New Construction Homes: What to Ask Before You Buy
New Construction Homes: What to Ask Before You Buy
Right now, in the Southwest Florida market, there are many new construction home communities to choose from. Over the last year, many area builders and developers have broken ground on beautiful, new golf and non-golf, single-family homes and condominium communities in Naples, Bonita Springs, Estero and Ft. Myers. The thought of a new home with choices of upgraded finishes, a variety of floor plans and new energy efficient options is very attractive to homebuyers, especially after touring those gorgeous model homes. Many homebuyers think purchasing a brand-new home is smarter than purchasing a “used” home. A new home’s maintenance costs should be minimal; its construction materials, systems and appliances should be up-to-code and energy efficient; the floor plan and amenities should meet the needs of today’s buyer; and the home should be move-in ready. A new construction home also has an emotional appeal for buyers who like the idea of living in a home which is completely clean and potentially perfect. According to industry sources, over seventy percent of home buyers want a new construction home.
However, as with any home purchase, new construction or resale, it is critical to go into the transaction with your eyes wide open. If you are in the market to buy a new construction home in 2016, there are things you should know.
Probably the most important thing to do when buying a new construction home is to bring your own real estate agent with you when beginning your search and visiting the new home models. While this is the most important piece of advice, it is usually the biggest mistake new construction home buyers will make. Many buyers think since the home is brand-new, representation is not needed. This could not be further from the truth. New construction buyers should absolutely have their own agent (not the builder’s agent) to represent their interests only, not the builder’s or developer’s interests. Having your own agent to negotiate on your behalf is critical – even for a new construction home purchase. And, there is no cost to you to have this representation. The builder/developer pays your agent’s fee! It does not cost buyers one red cent to have their own real estate agent looking out for their best interests. Also, do not forget all developers require your real estate agent accompany you the first time you visit a sales center!
Before you make this visit with your agent, be sure to research area builders and developers. Do your own investigation of the builders/developer’s previous projects, length in business and complaints filed with the state or local business bureaus. Your real estate agent can also assist you with this, as he/she will be familiar with area builders/developers, their offerings and reputations.
Once you see a model you like, ask how much this home is as you see it. Models can be filled with every upgrade offered by the builder/developer as an example for buyers. Typically, this cost will vary dramatically from advertised starting prices. Also, there can be a huge difference in quality and life spans between builder grade and upgrades. It could be worth the additional expense to install higher quality carpet, cabinets and hardware. Your real estate agent can assist you in negotiating the inclusions and costs of these options as well. Additionally, most builders/developers will require you to pay deposits in advance to cover these options, upgrades and final details you will choose. However, if you decide to pull out of the contract, the developer is now stuck with choices another buyer may not want. Remember, if you decide to pull out, you may not get your deposit back for these reasons.
Don’t be enamored by builders’ incentives (another reason to have your own real estate agent representation!). Free monthly paid assessments, stainless appliances, televisions and home “upgrades” are often given to induce buyers to “act now.” These may be signs the development is slow to sell, thus begging a more important question to ask – why?
Another very important aspect to consider when purchasing a new construction home is the future resale value. The low cost, buying emotionally and wanting to be the first to live in a brand-new home can make you consider a less desirable location or poor workmanship. You are better off purchasing a resale home in a better location than buying new construction with poor quality, or worse yet, potential poor resale value due to a poor location. In the community itself, you will also want to question how much of the current percent sold are reservations versus actual contracts. Some reservations do not go to contract because of a change of mind, money issues or required occupancy dates.
Another very important thing to do is to investigate property taxes beforehand. Property taxes can be a financial surprise with the purchase of a new construction home. Because tax assessors have not valued a home, builders/developers can underestimate how much the taxes will be. Call the local taxing authority to find out your worst-case scenario so you can plan ahead for it and not be unpleasantly surprised!
It is also a good idea to inquire about investor-owned properties in the new construction home communities you are considering. In the post real estate bubble world, especially in Southwest Florida, many builders/developers are restricting the number of homes which can be purchased by investors. If you plan to buy a new construction property as an investment, look for clauses in contracts requiring purchasers of homes to be owner occupied within the first twelve months after closing. Ask what the percentage of owner occupancy is allotted for the development.
Request copies of blueprints, floor plans and surveys. In the future, when you want to make changes or sell, having the blueprints, floor plans and surveys of your home will save you expense and time. Make sure the builder/developer provides you with an updated survey, showing your precise parcel. Verify your new home also has its own parcel identification number issued by taxing authorities. Investigate warranties on structure, finishes and appliances. Builders/developers usually offer five to ten-year warranties on the homes structural elements and then rely on their manufacturers’ warranties for appliances, furnaces, windows and garage doors. Always beware and question one-year warranties on hard structural elements!
Never ever omit a final walk-through list! You should have a final walk through at least three to five days before closing. Create a list of all items requiring completion; both parties should sign in agreement to the final list. Builders/developers should complete these lists before closing. And, more importantly, never skip the right to an inspection! Even a brand-new construction home should have a professional home inspection. New construction is not free from defects and poor workmanship. Your real estate agent can provide you with resources to arrange for a home inspection and should inform you of an inspection at least seven days prior to closing.
Lastly, never just accept the assessment amount you are told. Builders/developers can use low homeowner fees in new construction. Plan on about twenty five percent increase in assessments the first year after the association is given to the homeowners.
Purchasing a new construction home in Southwest Florida can be a great investment and a positive experience if you fully understand what to ask about, what you are getting and the costs involved. Going into it blindly, without your real estate agent at your side is never a good idea and can potentially leave you with additional costs, lower property value and a home that is not what you thought you were getting. Understanding the process, doing your “homework” and having a knowledgeable real estate agent at your side will ensure you get what you want, not only in a home, but in an investment as well!
Keller Williams Elite Realty
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