Buying New Construction Homes  

Tips for buying new construction homes for sale and keeping as much of your money as you can in your bank account while getting the best warranty and purchase protection for your family. That would have been to long of a name for the article. However that is what I want to help you do. I am a Realtor in the Orlando area. This information will help you no matter where you live. I have been a Realtor in more than one state and this information comes from over 30 years experience buying and selling homes and knowing other Realtors who worked for construction companies selling new construction homes.

Homes for sale in Orlando FL

Home buying is an awesome time in a person's life. It is this hope and excitement that blinds the buyer to the fact he/she is dealing with professionals who have the builder's best interest in mind. It just so happens that the builder's best interest is this. They want to take as much as your money as possible and still manage to keep a good enough reputation that they can still find new clients. Really what the buyer is doing is equivalent to this, they are making a purchase 10-15 times the size of a new car and trusting a new car salesman. They are the exact same thing and the companies have the exact same goals. It is a business. New car lots have the same goals. They want as much of your money as they can get, they want to limit their liability and keep their reputation good enough to maintain their business. Hopefully the following walkthrough and tips will help you enjoy your new home much more. I promise some useful tips just not all of them, every situation and builder are slightly different. As are car lots.

Keep in mind, a company that builds homes will not encourage you to not use a Realtor unless they do not want someone who is experienced in the process on your side. I have companies reach out to me every week encouraging me to bring them clients in various ways. Those companies know that it will be a better experience for you and you will be more likely to speak well of the new home purchasing process.

Buying New Construction Step 1

Before you do anything else I recommend you get prequalified for your mortgage. Preapproved is better. Here are some suggestions. Stop moving large sums of money between accounts. Also if you fill out your loan application online do not copy past your name into the blocks. Yes they can tell and this is a red flag of fraud. Take the time and fill everything in honestly and methodically. Banks are thorough and will check you again right before you close. No new large purchases or you will endanger the close. Yes I have seen it happen. Yes the bank will notice.

Obviously income, debt and credit score will be considered by the lender. The mortgage broker "may" make more money if you borrow more. There is a fee called the mortgage origination fee. It is typically 1% of your mortgage. That is just one example. You can expect to get approved for a payment that will be 30-40% of your monthly net income. 40% for people with really great qualifications. At this point you could benefit from considering these things. Property taxes, Insurance and Maintenance are three expenses that can go up. What other expenses in your life may go up? Are you sure your income will? Also you are going to want furniture, window treatments etc. Lawn care is going to have to be done by someone. Will you be needing a new car? Maybe staying closer to that 30% number will make you happier in the long run.

REALTOR TIP #1- Do not buy the nicest home in the neighborhood or the least expensive. If you want that level of a home buy in another neighborhood which the home you want is average in. When it comes time to sell your house again you will see why. The average home is average because more people are in the market for it. The home will be much easier to sell and you will be more likely to get more money for your investment. 

Buying New Construction Step 2

Buying new construction homes for sale is absolutely right for some people. It is not right for everyone. Some people change their mind after weighing the pro's and cons. Remember I am a Realtor not a family member. I want you to be happy with my advice and services so you will recommend me and use me again. If you buy either it is of no concern to me if you are happy with my services and your home. Here are some things to look at when you are considering new construction homes for sale.

• Commuting times. New homes are usually far from downtown areas. Since they need affordable land to build on. If this causes a longer commute for you or everyone involved how will that affect you in 2 years? Are their tolls involved? 
• Lawns and trees are often much better in established communities.  Which is really your preference? Are you willing to work with that new lawn and smaller trees? Can you budget for more mature trees or different types?
• Many of today's builders want to build basic models with few changes. This enables them to keep cost down. Also to maintain the brands image. Trust me some people have unique tastes and those tastes can damage the value of an entire community. There are some good reasons for model homes. Remember what it is like to buy a new car? All of the sudden you see your car everywhere? Can you make the necessary adjustments to not have that feeling when you drive home and see models similar to yours? There are ways to help.
• Lastly the in thing today is building homes close to one another. How are you going to feel about that? If you are OK with it then proceed on because this is probably a multi decade trend. If you do not like it can you get a home with a view from the front or backyard? I have lived in neighborhoods with homes very close to me. I currently live on the water, I have lived with my backyard being the reserve. Both were fine for me.

Buying New Construction Step 3

Strongly consider researching the communities and the builders. Also strongly, very strongly consider getting an experienced Realtor. Some people hate doing this and here are two reasons. They already know a Realtor, they just do not Realize that there are some Realtors out there that are awesome or don't know how to find the good ones. Like any profession 10% are really great. By the way really great does not mean a production farm of 10 agents so you can claim 100 sales per year. Really great means local knowledge and actually caring about the process and the person that is trusting you. Realtors are trained 10 times as much on finding clients as they are doing their job. There is a reason for that but it is not for this post.

I have written about 100,000 words on my site about the local communities. I have zero negative reviews online. Zero. Look for someone like that. If your around Orlando contact me here. Most readers will not be so please consider the 2 items above in your search for a Realtor. They will likely cost you $200-$500. That will be in a Administration fee you will be told about later. If they tell you upfront that they will cost you nothing make them hold to that pledge when they advise you of the fee. By the way I pay those fees myself. The client pays me by being pleased with my services and referring me. It is cheap advertisement.

Your new Realtor should accompany you on your first visit to any new construction community and be there when you meet the companies Realtor or Sales Agent. If not then your Realtor has endangered their commission and the builder's agent may get it all. If you have gone under contract with a Realtor this can be a legal and potentially a financial issue for you. So make sure to schedule your visits or follow your Realtors advice. It is going to be worth it later. Remember this also. The builder's salesperson is the new car salesperson. And the more friendly and pretty they are the more you need to be careful. They are asking you questions just to build a relationship with you to establish trust. They have been trained to do this and they may not really have a dog just like yours.

Realtor Tip #2-  Of course you are going to drive around in the community and you will be taking a look at the communities amenities. I would stop and talk to people who live in the community. How was their experience. What gems might they know? Would they do anything differently?

• When you go through the models take pictures and notes. A short list is better than a long memory. After 4-5 homes you will see what I mean. Some builders give their models names and some builders give them numbers. Hard to believe right. Which home would you rather buy the Casabella Grande or the number 14?
• Ask the builder if there is an HOA. I can already tell you yes but ask anyways. Then ask what the fees are and how often they can be changed. Is there a maintenance fee? How often can it be changed? I promise they will not usually go down. Does it allow a vegetable garden? Restrict the types of plants? Above ground pools? Parking in the streets? etc etc.Can the HOA assess cash penalties for violations?
• Call the City Planner's office it is a good place to look into zoning and possible new roads. Make this call yourself. I mention this from experience. Zoning can change. It may just take a phone call to save you an issue later. Also take a look at the area on a map. Does it look like a good area to add a new road? I have seen people told that the preserve behind their home will be there forever. Then when the community was finished all of the sudden the city decides to approve a new road. To top it off it was beside the communities most expensive homes.

Realtor Tip #3- Some communities have multiple builders you can choose from or you can even use your own. There are pros and cons to this. For quality and long term price stability I would prefer a community filled with homes built by one builder with a good reputation. Most of the building in the area I live in you must use the builder everyone else has used or one from an exclusive list. You can not bring in "Joe Blow Construction."

• Researching your builder. You can take this to extremes by going to the courthouse and seeing if any liens have been filed on the builder. You can drive by one of their homes that is being built and talk to a contractor. Ask if they are being paid on time. You can simply go to the better business bureau and check there etc etc. The best way is to just ask some people who live in their homes. Online reviews can be purchased or you can have your employees do them. Angry people do reviews on yelp but satisfied people won't do them. Anger is a much stronger emotion. Contractors rarely get paid on time because they rarely ever finish on time. Here is a suggestion for you. Look at the communities amenities. If they look a lot cheaper than the communities around them that should tell you something. Seriously just look at the picnic tables. I am thinking of some examples in my mind right now. You just can not hide cheap.

Realtor Tip #4- Phase developments. When your development is going to be built in phases here are some things to consider. Your builder may not still exist if the builder is not a larger builder. This means the plans for that million dollar community may turn into plans for $500,000 homes. Did the municipality get the builder to post a bond for the shared amenities that will be built?

Buying New Construction Step 4

The builder will be showing you upgrades. As soon as the builder thinks you are hooked then expect the focus to shift from amenities to upgrades. The builder offers them to allow you to personalize your home. Also to increase the builder's profit. One common upgrade that benefits both seller and buyer is to change the appearance of the front of the home with bricks or stone. This can make the same model appear different. Sometimes the garage is moved to the other side of the home etc. When you initially get information on the models take the information home and make note of the standard features. That can influence your bottom line in the long run. The earlier in the process you decide on upgrades the cheaper they will be. If you are still bargaining on the price try to settle it with an upgrade. This can be mutually beneficial.

• Your builder has most of what they need for upgrades already available and possible even onsite.  This makes it easier for the builder to profit on upgrades. It also makes it easier for you to not have construction on your home later to save a couple of dollars. Find the happy middle ground.
• Don't trust their pricing on appliance upgrades. Check the prices on your smartphone right there in front of them. Show them you are savvy and you're not going to "pay to much for that muffler". Old joke, sorry.
• For later on. Save all of those appliance warranties. I know that should go without saying but you will be busy and excited. Some of the warranties will require registering your appliance. Make sure you do not forget. Set up a google reminder or something similar. It could save you thousands. Maybe they require you to register those products because some people don't.

Inspections and Home Warranties

I am going to try to make this apply broadly. Some states, local municipalities and builders will differ. So I am going to err on the side of caution for you. Not all warranties and inspections are equal. There are some ways to safeguard yourself and family.

• When you buy a new construction home try to get the sale to be contingent upon an inspection that you pay for by an outside home inspector. Just because the county or local code inspectors have looked at the home does not mean they did not miss something that will glaringly obvious to an independent home inspector. Home inspectors are sometimes way to thorough. Keep that in mind also. Builders know this which is why they will baulk at the idea a remedy is this. If there is unfinished work DO NOT CLOSE. If you have to close escrow funds to be released upon final inspection. Your lender will probably insist on this anyways if the lender even agrees to close. If you decide to not close hopefully your agent properly guided you in the handling of your deposit.
• Arbitration. Your builder will probably want you to sign an agreement to accept arbitration. This is a legal issue and may or may not be right for you. Realtors are not attorneys. If your Realtor acts as one they are commission hungry and will eventually get sued. I will simply say to find these items out no matter which state you are in. Where is the Arbitrator and who will it be. Get one in your area. Builders use their own contracts. Don't be hesitant asking for contracts to be changed or amended. Realtors do this all the time. Try to retain your rights. Most Builders will send an attorney to arbitration. From my experience you can take an attorney to arbitration and if you don't then you lose. Things said in arbitration may not be admissible in court. Written statements may not work in arbitration. Subpoena witnesses instead. Get an attorney.
• Warranties- Some states dictate different timeframes for warranties. You may have 10 years for major structural component warranties, 1-2 years for workmanship and materials and 2 years for certain mechanical items. More expensive homes are slightly different, or can be. Obviously I am going to say read the warranties and I know you will most likely not fully read or understand them. So here are some important items to find out. Who backs the warranty? The Builder or a third party? If it is a third party it sounds like a smart shopper has some googling to do. You should research them but remember very few companies that back warranties are complaint free. They are targets for fraud and so they are very cautious. Honest people pay for the fraud of thieves. This is a sad but true fact. One thing to consider if you are purchasing a home warranty. If you buy a long term warranty and have a problem  relatively soon you are already locked into a long term warranty and the provider knows it. Do not count on a full refund either. Here is an example of a warranty you may see if you live in Florida.  RWC.

My last little bit of advice is this. At least speak with 2 lenders. If you have ever purchased a new car and taken in a preapproved loan you may have noticed this. They can always beat the terms. Well truth be told may mortgage brokers are the same way. The broker may not make 1% on the loan he/she may only make .95% on the loan.

This is something to keep in mind. Your Realtor is not allowed (it is illegal) to receive compensation from a mortgage broker for a successful mortgage issuance. We recommend mortgage officers who deal with lenders who do not cause problems at the last minute.

Thank you for reading this article and I hope it helps you in some way. If you want a great Realtor in the Orlando area contact me. I look forward to hearing from you and sharing more tips for buying new construction homes for sale.