DFW Homes – Buying From a Builder
Some home buyers don't want a used house. They don't want to inherit somebody else's dirty worn carpeting, personal taste in kitchen appliances or look at some kid's initials scrawled into once-wet cement that they didn't put there. They want a home that is brand new, never lived in. Hire Your Own Realtor· Your own will represent you, be your fiduciary and is required to disclose the positive things as well as the negative ones about the transaction. · The builder's sales agents are paid to represent the builder, regardless of what they may tell you. Many of these sales people will use high pressure tactics to get you to sign their one sided contract. Due to the high volume of new , many builder's agents are paid less than a traditional commission; some earn a salary plus incentives.· Hire your own buyer’s agent to represent you. Most of the time, your agent will be paid by the seller, but even so they can represent your interest 100%. If your contract contains a home sale contingency to sell your existing home before buying, hire your own sellers agent to list and sell your home. Beware, that buying new before selling your current home is not always in your best interest because you will be at a disadvantage when it is negotiating time.Don't Automatically Agree to Use the Builder's Lender· Compare alternate sources to find a mortgage company. Your own bank or credit union might offer you very attractive rates and terms, based on your banking history with that institution. Your agent may refer you to their own list of preferred lenders.· Builders often prefer their own lender because the builder will be kept fully informed of your personal progress. But a builder's lender might not offer you the best fees and terms. The builder may even own the lending company and make additional profit on your transaction.· Shop around and interview a few lenders. Find a mortgage banker or mortgage broker whom you can trust and with whom you feel comfortable doing business.· Ask to see a copy of your credit report with your FICO scores. You can order your own credit report for free before shopping for a new home.· Insist that your lender guarantee its good faith estimate that it is required to proved to you. If the lender balks or makes excuses, go somewhere else, because reputable lenders will honor that request, even though it's not required by the law.Obtain Competent Legal Advice Before Signing up for a New Home· Before you sign a sales contract on a new home, talk to a real estate attorney. Standard builder purchase contracts are designed to keep everybody out of court, but they don't necessarily contain language that protects the buyer.· Ask questions about removal or expiration of contingencies and your right to cancel. Make sure you understand your liability and commitments ahead of time.· Find out if the materials used by the builder contain chemicals that may be hazardous to your health. If your contract contains a warning about health issues, it's probably because it's a valid concern and other buyers have gone to court over it.Verify Option and Upgrade Pricing· Determine which options and upgrades you want in your new home. Keep in mind that for many builders, the profit margin is highest in options and upgrades. Some builders can sell a home for almost the basic construction cost because they make much of their profit in the upgrades/options.· Find out whether your lender will lend on all the options / upgrades you have chosen. If your lender will not finance 100% of your selections, you will be required to pay for it in cash, many times in advance.· Ask about cancellations of specific options and whether you will be held liable for items the builder cannot return to a vendor.· Some contracts give the builder the right to choose your upgrades if you do not submit your request within a certain period of time. Make sure this does not happen to you.· To save money, consider which upgrades you could purchase and install yourself after you close on the home. However, realize that some upgrades such as wiring inside the walls are easier to do during construction.Learn About the Builder's Reputation· If a buyer has a bad experience with a builder, and some will, the word spreads rapidly throughout a community. But you won't know if a bad report is an isolated incident or if the builder repeatedly brings bad publicity to itself without checking the public records for complaints and lawsuits.· Talk to the neighbors and pay attention to the construction quality of surrounding homes. Is the builder consistently building more and more homes in the area or is construction lagging and homes sitting have way completed?· Find out whether the builder sells to investors or not. Some builders require that all their homes to be owner occupied. Others builders will eagerly sell as much inventory to investors it their profit margins will allow. If the market takes a dip, investors are typically the first to bail out. Part of the reason you are buying in a new subdivision is to be surrounded by other buyers just like you, not renters.Hire a Home Inspector - Always· Always, always, always get a home inspection when you buy, even for a new home. Also, hire a licensed and accredited individual to perform the inspection -- not your cousin or your buddy contractor. Be there for the inspection and ask a lot of questions because a new home can, and often does contain defects. The HVAC system might be too small or the plumbing could be installed in reverse. Construction workers make mistakes. · If the home inspector calls for further inspection by another professional specialist, find out if the inspector is telling you there could be a serious issue or if the inspector isn't licensed to address that particular issue.
Comments