How to buy a new-construction home
In a hot market with low inventory, new homes are an attractive option to many buyers. Several benefits exist when purchasing a freshly built home: the ability to customize features; warranties from the builder; not having to clean up after a previous owner; and so forth.
But buying a new home from a builder isn’t always as easy as walking in and ordering your favorite upgrades and a floor plan. You need to be prepared and aware of all your options first. As much as society wants to automate everything these days, some things still require a human touch, and real estate is one of them. Let’s take a look at the current climate surrounding new homes and how best to go about purchasing one.
Hire a Realtor first. You know, as in someone not collecting all their paychecks from the builder. This is a common sense step you can take that will pay you dividends throughout the process. Realtors are there to help you with a variety of tasks — negotiating; managing the process; helping keep clear communication between all parties; keeping the seller on track; explaining jargon; providing sales data for your new home and homes around it; and so much more.
Builders plan to pay Realtors for most transactions, and walking into a model home unrepresented will not save you money in almost every single instance. New-home sales consultants are hired by the builder and their goal is to sell you one of the builder’s homes, which is not at all a bad thing. Just know that having your own Realtor to represent you is welcomed by builders and will most likely cost you as a buyer nothing, at least in Florida.
Keep your poker face. This isn’t to say you should lie, but don’t divulge you are in a must move situation or exactly how motivated you are before signing a contract. You want to treat the new home-buying process and builder like you would a private seller. If you wouldn’t let a private seller know how motivated you are before starting the negotiation process, don’t do it with a builder. And by the way, negotiations begin the minute you walk into that model or register online. It’s OK to hold back on personal information such as urgency and motivation.
Bring your Realtor with you the first time you visit. Don’t register with your information in person or online, use your Realtor’s contact information. If it isn’t possible to bring your Realtor on your first visit, as soon as you enter the model, give the sales rep your Realtor’s card and information and don’t register. Same thing goes for online. Register with your agent’s information. I often look for new-home options online for my buyers and send them listings through sites specifically for new homes. Immediately after, I am flooded with emails from new home agents in those communities plus many other communities not even close to the specifications I enter in the search criteria. So don’t share your info, provide the name number and email of your Realtor and let us filter through the requests.
Additionally, it’s important to establish the connection between you and your Realtor so everyone is on the same page. Creating a clear connection between yourself and your Realtor from the beginning will help protect your ability to receive full representation from your own agent.
Don’t be swayed to sell your home through an online company or Realtor recommended by the builder without comparing all options. I recently heard of an out-of-state buyer who popped by a new-home community closing out its last few homes. This buyer advised the sales agent that he or she had a Realtor, and yet the sales agent repeatedly pushed them to go with an agent they were recommending. This should be a red flag. If you have an agent and have expressed this to the builder, it’s pretty unethical to then try to get you to switch to another Realtor.
Another trend is some builders promoting affiliated brokerages, most recently one of the online “disruptor/DYI” models and offering contingent contracts if you list your home with said brokerage. The promise is to “sell your home without showings, repairs and months of stress.” Sounds great right? I checked the website and once again, reading the fine print shows that the cash buyer may well request repairs or a price reduction if they don’t like their eventual in-person inspection. If it sounds too good … you know the rest. I’m not saying that the online web based DYI models can’t work, I’m just saying if you are selling to a cash investor who hasn’t seen your home and plans to sell it themselves, do you think that will be the highest amount of money you can get for your home?
Some of these models turn around and charge you commissions or other fees but don’t place your home on the open market. Real estate is a numbers game, and fewer eyes on your home means fewer chances to get top dollar. In this market in Central Florida, you likely can get more money selling it the traditional way.
Compare apples to apples when considering financing options. Most builders will have either their own mortgage company or an affiliated company. Often, builders concessions such as closing cost contributions or dollars toward design options are tied to using this lender. In many cases, the preferred lender is great, but it’s not a one-size-fits-all situation. You may have to pre-qualify with their lender but have the option to still work with a lender of your choosing. I encourage you get a second opinion before working with that preferred lender. What are the fees associated with each lender? There is more to consider than just the interest rate.
New construction can offer so many advantages to today’s buyer, especially in Central Florida. Just remember to get your own representation, review all your options and don’t feel pressured to make a move if you are not ready.