It’s Saturday afternoon and you are driving around. You see a sign for NEW HOMES and you say “let’s go check them out…we won’t buy anything….but I just want to see how they decorate the models!” Sound familiar? You are not alone. Looking at new homes can be a blast, but if you are considering purchasing one there are some very important steps you should take before ever signing anything. Here is a short list of tips based on my experience helping clients purchase new homes in the Denver/Boulder area.
Know Who the Sales Agent Works For!!
The sale associates are very friendly, offer you beverages while you are touring the homes, and sometimes may even offer you discounts/upgrades/incentives/etc. that appear to be a great deal. Sometimes they could be, however, you need to know that despite how friendly they seem, they are by law a seller’s agent. This means they have a contract that means they legally have to negotiate to get the best deal for the builder and promote the builder’s best interests, not yours
Hire a Realtor to be your buyer’s agent and ask that the go with you on your FIRST VISIT – The builder has a ONE PRICE policy so they won’t charge you more if you have an agent. In fact, they will pay your agent for you so it doesn’t cost you anything, however, they require that your agent is with you on the first visi
Don’t fall in love on the first day!!!
- Take it slow. Don’t sign anything based on emotion until you have asked all the right questions. You need to know your options, what’s a good offer price, what have other homes sold for, what are the future development plans are across the street, what kind of warranty will it come with, how much is the HOA fee and what will it include, can the HOA fee go up, etc before signing anything
Understand The Pricing/Incentives/Credits/etc
- Buying a new home is a more involved and time-consuming than buying a resale. Often it involves understanding how incentives, upgrades, design center options, etc all affect the final sales price. The pricing is often not as straight forward as a resale home. Make sure you have a firm grasp on how this all works and what other buyers in the neighborhood have gotten for incentives to know you are getting a “good deal”
- What is the Deposit/Cancellation Policy and what happens if you have a house to sell?
How much is the deposit and is it refundable? How and when?
- What are the STANDARD inclusions vs Upgrades
Often the model home is 90% upgrades and your model will be very basic unless you choose (and pay for) upgrades. Ask what is standard and what is extra. Also, will they give you an allowance for upgrades? How much?
Why should I use an Agent to purchase a new home?
The advantages of having an agent help you purchase a new home are the same as those for purchasing a resale home…knowledge of the market, help in finding the perfect home quickly, expertise in contract writing/negotiation, and closing assistance. The builder has a professional representative watching out for their needs, and you have the right to have your own professional representation. Why would you give up that right? I can professionally guide you through this process. I have 12 years of experience working with new home builders in the Denver Metro area and have access to a database of information about subdivisions, floor plans, etc. I am also familiar with new home warranties and builders purchase contracts. It is important to note that builders use contracts written by their own attorneys and not the state approved purchase contract used in re-sale transactions. This means the contract is written to protect the builders interests and not the buyer’s.
Is there any advantage to not using an Agent to purchase a new home?
No. There is no financial advantage for you to buy directly from the builder. Builders have a “single-price” policy, meaning you will be charged the same price whether your interests are represented by an Agent or not. Just as in any resale, the Seller pays your Agent’s fee.
Final Thoughts
Purchasing a new home can be a wonderful thing and provides a certain feeling of satisfaction know you saw it being built and were involved in picking out options etc! If you follow the guide above you will be well on your way to making it a great experience and a good financial decision as well. If you have been considering moving to a new home give me a call and I am happy to answer any questions you may have. I have negotiated many new home purchases and you deserve an experienced professional on your side. Mike 303-669-2744
I love looking at new homes with my husband. I always imagine that one day I could own one. After reading this article, I feel like my husband and I could get a new home sooner than expected. I know I shouldn’t fall in love with one right away, but with a real estate agent I think it would be a lot easier to buy it. Thanks so much for this article!