Buying New Construction

Buying a newly built home can be exciting.  If you have ever visited a builder’s model home, you know what I am talking about.  When you first step inside the new home, you see how beautiful the decorations are, the features inside the home are top of the line, and it just looks and feels great. It’s like buying a new car, remember that new car smell? 

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Before you know it, you have sat down with the nice salesperson and started talking about price…..BUT HOLD ON!  This is one of the most important purchases of your life.  Even if it’s your 4th or 5th home or perhaps your first, there are still a few things that you should consider BEFORE walking into that model home the FIRST time. 

Process of Buying a New Construction Home

Buying a new home, can seem like an easy task, right?  You walk into the builder’s office, choose a model, sign the contract, pick out your options, sign another contract, work with the lender, walk through your home prior to closing, and then close.  It’s easy, right?  Not really.

  1. Hire a Realtor That Has Experience Selling New Construction Homes

I just recently built a home and have helped three buyers through their new construction process in the past 3 months, and I am convinced more now than ever that buyers need an advocate in their corner, that does not work for the builder.

Who Pays the Realtor?  A Realtor gets paid by the builder.  It is in their marketing fee. Whether you hire an agent or not, the fee is there and will not be removed.  The agent must be with you during your initial visit.  Or, if you do go, don’t register or give your name and information to the builder.  They are not going to ask you to leave if you don’t tell them your name.  I have had many clients not give their name upon their initial visit.  Or they tell the builder, I  have a Realtor, and I will not provide information until she is here with me.  

Realtors sell 63% of all new homes, according to the National Association of Realtors.  But, what does that mean to you, the buyer?  It means that an agent has clout with the builder, especially if the agent is associated with a large, national firm.  Statistics show we will be back if that builder does a good job for you.

2.  Establish a Relationship with a Mortgage Lender Prior to Going to New Construction

Many large, tract builders have a relationship with a lender or may even own a mortgage company. Some builders will offer you an incentive (contribute to closing costs)  to use their preferred lender or their mortgage company. However,  the interest rate you are quoted and the fees may not be that competitive.

The interest rate being offered by the builder’s preferred lender may cost you more money in the long run than the compensation that the builder was willing to give you for closing costs.  Shopping around for a lender can create a competitive environment and make the builder’s lender offer you a better rate.  I recently helped a buyer with their mortgage options and was able to get my buyer a better rate, more closing costs assistance because we negotiated between several lenders.

3. Know the Contract the Builder is Going to Use

Too many buyers get blindsided by the 30-100 page contract the builder is going to present you with.  The builder’s purchase agreements are written by the builder, for the builder.  It is a one sided contract, meaning it leans towards their best interest.  Knowing what you are up against before it is too late may save you from losing your deposit if things do not work out.

I recently had a large builder try and have my buyer sign an addendum that was not referenced in the original contract. That addendum, if signed by the buyer, could have cost them thousands of dollars.  The salesperson for the builder tried to tell my buyer that if the addendum was not signed, they would lose their $15,000 deposit.  Not true. But remember, that salesperson works for the new construction builder, not you.

4. Know How the Homes are Constructed Before You Sign

Find out the construction process, and the materials used, such as wood studs vs metal. What type of material are they using for plumbing? Don’t take for granted that the county ordinances and building codes will be good enough for you.  I was surprised with one recent builder that they were using plastic tubing for water instead of PVC pipes.

5. Be Prepared for the New Home Showroom

All those selections!  Ah yes, that wonderful showroom where you get to choose your cabinets, flooring, even the towel racks.  Upgrades!  Upgrades=$$.  And yes, some upgrades make sense. Doing a little homework about how much certain things cost, like a garage door opener from a hardware store, vs paying for it during the new construction process, can keep you from losing a lot of money.

Having your Realtor there with you during the selection process can help you determine the cost of some items and what can be done cheaper after you own the home.   We can prepare a summary of values in the neighborhood and use that as a guideline for your improvements.   Sometimes your agent will play devil’s advocate too.  We are that person sitting on your shoulder asking you, do you really need this?

6. Resale and Appraisal

Many builders will ask you to sign a form that basically requires you to bring the difference between your appraisal price and the purchase price should your home not appraise.  All those selections chosen by you increased the purchase price of your home and therefore, your upgrades must appraise if you are getting a mortgage.  So, be prepared to bring extra money to closing.

Selections=Resale too! Although you may have fallen in love with the dark chocolate tile to put in your bathroom, we can at least advise you on market resale.  Things that are permanent or expensive to replace should really be evaluated on after market resale.  An agent has heard countless times from buyers looking at homes say, “I really like the house, but…”  We try to eliminate that BUT, because that is where you lose money.  Maybe you have even said that yourself, which is why you want to buy (build) a new home.

7. Research and Select Home Insurance Company


You may be interested in the article: Top 15 Must Know FHA Guidelines

Is the Builder’s Lender Really Giving You the Best Deal? 

Realtors understand the mortgage process. Do you really want to finance that garage door opener option into your mortgage for 30 years? It will cost you 4 times the amount you could have paid for it at a local hardware store.   

Let’s see the costs associated with doing that mortgage.  A Realtor has seen countless closing statements and knows generally how much fees are for processing and underwriting a mortgage, etc.  If you are getting a super duper interest rate, believe me, you are paying for it somewhere else.  The federal government sets the interest rate.  It’s like buying a 2×4 at one hardware store vs another.  They should almost be the same price, right?  If one is so much cheaper than the other, believe me, they are making it up in the price of nails they are selling to you!  It’s the same thing with mortgages.  Rates do change daily but every company should be quoting you basically the same rate.

Punch out. 

What’s a punch out?  It’s the walk through.  New homes are made by humans and humans make mistakes.  Nothing is perfect, but sometimes they can be made better.  When you buy a new home, the builder should be doing a punch out with you.  At least when you work with an agent, they will.  An agent will attend the walk through with you and with their trained eye, look for errors.  It’s the tricks of the trade we learn. For instance, I always take my shoes off to walk on the carpet along the outside walls of all the rooms.  Why? because that is where you will find the drywall remnants that were not swept up.  That debris will eventually show through and your flooring will wear in those spots.  Home inspections on a new home?  I would.

Buying a New Home

Buying a new home can be rewarding, after all, you are the first person to live in it.  The inside of your home is what you choose and everything is brand new for you to enjoy.  A Realtor should make sure that your experience is positive and your investment is protected. We are your partner and advocate through your entire building process.  However, you have to bring us in the beginning.  We must accompany you on your first visit to that model home or register your name with the builder, otherwise, you may be on your own.

Buying a new home, do I need a Realtor?
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Buying a new home, do I need a Realtor?
Thinking about building a new home? Get your list of questions to ask your builder and whether you should have an agent work with you on new construction.
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Sarasota Sandy
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I have been in real estate sales for over 20 years. I am originally from the Midwest and have been living in beautiful Florida for over a decade. My career sales are over 2,100 homes sold. There aren’t too many obstacles I haven’t encountered throughout my work history. I provide you with honest advice backed by years of experience and understand that a real estate purchase or sale is a top priority for you. Nationally recognized. Licensed FL Real Estate Instructor. Contact me at or call 941-564-9491

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