Buying New Construction?...What To Ask Your Builder
There is nothing like doing a little investigation on the builder first.
Remember this is the biggest investment you will probably ever make so do your homework. The internet is a great place to start. Try Google, Facebook and even Twitter to see what is being said about the builder you are considering. Also, do a thorough examination of the builder's website. Reputable builders will let you know who they are and what they have done. That said, the best research you can do is ride around a neighborhood on a weekend and chat with the neighbors...they will give you the real skinny on the builder.
Once you are satisfied with the builder's reputation, formulate a list of questions that you would like answered by the on-site sales person. This will be helpful since you will get distracted during the sales process looking at the variety of homes and options that are available and may forget to ask something very important. Any questions you have about the builder will be welcomed and expected.
Now that you know all there is not know about your builder, let's get to the questions. There is no particular order in which to ask these questions but you should get answers to all of them:
- Is the builder offering any special incentives? These could be on inventory homes, base price, options or financing?
- What kind of warranty does the builder offer?
- What is the earnest money deposit, is it refundable under any circumstances, who holds the deposit and is it used by the builder as money or funds to build the home?
- How much deposit is required for options and is that money refundable under any circumstances?
- What happens if the appraisal comes in lower than the contract price?
- How long will it take to complete the home and what does the contract say about delays in completion?
- What is builder's policy on changes after the house is started and can you walk through the house while it is under construction?
- What is the service policy after you close on the property and who do you call if you have a problem?
These questions seem to be the most asked and also cause the most problems in new home transactions. I would highly recommend that you get a copy of the agreement of sale and take it home and review every single paragraph so that you know what you are getting into. If contracts are not your thing, enlist the help of an experienced Realtor or an attorney to review and explain anything that may be unfamiliar to you. The cost of this or the extra time spent in reviewing all the paper work will be well worth your time effort and money!
Brandon I just came across this. I will be blogging about new construction in my area. I think I'm going to reblog because you covered so much! Thank you for your detailed list. I actually still ask buyers to hire an inspector. It costs very little because of the new state of the home, BUT it still may expose if corners were cut or not.
I remember going to visit model homes years ago by a VERY popular Southern California builder. The neighbors surrounding the model units had signs in their windows saying "DO NOT BUY" and had flyers in a flyer box in their yards listng all of their complaints. Some were major! It was worth an inspection to see if it were true. The homes were in the high $500K. When you are spending half a mil it's best to know. I'm also going to suggest for a feature. I don't know if it's too late to get it, but we'll give it a shot.
Hi Brandon, Thank you for the excellent post! Very good input for the home buyer!
Thanks for the comments.
Andi - that is odd that a reputable builder would be cutting corners to make a higher profit on their homes. I guess even the best builders are stretched thin and are looking for ways to cut corners. I have not heard of any "popular builders" in Charlotte that are doing this but I will certainly be looking for this in the future.
Great post - I'm working with a builder now and just happened to stumble on your post when I was looking for a new construction group= Glad I did - Thanks!