduction. Don't forget to have your home inspected before final signing -- it will be too late after that point.
7. Trusting verbal agreements.
Verbal agreements are NOT legal contracts. If you want a verbal agreement to be legally binding, then that agreement needs to be written down on paper and signed by both parties. No matter how well you know your builder, put it in writing! No matter how wonderful your builder's references are, put it in writing! No matter how many times your builder says something will happen, put it in writing!
8. Paying full asking price.
When buying a new construction home, always do your research. As with any real estate, there's always room for negotiations! The asking price of a new construction home is usually just that -- an ask. You can almost always negotiate the price down based on what you're willing to pay at the time and what finishes and fixtures you choose. But remember to take into consideration closing costs when deciding how much you're able to offer.
9. Not planning ahead for the home warranty plan.
You might think, "Why am I paying for a home warranty when everything will be brand new?" but there's actually a good reason to have one -- especially once you move in! Even the best home builders can have their bad days. Having a warranty will mean that your builder must address any problems you might encounter after moving in at no cost to you, which is excellent comfort.
Keep in mind that new construction homes are great but there is more at stake than just money and time. Make sure you work with an expert who understands all the potential pitfalls of buying a new build and how to avoid them.