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:
- 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.
- 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.
- 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.
- 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.
- 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.