New Home Construction: Build Your Dream House
Building a dream home takes some hard work.
I recently closed a transaction involving new construction out in Stillwater Ranch. My clients built the house of their dreams and it was an exciting and wonderful experience, but it also brought up some great points about what to do when thinking about buying and building a new home.
With the availability of land to expand on in San Antonio, new home construction has remained a popular choice for many home buyers and with a wide-array of choices in builders, floor plans, and amenities; it’s easy to see why. These are some tips to help make the buying and building process a lot easier on you.
Work with a Realtor® – Obviously, this seems a little self-serving as I am a Realtor®. You could take me out of the business today and I would still say this. Here’s why. The builder is offering the home at a particular list price. That list price includes a built-in amount of commission to be paid to your agent. Now, of course, you can go without an agent and the sales reps at the builders office will help you, but remember, they work for the builder, not for you. They’re job is to maximize profits for the builder. An agent’s job is to get you the best price and see you through the transaction smoothly.
Although builders do this every day for a living, I have seen major mistakes made. In this recent transaction, there were some major issues – they started to put brick on the front of the home (it was meant to be stone), the fireplace was at floor level (meant to be a raised hearth), missing outlets, grass that wasn’t planted…you get the picture. These details can become problems down the line and having someone to fight on your side is important.
Inspections – Speaking of things not being done, let’s talk inspections. I’ve mentioned this before, but it is more important than anything else in this post. That’s right, ignore the rest of the post if you want, but don’t ignore this. Inspections cost money and yes, you can save a few dollars by relying on the builder’s inspections (they have to do certain inspections for code compliance, but they often do a series of inspections on the homes they build). Each builder will tell you how many steps to their inspection process and how great they are, but think about it for a moment. Who’s paying the inspector? You guessed it – the builder.
Take the extra time and money and hire a licensed inspector to perform a phased inspection. This will get you a series of inspections at certain milestones in the building process (foundation pour, framing, wiring, plumbing, pre-drywall, etc.). Not only will you be able to head off any problems, but it helps keep the contractors honest knowing that their work will be inspected.
Use your Realtor® – It’s frustrates me that I even find the need to say this, but when you and your agent head over to the community to sign your offer and you walk out the door, the builder often will forget you have a Realtor®. They don’t call us, fill us in, or tell us much of what’s going on. Why? I have no idea. Whenever I’ve dealt with a builder, I’ve found that I have to stay on top of the builder at all times. Builders could make the process easier, but for whatever reason, they don’t typically. What winds up happening is they call you direct all the time and your Realtor® winds up looking like a moron when they call you to tell you some important news they found out – that you’ve know for the past three days. Grrrrr. While you sit there thinking, “why does this agent get paid a commission?,” your agent is frustrated too. So when the builder puts you in a corner or you’re having difficulty dealing with a particular issue, use your Realtor®. Call us up, get us involved – we won’t know when these problems are occurring unless you tell us.
Now, of course, your real estate agent should be proactive and calling you and the builder and checking the progress of your new home. Your Realtor® should attend all meetings with the builders and contractors along with you, as well as the closing. Remember, everyone works for the builder, except for you and your agent.
Thoughts on bonuses – This is a huge issue in my book and something you should be aware of. Builders often give out large incentives and bonuses to agents for selling homes (usually inventory homes). I’ve seen them go as high as $25,000. These incentives are meant to help drive traffic to their communities and get Realtors® talking about their homes. I like money as much as the next guy, but I want to be clear – I refuse to steer buyers to a particular community just because I am going to get a bonus. I wish I could say the same for everyone, but let’s face it, money is one of those things that causes people do crazy things. If you ever feel pressured by sales people or even worse, your agent – back away. Take a deep breath. This is a big decision and you should be making – no one else.
Although I love to get a nice bonus, I don’t lead a client to a community for that purpose. My goal is to secure you the right house at the right price. Many of those bonuses are tied to you using a particular lender (called a “preferred lender”) and one of the first things I recommend to all my buyers in new home communities is that they apply for the mortgage they’re being offered in the builder’s office and then speak with one or two other lenders. Many times you can find better rates, payments, or loan programs that you may not have had access to with the builder’s lender. All this must be weighed out to see what gives you exactly what you need. For instance, a higher interest rate might work for you, as you want to conserve cash. Sometimes the loan fees are excessive while the interest rate is low (often called a “buy-down”)…all of these different things should be analyzed to give you the best solution. One of the lenders I work with is great at this – he’ll take their offer and his and show you where each one is better than the other – and if their loan beats his for your needs, he’ll tell you to go with their loan (on of the reason I recommend him).
When all is said and done, you should have the home you imagined when you decided to build a new home.
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Comments
Great points. do you have any tips for people who are looking to tear down a pre-existing home on a lot and then rebuilding from there?
North Idaho – Tear downs aren’t quite as common here in San Antonio as they were in places like Los Angeles where I lived.
My only advice would be to hire an excellent contractor and make sure you pull all your permits.
.-= rerockstar´s last blog ..Disclosing Death in Texas =-.
Home buyers who hire independent home inspectors are much better off because they get the undivided attention of a qualified and experienced home inspector for a couple of hours.
DLF – I can’t agree more. Inspections are one of the things I push and push and push for in new home communities (and re-sale). Phased inspections for to-be-built homes especially.
Great information! Moving to a new place is not easy, especially if you don’t have the means to live big.
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