New construction can be a great option for someone looking to purchase a house, townhouse, or condo. Different types of properties require their own subset of knowledge in order to make the best and most informed purchase possible. New construction is no exception. A Realtor who is familiar with new construction and is working exclusively for the buyer will add incredible value and insight throughout the entire process.
new construction Basics:
// Buyers pay nothing to use their own Realtor - the builder pays the buying agent’s fees. Builders look at the commission they pay to the buying Realtor’s company as a marketing expense and it has no bearing on the final price a buyer pays for a new house. In other words, a buyer pays the same price to purchase new construction whether or not they have their own Realtor to represent their side of the purchase.
// Most builders will have an “on-site” Realtor. Their job is to sell the new houses/townhouses/condos which are being built. The on-site Realtor works for the builder, not for buyers. This is the main reason why buyers should have their own Realtor who advocates exclusively for them when buying new construction.
// There are two types of physical contracts for purchasing a property: Contracts for existing (resale) homes and builders’ contracts for new construction. Unlike contracts for resale homes, builders’ contracts for new construction normally default to benefit the seller (builder). Each builder will typically have their own proprietary purchase contract. There’s generally nothing wrong with this as long as the buyer fully understands the agreement. This is why it’s important that buyers have their own Realtor to walk them through the builder’s contract when purchasing a new home.
// During the building process, buyers will typically need to write a check for earnest money, a builder deposit, and a selections deposit. Knowing what’s refundable and what’s not in the event that the buyer does not close on the property is very important for buyers to know.
// Different builders use different building techniques which allow for varying levels of customization. It’s important for buyers to understand builder differences in order to help ensure the value of their investment for future resale.
// A buyer’s Realtor will keep all of the paperwork, documents, and checks organized during the entire building process. This is one of the most overlooked benefits that comes with buyers having their own Realtor represent them when purchasing new construction.
// The state of Tennessee requires builders to provide a one-year home warranty on every new house. Even though it’s a new home, there’s no such thing as a maintenance-free home. In the event that something breaks or needs adjusting, it’s good piece of mind for buyers to know they’re covered during the first year “break-in” period. In addition to the one-year builder’s warranty, many of the appliances and mechanicals will come with their own extended manufacturer’s warranty.
// Even though a buyer is purchasing a brand new property, it’s important to hire a home inspector to do a comprehensive inspection. New doesn’t mean perfect. Builders encourage and appreciate when a buyer has their own inspection performed before closing. An inspector will help ensure that nothing has been overlooked by the builder before closing on the house. Buyers - don’t worry if you don’t have a favorite home inspector that you want to use. Drew has a list of several inspectors who have provided exceptional service and great communication for previous clients.
// There are several “walk-throughs” that a buyer and their Realtor will do with the builder during construction (after a contract has been signed). These are in addition to the pre-construction meetings. Once the foundation and framing has been completed, there will be a “mechanical walk-through” to finalize the location of the lights, outlets, tv/cable boxes, light switches, and other items. This is also the time to verify that the floor plan is laid out correctly, the windows are in the right locations, and decide which way the interior doors will swing. After the drywall has been installed and painted, there will be a “blue tape” or “punch-list” walk-through. This is where the buyer, their Realtor, and builder will walk through the house and mark any imperfections (usually with blue painter’s tape) on the interior and exterior. Typically, any imperfections that need to be fixed are related to the drywall. This is also where the builder will discuss any issues that the buyer’s inspector found. The last walk through is called the “final walk-through” and takes place the day before or day of closing. This is a shorter walk through to ensure any issues or imperfections found during the previous walk-through were fixed or taken care of.
// There are many details which affect the overall livability, value, and resale of the home that are made during the construction process. Some of these include lot location, size of home relative to the rest of the neighborhood, and upgrades such as granite, lighting, flooring. Floor plan and lot choices are made at the time a contract is signed. Many of the interior choices are made at what’s called the “selections meeting”. This is where the buyer and their Realtor meet with the builder to customize the house. It’s important for buyers to have a Realtor who be there and help them understand what upgrades would be a lifestyle choice vs a bang-for-the buck resale choice.