What to Ask When Buying New Construction

Buying new construction is exciting! Often you get to pick many of your own finishes and then watch your house rise from a piece of dirt. There's a definite thrill in moving in to a brand new home in which no one has ever lived.

There are potential downsides though, and they aren't always evident when you're sitting in a sparkling sales office inside a well appointed model home. Make sure you are armed with these questions so you can collect all the information, not just what the builder wants you to see.

Bring Your Own Agent
No matter what they say about being able to write the offer for you, the builder's agent is not on your side. They work for, you guessed it, the builder. If they are compensating for a buyer's agent, please be sure to have one with you on your initial and all subsequent meetings. Your agent must be familiar with new construction. Not all agents are, and as such they may not be able to help you in seeking the correct information.

What Agreements Have Been Signed by the Developer or Builder that Affect the Land?
There are communities where the developer strikes a deal with a utility service provider and then the homeowners are "stuck" in that deal for many years to follow. Watch for any specific local utility companies that may not be your typical Gas or Electric Company. One such agreement locked homeowners in a new community in Delaware into Propane for heat and hot water for 40 years. Once the homeowners discovered how costly this was to keep their houses warm, and how long they were stuck in this agreement, it was quite an unwelcome housewarming gift.

Who is the Developer and Who is the Builder, and Are They the Same Entity?
Sometimes the land developer will also be the person building the houses. Sometimes the land developer will sell the finished lots to a builder. You want to know who each of these people are, what they are responsible for and what level of contact you have with each of them. You also want to be able to check their reputation, so make sure to get the names. Check into their reviews, see if they stand by their product, find out if they provide a warranty and if they back that up and stand by it. An agent familiar with land development and new construction can guide you in the right direction.

What Is the Timeline For the Completion of Development?
Ask how many more homes will be built, how long the construction will continue, how many different builders may be involved. This is the chance to find out the future and direction of the community, and when any common amenities like pools or clubhouses will be completed.

What are the Rules and Regulations?
You'll want to obtain a full set of association documents, a schedule of the fees owed, and what they cover, as well as any rules and regulations for the community. If you're planning to Airbnb your home for example, or you want to have family reuinions at your new home's community pool and the documents prevent these things, this is something you would want to know before you sign on the dotted line.

Are There Any Preferred Lenders or Other Agencies?
Most builders will offer an incentive for going with a lender and title/closing company they have pre-selected. Sometimes this is great. Sometimes it's not so great. Often it's worth pricing out the incentive that the lender can offer with your own mortgage contacts. Typically though it makes sense to use the title/closing agent as they can save a few dollars on the title work they've completed for the building and units.

Buying a new home is exciting, but don't let the beautiful landscaping in front of the model and the high end furniture and upgrades sway your common sense. Look hard for any downsides and trust your instincts. And make sure to hire an agent familiar with new construction and land development.

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