Monthly Archives: June 2016

Most home buyers are aware that they need to make a down payment on a home.  However, first time home buyers might be confused about paying earnest money towards a home. Earnest money is paid to the title company when a purchase contract is signed by all parties. This demonstrates that the buyers are serious about the transaction and are backing it up with cash.

Without this, buyers could simply make offers on many homes, essentially taking them off the market until they choose a favorite. Sellers rarely accept offers without earnest money.

There is no set amount for an earnest money deposit, so it’s negotiable. However, in the Austin area, typically it is 1% of the sales price of the home.  Assuming the buyer actually purchases the home, the earnest money goes toward the buyer’s down payment and closing costs. However, a buyer can lose earnest money through default, which happens when he or she does not perform according to the terms stipulated in a purchase and sale agreement.

Work carefully with your agent to ensure a clear understanding of all terms and obligations so that you do not lose your earnest money!

In this blog series, I’ve shared my tips on what to do before signing a contract on a new home and what to do after signing your contract.  Here are my tips for right after you close on your new home.Tips for Home Buyers (part 3)

  1. Test everything.  Once you move into your home, test out all of its features to make sure everything works properly.  Plug something into the electrical outlets, try out all of the appliances, flush all of the toilets, take a shower in all of the showers… you get the idea.  In case there are any issues, it’s easier to get them fixed if you report them to the builder as soon as possible, rather than months later.
  2. Save your manuals. Make sure you keep all manuals that come with your home, including all appliance manuals, home warranties, or homeowners association guidelines. It’s easy to misplace these important documents when you move, so keep them in a set place because you will definitely need them at a later time. Make sure you fully understand the warranties the builder has provided for your new home and who to contact in case a problem arises in the future.
  3. Beware of bugs.  All the time your new home is being built, the homes of hundreds of insects and rodents are being unearthed and destroyed.  You’ll soon find that they’re invading your home for shelter. After finding several scorpions in my first home, I was ready to move. So the second time we built, we sprayed the inside and outside perimeter of the house with insect repellent.  I suggest doing this right before you move in so you don’t spray around your furniture, pets, or children.  Otherwise, I highly suggest investing in a pest control service the first year.
  4. Try a DIY project.  Showroom Garage FloorsWhen we bought our last home, we closed mid-week, but waited a few days to move on the weekend. We used one of those days to tackle a do-it-yourself project while the house was empty.  We painted showroom floors in our garage, which was surprisingly easy to do.  This task was also much easier since the garage had never been used!
  5. Stick to a decorating budget.  Anytime you move into a new home, it is tempting to start decorating every room and filling it with new furniture.  Create a budget for home decorating and determine which areas of the house are priorities.  This can help you avoid going far into debt.  Take your time filling up your new space and enjoy it!

What other tips do you have for anyone buying a new home?  I’d love to hear them!

Last week, I shared Part 1 of my blog series on tips for new home buyers.   I’m continuing this week with tips on what to do after you’ve signed your new home contract.Tips for New Home Buyers

  1. Be Patient. People love instant gratification, whether it’s getting a custom-made latte in a drive through or watching commercial free shows on Netflix.  Buying a new home is the complete opposite experience.  You’ve just put money down on something that you can’t fully enjoy for at least six months.  So mentally prepare yourself for the wait and look at it in a positive light.  Use this time to save up extra money on a down payment or new furniture.  Also, add a few weeks to whatever timeframe the builder estimated to complete your home.  Inevitably something can go wrong, such as bad weather, shortage of supplies, or shortage of labor. So just prepare yourself for a slightly longer wait, and if your home is built sooner, then great!
  2. Communicate Regularly.  From the beginning, find out who is involved in the construction of your home and get their contact information.  This can include the sales person in the community, the builder, and sales person at the design center.  A good-quality builder will usually call or email you once a week to update you on the progress of your home.  My husband and I would jot down questions or concerns we had so that we could ask them all at once in our weekly phone call.  This kept everyone on the same page and made us feel like we were in good hands.
  3. Visit Regularly.  As our last home was being built, my husband and I would visit once a week on the weekends to see the progress.  Once the framing went up, it was exciting to see new features added every week.  Along the way, we also caught a few mistakes, which we were able to share with the builder.  For instance, our living room was supposed to have a coffered ceiling covered with wood.  On the building plans, however, the air-conditioning ducts and speakers were placed in the middle of the wood ceiling.  This would have been an eyesore in something that was supposed to be a focal-point of the room.  Fortunately, we noticed this before the sheetrock was installed, making it easy to move the ducts to another location.
  4. Take Photos.  Each week, take a few photos of the progress of your house. This will help you to see how much has been accomplished when you compare current photos with photos a month ago.  You can also put all of your photos into an album or slideshow at the end as a keepsake.
  5. Save Leftover Materials. Ask the builder to save any leftover materials from your house, such as bricks, tiles, or other materials.  This will come in handy later on if you want to take a sample to match paint colors, curtains, or other decor.  We also used extra bricks to line the edge of a garden in our backyard.  Usually, the builder is happy to place excess materials in the attic or garage.

Stay tuned next week for part 3 of this series:  tips for after you’ve closed on your new home.  

There’s nothing quite like choosing and designing the elements of your future home and slowly seeing it transform from a paper blueprint into a reality. There’s also something special about having a space that is entirely yours, never owned by another person.  I’ve bought two new homes in my lifetime, and along the way I learned a few lessons that I’ll share in this blog series.  Here are my 6 tips to follow before you sign a new home contract:Tips for New Home Buyers - www.askshan.com #askshan

  1. Do Your Research.  As you explore new home communities, you might settle on one or two that seem to be your favorites.  Before signing any contract, research the builders to determine whether or not they have a good reputation.  Also, ask questions about what else might be developed in the area.  Before I bought my first home, I thought I had found the perfect new community and the perfect lot!  There was a beautiful greenbelt behind it and acres of empty land beyond that.  I happened to ask the builder if there would be houses built over there in the future, and he said, “No, that’s a commercial space.” I soon found out that my “dream home site” would eventually back up to a Target parking lot. Good to know! Fortunately, I chose to build elsewhere.
  2. Hire a Realtor.  If you’re considering buying any home, you should hire a Realtor.  Buyers do not pay for Realtor fees, so there is no reason to not use one.  A good Realtor will give you objective details about different homes in a variety of communities and from a variety of builders.  A Realtor’s main job is to help you sort through your options and make the best decisions possible. Since they do not work solely for one builder, they can provide you with a more neutral opinion of the homes in an area.
  3. Don’t be Fooled by the Model Home.  Model homes usually do not reflect what comes in a standard home at base price.  In one model home I visited, there were over $150,000 in upgrades! So the true price tag for that house did not match the price on the floor plan at all. Ask the builder how much the upgrades for the model home cost and what features come in a standard home.
  4. Ask about Incentives not Price Cuts.  Most builders only make about 5 to 7% profit on a new home, unlike individual home owners who might have a large amount of equity in a home. Therefore, do not expect to negotiate the price of the home.  Instead, ask about what incentives they are willing to offer.  Most builders offer a certain amount of money to use at the design center for flooring, countertops, and other finishing touches.  Some builders also partner with a lender or title company who might be willing to pay part of your closing costs if you use them.
  5. Budget for the Design Center.  If you have not recently bought faucets or knobs for your cabinets, you will be shocked at what these things will cost.  Make sure that you save room in your budget for design options.  If you know that the maximum amount you can spend on a house is $200,000, then choose a floorplan that is closer to 180,000.  If you plan to spend $500,000, then aim for a house that is closer to $450,000.  This is just my personal opinion – hold back about 10% of your total budget for upgrades.

Stay tuned for my next post on what to do once you’ve signed your new home contract.