Purchasing a new construction home can be a unique and rewarding experience, but it is important to understand that it is quite different from buying an existing property. The process of buying new construction is not without its challenges, so it’s essential to be aware of a few important factors as you weigh your options.
One of the first things to keep in mind is that hiring a real estate agent is critical when buying a new construction home. Although there may be a sales agent on-site, they work for and represent the seller, and a seasoned agent will work on your behalf. Not only will they know the right questions to ask, but they can also negotiate contracts for upgrades and finishes that don’t come standard with the home, potentially securing a sizable closing cost credit from the seller. Additionally, the builder pays your agent’s commission, making it a win-win situation for you.
Customizing Your Dream Home: A Guide to New Construction Homes
It is also crucial to have your earnest money deposit ready when buying new construction. While the typical deposit for previously owned homes is 1-2% of the sales price, the deposit for new construction homes is typically 5% of the sales price, as mandated by the builder in their contract. Moreover, if you choose to add additional features outside of the initial contract, you may need to provide a new construction deposit, which can range from 25% to 100% of the option purchase price, depending on when you add them.
Another thing to keep in mind is that you should be prepared to wait for your new construction home’s delivery. Delivery times can vary from immediate to more than a year, so make sure you understand the delivery timeframes and be prepared for these timeframes to be extended slightly, as almost every new construction project hits delays.
Navigating the Fine Print: Understanding New Construction Contracts
It is essential to read through the fine print when purchasing a new construction home, as many builders use contracts that protect them rather than the buyer. Therefore, it’s essential to have a clear understanding of the contract and its provisions. If you’re purchasing from a smaller or relatively unknown builder, it may be wise to have a real estate attorney review the contract for added protection. It’s also wise to negotiate addendums that protect the buyer, as builder contracts usually do not include contingencies.
Is New Construction Right for You? Factors to Consider When Buying a Home
Before purchasing a new construction home, it is crucial to understand what a new construction house is, as well as the different customization options that come with it. New construction homes offer various customization options, including building on spec, semi-custom, or full custom, and it’s essential to know what comes standard with the home and what costs extra. You should also be aware of new construction timing, as building a home can take anywhere from three to seven months, or up to a year if any delays occur. Choose the building option that best fits your lifestyle.
Finally, just like buying an existing home, when buying new construction, you should have your team with your interests at heart. Research, interview, and hire your own real estate agent and apply to multiple mortgage lenders to find the best deal. By keeping these factors in mind, you can make a well-informed decision and make the most of your new construction home purchase.
