New Home Construction

Asked by Bozmom_2000, Denver, CO Wed Apr 17, 2013

We are having a new home built. We are picking out our upgrades at different suppliers. When we went to the appliance center, we did not want the standard stove, refrigerator and microwave. We upgraded all of those. The appliance center then gives our selections to the home builder and that is added to the price of our home. The appliance center has charged us tax for the appliances. We were not charged tax with upgrade on cabinets, at the Design Center, lighting or plumbing. I would think that it would not be taxed since it is being sold to builder as wholesale. I have not discussed with the builder yet because I want to know if this is right or not before I start questioning. Any thoughts will be appreciated.

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Suz A, Agent, Longmont, CO
Sun Apr 21, 2013
For what it's worth: a tip (to help agents):

If a buyer does want representation when buying a new build, buyers shouldn't wait until they're choosing paint colors to mention it to the builder's sales rep. When you sign in on your first visit, mention that you are represented by an agent. The builder's sales rep doesn't want to step on toes. And, it can be a thoughtful timesaver for the agent and the rep.

Usually, a faxed or emailed copy of a signature on the broker's buyer agreement is sufficient to clear up any issue. However, as the season heats up, everyone is in a rush. Those agreements seem to get lost.

There is friction on this not-small matter. Builders certainly encourage agents to bring clients. They send enough marketing material our direction, anyway. My practice is to tour new homes and introduce myself to the staff members and temps I find at the model homes. When I talk to buyers, this something I cover. If they want to look at new homes, I encourage them to do so and sign in with a mention that I am representing them.
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Christine Ni…, Agent, Denver, CO
Sat Apr 20, 2013
Indeed, you do not ever need to be represented by a Broker in any Real Estate transaction. My point simply was that most people are involved in real estate transactions just a few times in their lifetime, and professional Brokers are knee deep in it every day. It helps to have professional representation and someone who is representing you, the buyer's, best interest (which a builder's salesperson is not paid to do). Not to say that there arent many great builder rep's out there ~ there are.
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Suz A, Agent, Longmont, CO
Sat Apr 20, 2013
You don't have to be represented by a broker when you buy a new home, but indeed this is an instance where a Realtor with a home construction background can help.

You might clear this up with some communication to the supplier and builder. You are going to pay a tax at the closing. You might have the builder send a note to the supplier with your explanation.

It shouldn't be a big deal.
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Stim Kennedy, , Denver, CO
Wed Apr 17, 2013
Having been a Custom Home Contractor, my experience has been to offer my future new home owner
an 'allowance' for appliances. Typically, if they wanted to upgrade over my allowance, I would have
them sign an agreement that if the sale did not close, they would reimburse me for the additional amount that I had to pay the appliance supplier. I explained that my construction company would pay
for the appliances because we could purchase at a lower price than they could and would pass along
the savings to them. We also maintained a Sales Tax ReSale License so there would be no sales tax
charged to the Buyer(s). Of course, we filed quarterly statements to the state itemizing the purchases
where state taxes were waived.

Our advise to you would be to discuss with your builder who is responsible for the purchase when there
are 'upgrades' involved; and, in the event that the closing is defeated for whatever reason then who is
responsible for the cost of the upgrades.

Stimson Kennedy
Broker, CRS, ABR, NCE, SEC
stimson KENNEDY Realtors
Cell: 303 478.9494
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Curly Sue, , Texas
Wed Apr 17, 2013
Design Center pricing usually includes tax. ...and a healthy mark up for the builder. I'm sure your upgrade pricing included tax on cabinets, lighting & plumbing.
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Robert McGui…, Agent, Denver, CO
Wed Apr 17, 2013
Hi Bozmom,

Sounds like you are hesitant to discuss this with your builder. It is a good question for the builder and I am sure they will have an answer for you. This would be a good time to use the services of your Buyer's Agent as a go between so you won't feel awkward in this process. Your agent may have dealt with this situation before and can give you a quick answer and a get it solved right away. If your builder is working directly with the appliance center to purchase them for you, it seems that the tax would be charged to them. I am sure you will get this worked out to your satisfaction. Congratulations on your new home purchase.

Robert McGuire
Your Castle Realestate
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Christine Ni…, Agent, Denver, CO
Wed Apr 17, 2013
Your reasoning sounds valid. I would just call your Buyer's Broker (I hope you were represented by one ~ because this is the kind of thing we can handle for you!). They will work with the on-site sales representative and have them look into it for you. Best of luck in your new home.
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