Buying a new home is one of the most important and exciting decisions you'll ever make.
It's fun to pick out the drapes, paint, carpet, and appliances, and offer input into the home design itself. Another benefit is that new homes are usually more reasonably priced, require less maintenance, and are far more energy-efficient than older homes.
On the other hand, you may come down with the "new home blues. "
Shoddy construction and lengthy construction delays are problems frequently associated with recently-constructed homes. In the past three years, I have represented 71 homeowners in two separate cases involving the same builder in the same Folsom-area subdivision. Result: two multi-million dollar awards against the builder for poor workmanship and inadequate materials. Lesson: No one likes buying a new home with problems.
Here is how to avoid pitfalls when buying a new home:
Know Your Builder The most important factor in buying a new house is not what you buy (the particular model), but rather who you buy from. In other words, be careful who you buy from- and that's the builder. Talk to owners who live in the development you are considering or in a recently completed development by the same builder. Homeowner's associations are especially good sources of information about builders. Have an experienced contractor check out the house you are considering. Consult with county planning or building department staff who deal with local developers. Talk to real estate agents who have worked in the area for some time.
Read the Contract Carefully Many new home contracts contain language somewhere that says that the model's features- such as appliances and carpets- are not necessarily the same brands you will receive. You are guaranteed only the functional equivalent of what you see. Often enough, this means that the builder will substitute less expensive items and materials. Make a list of the precise features you are concerned about (specifying makes and models) and include it in your contract. If one developer will not accommodate you, shop elsewhere- it is a big market for new homes.
Beware of Options Many developers market houses at low prices to get you to come out and have a look. Then salespeople show you models loaded with upgrades and extras such as luxurious spas, charming fireplaces, quality carpets and spacious master bedrooms. However, the advertised price will rise depending upon any extras you select. Upgrades often add 5 to 20 percent to the overall cost of the new home. To get the most for your money, focus on the essentials first, such as more electrical outlets, a fenced yard (for children or pets) and, in many areas, air conditioning. In models, look for poor-quality materials used in highly visible spots that almost force you to upgrade to overpriced substitutes. When choosing between different developments, consider the cost of the options versus standard items. One developer's standard items may be another's options.
Always Negotiate Everything is negotiable. Ask for one free extra for every two you buy. For example, if you pay top dollar for fine carpeting and kitchen cabinets, ask the developer to throw in a spa at no charge. You also have the right to buy and install extras on your own.
Put It In Writing Always get it in writing when the developer or sales agent makes promises as to what will be done, and when. Modify the contract. If you have already signed the contract when you negotiate changes, write them down on a separate document or an addendum to the purchase contract. Do not rely on oral commitments- they may not be enforceable.
Check Out the Homeowner's Association Like it or not, the homeowner's association will probably exercise a lot of control over how you use your property. Deeds to houses in new developments almost always include restrictions on how the property can be used. Usually, these restrictions put decision-making rights in the hands of a homeowners' associations. Study the rules carefully to see if they are compatible with your lifestyle, for they are hard to change once you are moved in.
Protect Yourself Against Delays If you agree to buy a house that is not built yet, you will be asked to sign a very one-sided contract. You will be give numerous deadlines, but the developer will have great leeway- sometimes up to a year from the target date- to deliver a house. Again, do what you can to negotiate a fair deal. Most important, you want to establish a reasonable date at which you can cancel the contract and get all of your money back if the developer does not deliver the house. Before escrow closes, inspect the house, and do not pay your money unless everything is complete. If you must close escrow because you need to move in, but significant and costly work remains, demand a walk-thru inspection and put in writing all concerns as to when the work will be done. Have a developer's representative and you sign the inspection report.
Investigate Warranties You should only buy from a developer who included a new house warrant from an independent insurance company. Many builders also provide you with their own warranty or a Home Owners Warranty (HOW). HOWs usually cover workmanship and materials for one year, plumbing, electrical, heating and air conditioning systems for two years and major structural defects for 10 years.
These tips will help you make the best possible new home purchase. Buying a new home is part of the American Dream- it should not become your worst nightmare.