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1. First,
visit with your real estate agent. |
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Before you
step into a model home, know how much house you can afford. If
you currently own a home, you will probably need to know the net
proceeds from its sale to calculate how much cash you'll have
available. Your real estate agent can analyze this to narrow
down what that net proceed figure is likely to be. If you are a
first-time buyer, you should seriously consider becoming
pre-approved for a mortgage loan to nail down how much of a home
you can afford and improve your bargaining position with any
seller. |
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2. Put
experience on your side. |
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Remember that
the sales agent in a model home represents the builder, not you.
If you don't have a professional real estate agent working on
your side, you are not being represented. Your real estate agent
can help you to understand new home construction, warranties,
financing, and differences in price, quality, and lot selection
to help you obtain the best value.
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3. Not all
builders are created equal. |
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Some builders
are known for their craftsmanship, while others are known for
innovative use of space, below-market financing, or exceptional
customer service during construction and after move-in. Your
real estate agent, who makes a profession of real estate, can
help you find the best home for your needs.
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4. Get the
whole story. |
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Investigate
the reputation and financial strength of the builder. Be sure to
obtain "spec sheets" that cover the home features, which can
cover everything from floor plans to energy efficient ratings,
and from immediate-delivery inventory to lot availability.
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5. Look
"under the hood". |
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Learn all you
can about the community. Review the common amenities. Find out
from local land use officials what else is planned or could be
built in the area, especially where there's vacant land. Read
the rules of the homeowner's association - or determine whether
one will be set up - and investigate whether it has adequate
reserves set aside to build or replace major amenities such as
pools or major roads. Consider commuting routes and times.
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6. Choose
your options carefully. |
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The higher
the base price of the house, the more options and upgrades you
can add without overpricing for the neighborhood. Make the most
of builder incentives, typically free upgrades or credit off the
purchase price. Upgrading means selecting quality above "builder
standard" for carpet, floor coverings, detailing, appliances,
and kitchen fixtures. Options are items that the builder
installs while constructing the house. Options that add usable
space, such as a sunroom or a computer room, add most to resale
value. Remember that some improvements can be added later and
sometimes for less money, such as a deck, finished basement, or
landscaping.
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7. Negotiate
with the builder. |
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Many buyers
don't realize that there may be room for negotiating price,
upgrades, or options. You may have the most possible room for
negotiation if the builder has a completed but unsold home.
Unless you are buying in a "seller's market", builders may offer
discounts or special financing to help close a sale.
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8. Make sure
the contract works for you. |
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Be certain
that the agreement with the builder includes some safeguards for
you, such as putting your deposit in escrow, itemizing your
upgrades by description and cost, allowing you access to the
site to check on construction progress, a weekly schedule of
appointments to meet with the builder, and a 30-day advance
notice of the closing date.
Also be
aware than in many states, new home construction contracts are
NOT regulated by your state Real Estate Commission. The contract
is typically written to favor the builder.
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9. Financing
can make or break you. |
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Some
builders, especially those in high-volume communities that place
many mortgage loans, offer special financing packages. It is
customary for the builder to tie upgrade incentives to an
in-house mortgage company, so the builder may not offer those
incentives unless the buyer is willing to use the in-house
mortgage company. But using the builder's financing is not the
only option in the highly competitive world of mortgage lending.
You should shop everything, including interest rates, points,
and lender fees.
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10. New
doesn't mean perfect. |
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New
homebuilders typically use modern materials that are durable,
low maintenance, stronger, quieter, safer, and even wired for
the next century. But new doesn't mean perfect. Your contract
should provide for the option of hiring a home inspector. You
and your real estate professional should prepare a list of items
for the inspector to pay particular attention to, and you should
accompany the inspector during the inspection. Use what you
learn from the inspection to create a builder "punch list" to
fix major problems before closing.
Those who
brave it alone may not realize that there is usually no out of
pocket cost to the buyer for this necessary representation!
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