Going Under Contract for a New Home Build

[Tommy Feraco Jr]

Hello,

I have a new lead interested in a new home build in my area. I have yet to work with new home builds and the process of going under contract for these in particular. I would assume that it would be a much longer process if the client would prefer to go under contract as that home is in the final stages of construction. I would love to hear any suggestions on what to look for and where I should be committing my due diligence towards!

As always, much appreciated. 

[Lydia S.]

@Tommy Feraco Jr

From a few experiences, I will toss in a couple tidbits.  
First, is it being ‘listed' by a Realtor on the MLS or is it a sales rep who works for the builder? That may determine whether the offer will be written by you on State forms or if it will be written by the rep on a different contract.
a builder’s contract may have terms about the appraisal where a low appraisal requires the buyer to bring any amount differential to the table at closing, especially if there are a lot of upgrades over base materials.

Builders rarely negotiate on price but you may be able to negotiate some upgrades for your buyers, like quality of appliances, garage door openers, fixtures.

If the project isn’t completed, your buyer ‘may’ be allowed to make some choices in materials, upgrades and cosmetic options.

I would arrange a few walkthroughs to observe the progress before completion, with the buyers.

Delays in construction and State required inspections, certificate of occupancy and cost of materials can complicate closing, such as a builder changing the price or the buyer’s rate lock running out of time and what it costs the buyers to extend it.

Still recommend inspections to your buyers as new construction doesn’t guarantee things are in perfect condition, although builders typically have a window of time whereby they will correct what’s found by the new owners after closing, as well as some guarantees over time.

Some builders have preferred lenders and Title companies - although the buyers don’t have to use them, they typically make for a smoother transaction and may provide discounts.

If your buyers are loyal, and they happen to speak with a builder or builder rep without you, hopefully they won’t take the bait if the rep says they’ll get a deal if they leave you out. Remind your buyers that you are there to protect them through the transaction.

Ideally, as mentioned in another response, always attend an initial tour or visit with a new build or builder with your clients, and let your clients know if they visit a builders website or speak to someone that they need to indicate that you are their Realtor.

Good luck!