Tips for Buying New Construction

The process of buying new construction involves a lot more than just visiting the sales office, picking out a floorplan and a lot, and then plopping down a deposit check. There are many potential pitfalls that unwary buyers may fall into, many of which can cost you a bundle of your hard-earned money if you're not careful!

• Tip #1: Use a qualified Realtor to help you avoid the money drains and other pitfalls of buying new construction. The nice people at the sales office are NOT working for you, they're working solely for the builder. They're in the business of selling that builder's homes, and nothing more. Don't believe me? Click here to see what a builder's sales rep had to say about this! Also, be sure to check your Realtor's qualifications in regards to new construction. Is your Realtor a Certified New Home Specialist (CNHS)? If not, find someone who is! And remember: All builders use the "first visit" rule. Your Realtor must be with you on your very first visit to a new home development!
  • Myth #1: Builders will give me a discount if I don't bring a Realtor. WRONG!!! The builder will not give you anything for showing up on your own. No credits, no price reductions, no discounts on your upgrades. They'll just take the money you saved them by showing up on your own straight to the bank.
• Tip #2: Ask questions BEFORE you sign any agreements, and have your Realtor present at the signing. Santa Clarita new construction often has extra taxes and other fees attached to it that you the homeowner will be responsible for paying over many years. Knowing what these are in advance will help you to understand whether you can afford the home or not. Remember, there's more to owning a house than just paying the mortgage! You'll also be responsible for property taxes, Mello Roos assessments, homeowners association dues, and property insurance. Make sure your Realtor knows enough about the area to ask the right questions of the builder's sales rep. Often the sales reps won't share this information unless they're asked in a certain manner.
• Tip #3: The advertised base price is not the price that you'll pay! Builders often add thousands of dollars to the home price for lot premiums (you want a nicer lot, don't you?), upgrades such as countertop materials and flooring, and sometimes even for the separate tub and shower in the master bath as well as the fireplace in the family room. Again, ask questions to make sure that you're getting all that you think is included with your new home. A qualified Realtor will know to ask about all of these little details that can add up to big bucks later.
  • Myth #2: My new home will be just like the model. Wrong again! The models are spiffed up with all the most enticing upgrades, and are meant to seduce you the buyer into wanting to live there. Make sure you know EXACTLY what your new home comes with, including cabinet and countertop materials.
• Tip #4: Research possible lenders. The builder will usually have a relationship with a lender, which we call an "in-house lender". The lender gets this top billing by either being related to the builder's company (likely a subsidiary) or by paying the builder to let them create a presence there. Both the builder and the lender get paid when you the homebuyer use the in-house lender. Sometimes this is a good deal, and sometimes you'd be much better off with a different lender. Often times the "incentives" that the builder offers for using their in-house lender are eaten away by the extra fees and costs that you'll pay to that lender, rather than being used for your upgrades.
• Tip #5: Beware the intro rate! Many of the builders' in-house lenders are now qualifying new home buyers based on the introductory rate for their new mortgage, rather than for the actual rate that they'll be paying once the intro rate expires. You'll notice that there are more people going into foreclosure because of this - buyers are finding that they cannot make the payments once they are adjusted to the prevailing interest rate. Don't let this happen to you! Be sure to get full disclosure from your lender, and be sure that your Realtor looks over this information with you.
• Tip #6: Pay attention during your final walk-through. The final walk-through is the last thing you'll do (other than closing escrow) before you take possession of your new home. The builder's reps will often try to distract you during this process so you won't notice all of the small defects that are present. This is your LAST CHANCE to get cosmetic defects corrected. Once you move in, most of the cosmetic stuff will not be covered, since there's the potential that you caused the damage yourself during the move-in process. Check everything: turn on faucets, flush toilets, check for damage on walls, cabinets, and floors, check for evidence of water leaks, open and close all windows and doors.
• Tip #7: Get a professional home inspection during Month 11 of your home ownership. Most builders allow you 12 months to discover and report any defects. A qualified inspector will both find previously undetected defects for you, and he'll prepare a report that you can present to the builder so you can get these fixed.

As you can see, there's a lot involved in buying new construction! Not mentioned here are other items such as installing landscaping and window coverings and how to know if the neighborhood will fit your lifestyle. A homeowners association can be a double-edged sword: it will keep your neighborhood looking neat, but it will usually not allow for commercial vehicles or toys such as motor homes and boats.

Remember that your best resource when shopping for new homes is a qualified Realtor who is also a Certified New Home Specialist. Bring your Realtor along for the ride on your first visits to all new home developments - this can save you a lot of money and anxiety!

Now that you're ready to start investigating new homes, click here to return to our Santa Clarita Neighborhoods and New Construction pages.