Home Buyers Tools

Home Buyers Tools

Checklist for Hiring a Home Builder

Use this checklist to help you select a home builder to build your home.

11 Things You need to Know.

  1. Contact your local home builders’ association for the names of member builders and remodelers: nahb.org/findanhba. You can also ask family, friends or coworkers for recommendations.
  2. Make sure the builder or home remodeler has a permanent business location and a good reputation with local banks and suppliers.
  3. Find out how long they have been in the building business. It usually takes three to five years to establish a financially sound business. You want to make sure they will be around after the construction is complete to service any warranties.
  4. Check out the company’s rating and if there have been any complaints filed with your local Better Business Bureau: bbb.org.
  5. Make sure the builder/remodeler has sufficient workers compensation and general liability insurance. If not, you may be liable for any construction-related accidents on your premises.
  6. Ask the builder/remodeler to provide you with names of previous customers. If they won’t, beware. If they do, ask the customers if they would hire the builder/remodeler again.
  7. Ask if you can see the builder/remodelers work, both completed and in progress. Check for quality of workmanship and materials.
  8. Do you feel you can easily communicate with the builder/remodeler? Remember you will be in close contact with them throughout the construction process and afterward as you live in your new home.
  9. Make sure the builder/remodeler provides you with a complete and clearly written contract. The contract will benefit both of you. If you are having a new home built, get and review a copy of the home warranty and homeowner manual as well.
  10. Be cautious of unusually low-priced bids. If the builder/remodeler is unable to pay for the materials and labor as the project proceeds, this may indicate a potential problem. Keep in mind that less expensive does not necessarily mean better!
  11. Verify that your remodeler is an EPA Lead-Safe Certified Renovator if you are planning work in a pre-1978 home that will disturb more than six square feet of painted surfaces inside the home or 20 square feet on the exterior of the home. Learn more about the EPA’s lead paint rule.
Home Buyers Tools

The Difference Between Custom and Production Homes

A Production home involves the same house design used over and over again. These are typically seen in neighborhoods that are built by large-volume homebuilders. These “tract” homes may appear in suburban locations outside more densely populated areas so larger tracts of land can be subdivided to support such construction. All homes in the community may be built by just one Production home builder who owns all the lots. There are a number of large, national Production homebuilders with good reputations, as well as local or regional builders that can fall within this category.

A Custom home is unique and one-of-a-kind, typically designed and built from scratch. This process involves collaboration among the homeowner, Custom builder, architect and various other parties involved in the design and logistics. Usually the home lot is a driving factor in the design and construction. Often the homeowner has found its own lot for sale, but sometimes it’s a builder lot. Custom builders tend to be associated with high quality work, and are focused on a smaller local or regional market.

Somewhere in between is the Semi-Custom home – often where a customized home is built based on an existing set of houseplans that have been altered to meet the buyer’s needs, but also a term used for some Production home builders who provide greater flexibility and a large set of options to customize their stock plans for the new homebuyer.

 

PRODUCTION HOMES: The Pros and Cons

Production homes are generally built at a variety of price points, but offer enormous value and cost-savings for homebuyers. There is a no-hassle benefit to these stock floor plans. There are typically several plan choices and options from which to choose, but without having to go through the stress and day-to-day decisions of building from scratch. Time is saved throughout the Production homebuilding process, allowing a buyer to move in relatively quickly.

Sometimes Production Homes are referred to negatively as “cookie-cutter” homes. Due to the homogeneous nature of these house plans, many times there are little options when looking at finishing touches (like cabinets or flooring) or room configuration, and low flexibility once the course of a plan has been set into action.

 

CUSTOM HOMES: The Pros and Cons

Custom homes offer two enormous benefits – choice and flexibility. These homes offer a homeowner a choice in almost everything in the homebuilding process – from the foundation to the flooring to the doorknobs. Custom home builders are flexible in mixing styles and plans to construct a home that is molded to the owner’s needs and lifestyle. Some argue that this custom attention leads to higher quality.

Of course, all this flexibility comes with a certain price – time and cost. As either the homebuyer or the homebuilder you will be dealing with more decisions, more stress, more room for errors and possibly more setbacks than the average production home. All of the additions and unforeseen costs may not be clear at the start of a Custom home project, but can certainly contribute to the overall cost.

Evaluate your home construction options and decide the balance of quality, price, peace of mind and personalization that you want in building your home. Once you’ve determined which type of home suits your requirements and lifestyle – whether it be a Production home, Custom home or somewhere in between – make sure you’ve chosen a builder that meets your needs, is experienced and has a good track record.

Home Buyers Tools

How to Buy a New Construction Home

Buying “new construction” is a bit different from buying a previously-owned home. For one, because there is no previous homeowner, you don’t have to deal with a seller’s emotional tie to the property, which typically influences the negotiating process. Whether you’re designing and building a custom home or buying a home that’s built on spec in a new subdivision, you’ll only have to work with the builder.

As with buying a previously-owned home, you have to figure out your budget and secure financing before you even begin house hunting. Get pre-approved by a bank or mortgage lender. Decide how much money you want to invest in a new home. And don’t overlook the extras like property taxes, insurance, furniture, window treatments, landscaping costs and maintenance that can drain your bank account.

“It’s absolutely critical for new homeowners to know what they can afford based on their income, debt and credit score,” says Rosy Messina, vice president of sales and marketing for ICI Homes in Daytona Beach, Fla.

If you’re considering buying a newly-constructed home, follow these five steps to guide you through the process:

STEP 1: Weigh the Pros and Cons

Nothing beats the feeling of being the first person to live in a newly-built home. Everything is shiny and untouched.

You can buy a brand-new home in one of three ways: buying a house already built on spec; having a semicustom home built as part of a development (you can choose from a set palette of finishes and upgrades); or having a purely custom home designed and built to your specifications.

But before you get caught up in the sparkling new paint and granite countertops, evaluate your situation and see if new construction fits your lifestyle. Here are some questions to ask yourself, particularly if you fall within the first two methods of new-home buying:

  • New homes are typically far from the city center; will you mind the commute?
  • Are you willing to coax a new lawn into existence, and can you wait 20 years for sapling trees to mature?
  • Will the cookie-cutter nature of new subdivisions drive you bonkers?
  • New houses tend to be built right on top of each other. Do you mind the closeness and potential lack of privacy?

STEP 2: Research Neighborhoods and Builders

When buying in a new subdivision, consider working with a buyer’s agent who knows the area well, can set up home tours and walk you through the closing process. When researching real estate agents:

  • Remember, the listing agent works for the builder, not for you. They’re trying to hit a quota, not help you make the right decision for you and your family.
  • Many states regulate how agents deal with new subdivisions. If you have your own agent, tell him up front that you’re interested in looking at new homes. He must accompany you on your first visit to any new subdivision; if he doesn’t, the builder’s sales rep will get the full commission if you buy a home there.

When researching neighborhoods:

  • Look online for listings for new home construction.
  • Drive around the neighborhood and check out the amenities and the quality of the homes.
  • Walk the community. Ask homeowners about their experience.
  • Go to model open houses, keep a journal and take photographs. Don’t try to cover every model house in the area in one day.
  • Check with the developer about potential homeowners’ association (HOA) fees and rules; some are incredibly expensive — and strict. They may not allow storage sheds, certain paint colors or finish materials, solar panels or even vegetable gardens. Be sure to find out if the HOA can assess penalties for infractions.
  • Ask whether cable and Internet are readily available and from what companies; your new house will be wired for cable but that does not mean the cable company offers service to your neighborhood.
  • If the development is still under construction, you’ll be dodging giant contractor trucks and facing jackhammering at 7 a.m. for a while.
  • Research the zoning laws for the neighborhood, as they can change quickly.
  • Visit the city planner’s office to see what’s in store for a particular location.
  • Ask your agent about plans for the area.

Whether you’re buying a new home that’s being built or building a new home from the ground up, you can choose the builder you work with.

When researching builders:

  • Make sure there are no Better Business Bureau complaints on file against your builder’s company.
  • Ask local real estate agents if the builder has a good reputation in the community.
  • Visit your builder’s previously constructed homes; ask the occupants whether the craftsmanship has stood up to time, use and weather.

STEP 3: Know What’s Standard and What’s Extra

Ask the builder about amenities and upgrades. Amenities are features that benefit the entire community like a clubhouse, health and fitness center or a gated entrance. Upgrades refer to added features or items you pay extra for to enhance your home, like certain types of flooring or appliances.

Get a feature sheet on the line of homes you’re interested in and read them very carefully, then compare feature to feature. Find out what comes with the base home price.

If you don’t understand exactly what the builder is offering, ask and take notes. There are no dumb questions. Not knowing can cost you real money. Some things to keep in mind:

  • If the stove is included, visit the showroom to see the model. If you’re offered the basic stove and you’re a gourmet cook, it makes sense to buy the upgrade.
  • Make decisions on upgrades early in the process — every change costs money.
  • Have a good idea of what you need and want. They are two different things when it comes to upgrades.
  • Builders rake in the cash on upgrades because they can get parts and labor relatively cheaply. The markup is huge, so investigate each option you’re considering to see whether it would be cheaper to bid it out after you move in.
  • Builders, in general, need to sell quickly to make a profit. If you’re stuck haggling over price, get them to throw in the upgrades you want at a reduced cost or for free — it’s a way to get more value that’s appealing to both sides.

STEP 4: Get an Inspection and Home Warranty

Once you decide to buy a new home, make your sales contract contingent on a final home inspection by a professional you hire. Never assume that because a home is newly constructed, it isn’t going to have defects. Municipal inspections for code violations are nowhere near as thorough as an independent professional inspection. If possible, have the home checked during each phase of building, when potential problems are easier to spot. If the builder objects to this, consider it a red flag.

Protect yourself with warranties. All new homes come with an implied warranty from the builder stipulating that any major defect of the structural integrity of the home must be repaired. Ask for a builder’s warranty for a period of time following move-in (a year, for example) that covers any defects in craftsmanship. Preferably, this warranty should be backed by insurance.

Home warranties vary in length, what they cover and typically run from one to 10 years; the manufacturer covers appliance warranties. Make sure any warranty you receive explicitly states what is covered and what isn’t, and what the limitations for damages are. For extra peace of mind, have your real estate attorney look over the warranty to make sure it’s kosher.

STEP 5: Close the Deal

Builders often have in-house mortgage lenders or ties to an outside lender. New homebuyers can use the builder’s lenders or find their own financing. Ask your agent for information on special funding programs available for first-time buyers. Contact at least two lenders and compare terms, fees, rates and points.If you’re not comfortable with the legal process, get an attorney. Remember, sign nothing until you fully understand the meaning of the words.

Home Buyers Tools

The Benefits of Buying a New Construction Home

Home buyers have the choice of two types of houses on the market: resale or new.

Home buyers planning to buy a brand-new house or condominium often cite energy efficiency, open layout, a warranty, and being able to select appliances, flooring, paint colors and other design elements as factors driving their choice. 

But builders say that buyers can be drawn to a new house for reasons that aren’t so obvious. Here are a few more benefits of a brand-new home that you may not see in the sales brochure.

Building a Community Together

A brand-new community is one of the built-in benefits of many new homes. When families move in to a subdivision at the same time, they often form lasting bonds of friendship and neighborliness right away. Nobody is the “new kid on the block,” and many home builders host community parties in new developments to help owners meet and connect.

Popular amenities like pools, walking trails and tennis and basketball courts offer additional opportunities for interaction among neighbors of all ages. Often new communities are comprised of home owners in the same stage of life, such as young families or active retirees, so neighbors can get to know each other through carpools, PTA meetings, tennis matches or golf games.

Entertaining

Throwing a party in an older home can be a challenge because smaller, distinct rooms make it difficult to entertain guests in one large space. Today, new home layouts feature more open spaces and rooms that flow into each other more easily. While you are preparing dinner, you can still interact with guests enjoying conversation without feeling closed off. The feeling of spaciousness in today’s new-home layouts often is enhanced with higher ceilings and additional windows that bring in more light than you would find in an older home.

A Clean Slate

For some buyers, parking the car in a sparkling-clean garage or being the first to cook a dinner in a brand-new kitchen is part of the appeal of new construction. In addition, you won’t have to spend time stripping dated wallpaper or repainting to suit your own sense of style creating your own home décor from the get-go!

The advantages of being the first owner extend to the outdoors. Instead of inheriting inconveniently or precariously placed trees, or having to tear up overgrown shrubs, you can design and plant the lawn and garden you want.

Outlets, Outlets Everywhere!

Homes built in the 1960’s and earlier were wired much differently than houses today. Builders had no way of anticipating the invention of high-definition televisions, DVRs and computers that we enjoy today — and the very different electrical requirements they would introduce. New homes can accommodate advanced technologies like structured wiring, security systems and sophisticated lighting plans, and can be tailored to meet the individual home owner’s needs.

Anyone who has ever lived in an older home can also attest to the fact that there are never enough outlets, inside or out! Today, home builders plan for the increased number and type of electronics and appliances used by today’s families, so you can safely operate a wine cooler, Christmas lights and your laptop — and more.

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