HOW TO BUY A NEW CONSTRUCTION HOME - 10 THINGS TO KNOW

Buying a home is one of the largest financial transactions of one’s life and it can be intimidating for anyone. It’s important for buyers to educate themselves to protect their equity.

Buying a new construction home is an entirely different dynamic than buying a home someone has lived in. You will be buying directly from a builder. In order to understand the best strategies for buying new construction, you need to be able to put yourself in the shoes of the builder.

1. Have a Solid Knowledge 

The first step on your journey to finding the right new home is education. When you educate yourself on neighborhoods, you'll discover a wealth of information that will help you determine which community is right for you. Equally important as the new community details is the developer or builder. There are several reasons why it's critical to learn everything you can about the builder or developer besides providing you with a quality home. 

Buying a new home has a lot more to do with education than most people realize. While the details of size and price are important, the details of community and developer are just as important in deciding where to buy. Once you’re ready to start looking at real estate, educate yourself on what financing options are available. Everything becomes clearer only once you’re armed with information.

The great thing about buying a home is that there's tons of information available online on the topic! The internet allows you to research all kinds of different topics from non-biased sources to get a real picture of what a city or location is like for you.

2. Team up with a Lender on a Mortgage

As you begin your search for a house, it’s helpful to stop and realize that the most important part of the home buying process is to find the right team to work with and the first teammate you should find should be a mortgage lender.

Anyone who's looking to buy a home should shop for a mortgage before shopping for a house. A small change in interest rates can save or lose you several thousand dollars over the life of a loan. By shopping for a mortgage and finding the best rate, you'll ensure you're getting the most competitive rate when you purchase your home.

Choosing the right mortgage and the right lender is worth a lot if you are looking to buy a new home. When you shop for money early on, it may also help to save you money. Your choice of mortgage and lender can make a difference in your cash flow, in terms of how many months it will take you to become debt-free. It’s important to know as much about loan programs as possible before deciding on a mortgage. So you should choose mortgages wisely.

The dsmSOLD Team is partnered with Lenders across Des Moines who are ready and able to fund your loan. We have a variety of options suited to fit any need.

3. You want a Realtor when Buying a New Constructed Home

By now, you’ve probably been on our website for a while, and you know that we can help you with the pre-qualification process. Here are a few more things to know:

BUILDERS GENERALLY PAY THE AGENT COMMISSION:

That's right, the builder will pay your Agent to represent you and to negotiate a better deal for you — but that's just part of the story. You must also make sure that your Realtor is someone who is going to work well with you. The reality is that first-time home buyers can make mistakes when deciding on a home, but being able to rely on your real estate agent for honest advice helps avoid costly mistakes like buying a new home in an area where there’s little to no resale value.

Don’t settle for anything less than an experienced Realtor who is transparent, and who can get you a great deal!

Your Real Estate Agent will be able to help you figure out your wants and your must haves. Now that you have your team together, it’s time to begin researching different builders in your area. You can start by looking at the builders' websites or reading online reviews or even check out their social media pages to get a feel for what their customer service is like.

4. Research about the Builder

You want to find the very best builders before you go out shopping for custom homes. Researching the best new home builders and new home communities in the area is not the most fun. It's super important though. It's a lot easier than you think too. The time and effort you spend researching the best new construction homes will pay off in the end! As your agent, we can help you with this as well - based on our experience in the market and knowledge of different builders.

While there are many great builders willing to work with you as an individual who is looking for a new home that meets your specifications, the fact is that it's much more difficult to find such a builder. And regardless of your precise needs, you should leave nothing to chance. To ensure you receive the best service and product available, use those in the know to help you find a builder to build your new home.

Your Realtor might have a lot of home builders in the community, but for your search for finding the best new homes you should put together a list of builders that really stand out to you. There are many reasons that builders stand out; the way their websites are designed, their pricing, or special features and upgrades that really stick out to you. This is your partner so make sure you’re on the same page as them.

5. Creative Negotiations When Buying New Construction

Your new construction home will likely be the most expensive purchase you make in your life. So why would you go into it alone? Buying a new construction home can be intimidating. You’re buying from a builder who is focused on selling you their product, not necessarily negotiating with you.

You want a Realtor representing you during negotiations for your new construction home. You might think that by cutting out a Realtor you’ll receive a better price, however, builders are highly unlikely to budge on price. This is why you need an expert to work for you during negotiations. Someone who knows the ins and outs of securing you the best deal possible. You want the best deal possible right?

Builders know how to build homes but they are not experts on financing or incentives that are available to buyers like Realtors are. Because of this, there are some creative strategies to negotiate when buying new construction that can save buyers thousands of dollars!

6. Make Sure Everything is in Writing

Anything that is verbal is not a guarantee, that’s why you must have everything in writing or it’s in no way shape or form binding.

Now that you’ve found your builder and are ready to move forward with a new home purchase, what’s next? Yes of course, they will build your dream home, but most builders have a lot of incentives and additional features that you may need. This is where it gets tricky. If you’re working with a respectable builder there is a good chance they will honor what they say, however they may truly forget the promises they made to you.

Working with a builder without a Realtor could cost you thousands of dollars because they know how to negotiate. An experienced Realtor will ensure that everything is in writing and will make sure the documents are signed.

It’s too late to realize that something wasn’t in writing after the fact, and this is a big reason having an experienced Realtor on your side matters when buying new construction. At the end of the day, it’s your investment and you want to be certain that every contingency has been accounted for.

If you have any questions about working with a builder or what you should have in your contract, give us a call!

7. You’re Buying a New House, not the Model Home

Have you ever been to a model home? If so, chances are you saw what your new place could look like with all of the upgrades and features. Sometimes the model home is even staged to give it that lived-in feel. Unfortunately, oftentimes people will forget that these model homes aren’t always indicative of what their homes will actually look like. The same thing happens when buying a new house. You want to see what you can get before you start making alterations or signing on the dotted line.

When you walk through your new home, you might not be able to believe how gorgeous it looks. That’s because typically the model home that builders have their prospects walkthrough is full of all the upgrades and amenities so it’s important to understand what your model comes with and what your model doesn’t. You can sometimes offer to buy the model home if that’s the one you’d like to purchase. 

Don’t assume that because you saw a similar floor plan completed by another builder in a different location, yours will look identical. In most cases, there are several ways to frame an interior wall or exterior facade (the way it looks from the outside) so even though your square footage might be identical, there might not be much resemblance in appearance from house to house.

Remember when buying your first new home, you are NOT buying the model home. The model home is the builder’s “showcase” not the homeowner’s new home.

8. New Construction Home Guarantee

When you buy new construction real estate, you’re sometimes buying something that doesn’t exist yet. As mentioned above, and it deserves repeating, make sure everything is in writing and that your builder will give you a guarantee. Having a strong Realtor is important to make sure you’re covering all of your bases - you wouldn’t go to court without a lawyer, and buying new construction is no different.

Before signing anything with the builder, make sure that they have in place a warranty, preferably with an independent third party company. This will allow you to take any concerns or issues to the warranty company so they can mediate between you and the builder.

9. Do I need a Home inspection on a new construction home?

Yes, you should always get a home inspection on any home you buy. No matter how new the property is there are many things that could be wrong with it. People make mistakes and it’s possible a mistake was made in building your new construction home. Inspectors can find many things the builder may have forgotten to do or even potential problems that could be caused down the road.

A home inspection is someone who is coming in to review the work done on your home, you’ll want to make sure they give you feedback. You did just make a large financial purchase after all.

However, it’s best to go into this knowing that they may not find anything wrong with your new construction home because of course, it is new! If any big repairs are needed most builders should be willing to take care of them for you before you close on the property.

Getting a home inspection is just one of many steps when buying a new construction home, if you need more advice or help buying a house, let us know through the comment section below.

10. The future of your neighborhood is important

The neighborhood you choose is about more than just where your house is. It’s about who you are and the identity you wish to convey. So, it only makes sense that the future of your neighborhood should figure into your home buying decision.

One important step that a lot of people may forget is that you’re going to move into this home to live there. What does the future of the new community look like, how about the future of the city? Are there certain priorities you have in a neighborhood you’re going to live in amenities-wise? There are a lot of neighborhood details you should consider when buying a home.

If you have specific needs in shopping, education and other areas, then be sure to ask your real estate agent what they know about your potential new neighborhood and what they can find out. You can also do some research on your own, checking out websites that focus on things like school quality, crime rates and other factors that might help with your decision making process.

BONUS:

FAQ on New Construction

Can you Negotiate on New Construction Homes?

Yes, you can negotiate on new construction homes. Negotiating on new construction homes is a fine art. The first thing a builder wants to know is what price you're willing to pay if some of their standard items are added to the home. Be sure, before negotiations begin, you have already decided what you want and need in the home, then tell the builder that everything else will be negotiated. One of the best ways to negotiate on new construction homes is to politely and firmly let it be known you want everything else to be negotiated with one exception: The purchase price. Do not get caught up in the excitement of buying your first new home; take a breath and calmly explain that you plan to maintain a level head and negotiate for everything except for the purchase price.

Is New Construction a Good Investment?

If you're in the market for a new home, it's important to look at all of your options. Compare new construction to resale homes and weigh their costs and benefits. The decision to build a new home is an important one because it can make a big difference to your monthly costs, but it also has the potential to appreciate over time. 

All things said, new homes are a good investment. A strong economy, low interest rates and a historically low inventory of homes for sale have heated up the real estate market nationwide.

New Construction houses can be an excellent investment, but you have to make sure you do your homework first.

How Much Money do I Put Down on a New Construction Home?

Having a builder's deposit is essential when buying a new construction home. The builder's deposit is basically to show that you are serious and committed to the purchase of your new home. It usually depends on the price range of your new home and how you want to structure this down payment with the builder.

Always make sure to ask any builder you are looking at for a quote how much of a deposit you will need to put down. The deposit is one aspect that most people tend not to research enough. A lot of great builders will negotiate the money down so feel free to ask and see if they have any flexibility, you never know.

Conclusion:

New construction homes in Des Moines, IA are plentiful as they are in our neighboring cities like Urbandale, Ankeny, Waukee, Norwalk, West Des Moines, Clive and the many other amazing suburbs! The reason for the large number of new communities being built is the large number of people moving here.

Buying a home is a complicated process, and buying new construction is both similar and different to existing homes. Some of the similarities regard the purchase process, while the differences can be found largely in negotiations, research on the builder, and looking towards the future for the new community neighborhood plans.

The final sentiment we would like to leave you with is this: buying a new construction home is much like buying an existing home, only easier. The company you choose to work with should be a company that not only gives an expert opinion on the house itself, but will also build a warm and welcoming relationship with you, the buyer.

There are many reasons to buy a new construction home, and it comes down to finding the best option for your needs. A good builder will take care of home specifications for you, so you can sit back and relax.

If you’re thinking of buying a new home or potentially want to learn more about the building process contact us so we may help!