I'm planning on buying residential property that is new construction (being built now)

Asked by Joe, 27612 Tue Sep 9, 2008

My question is what do I need to know? What documentation should I ask for? What can I expect? Etc...I welcome any information or advice from someone with experience in this area.

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8
Lizete Santos, Agent, San Francisco, CA
Wed Sep 10, 2008
Hi Joe,

The other respondents are correct. You'll be best suited having someone whose knowledgable about the process and can aid you in getting the best deal and in the process saving you money and future headaches.

Unless you have extensive knowledge of real estate law and NC contracts you would be doing yourself an injustice by not having counsel and a professional expert to aid you in the purchase.

Good luck!
Lizete
Web Reference:  http://www.LizeteSantos.com
0 votes
Jean (Zhihon…, Agent, Cary, NC
Tue Sep 9, 2008
Work with a buyer's agent. A good one will make your life much easier. She/he can help you negotiate a deal, watching out for you, and protect your best of interest all the way. Many buyers walk right in the new construction sales office without any representation. Remember, builder are only interested in their their behalf (seller), not buyer.

Good luck,

Jean
0 votes
Larry Story, Agent, Greensboro, NC
Tue Sep 9, 2008
Joe, Lynn and Mike are correct in that you need to make sure you are working through a good buyers agent. I also agree with Joe and Wendy about the fact that you should try to find a builder with plenty of inventory. They are going to be more willing to deal. Just the other day I got a contract finalized that was new construction. Did my homework and sure enough he had alot of inventory. So we went in very aggressive with our offer. We came ended up at 9.4% below list price. Basically if you know they are hungry it gives you so much more strength in the negotiations. I looked and he had three communities and had not had a single closing in over 30 days. Then I checked the closings he did have and the list to sale price ratio. Granted we went in and got lower then we anticaipated actually. Of course I bluffed and he took it. So better for the client.


Hope this helps.
0 votes
Wendy Norman, , Raleigh, NC
Tue Sep 9, 2008
Hi Joe,

You'd definitely want to know how much standing inventory there is and how long the homes have been listed. The longer homes are on the market sometimes, the more flexible the builder is with giving incentives to move the properties. Often, they can't begin construction on the new homes until some of the inventory is partially depleted. You'd want to know the estimated completion date (but don't bank on it--new construction typically has delays unless the home is already complete), what your standard features and options are, whether you have a pre-construction meeting to pick out design choices, what the incentives are for using their preferred lender or attorney (at least stipulate in the offer/contract that you want to have your own lender look over the Good Faith Estimate to make sure there aren't any fees sneaking in on the back side), what the estimated build out date is for the neighborhood (when will they be done), what will the allowable percentage of rental properties be (can affect financing with resales if the % is too high, according to some lending guideline), when will the HOA be taking over for the builder/developer, HOA dues, what the dues cover, are there any capital improvement assessments due or pending, what's the builder and structural warranty like, etc. There are lots of things to anticipate with new construction.

While the onsite agent is required by law to work fairly and honestly with the buyer, they represent the builder...and getting both sides of the commission could mean that they won't necessarily negotiate a good deal for you like a buyer's agent would. The seller pays the commission in this market (most likely), so if having a buyer's agent is free, you may as well have someone who's representing your interests as opposed to the builder's.

The last new construction deal I closed this year, the builder had to bring over $3,000 to closing...so my buyer got a great deal. A buyer's agent can help negotiate things for you that the onsite rep may not mention unless you know to ask.

If you don't already have a Realtor, I'd love to help out. Feel free to drop me an email via my website at http://www.wendynormanonline.com. I'm very thorough and detail-oriented and also have the Certified Real Estate Negotiator designation. Feel free to contact me with any questions. Have a great afternoon!
0 votes
Joe Ward, Agent, Raleigh, NC
Tue Sep 9, 2008
Joe

Look for standing inventory. The price will be much better. We have negoiated for our client over the last year 2 home priced in the 1.5 million with 200k off list and one listed at 900k with 169k off list. These are the extreme but this is why you need an agent protecting your interest.

Joe
Web Reference:  http://www.JoeWard.net
0 votes
Mike Jaquish, Agent, Cary, NC
Tue Sep 9, 2008
Joe,
If you are under contract with a home under construction, you should have a copy of the contract stipulating the specifications for the home, including features colors, and any optional upgrades you have chosen, any disclosures the builder may have to make, at minimum a basic copy of the plans for the house-which may be a brochure.
The contract will contain a great many details.

At closing, you will receive a deed to the property, and will also sign paperwork for your loan and various forms with disclaimers in them.

If you are not working with an agent, the Builder's agent should be able to provide you with copies of all the contract paperwork.

If you are not yet under contract, you might consider engaging an agent to represent you, and/or having an attorney review the contract and associated paperwork.

Good luck!.
Web Reference:  http://MikeJaquish.com
0 votes
Michael Colv…, Agent,
Tue Sep 9, 2008
This is why you should use a Real Estate Agent, who represents your interest. The on site agent for new construction is representing the builders interest.
Thanks,
Michael
Web Reference:  http://www.colvinm.hpw.com
0 votes
Dallas Texas, Agent, Dallas, TN
Tue Sep 9, 2008
Builders contracts are authored in their favor you need to locate a real estate agent who will represent you. We answer soooo many questions weekly where there are problems between builder and buyer .
http://www.lynn911.com http://www.homes-for-sale-dallas.com
Web Reference:  http://www.lynn911.com
0 votes
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