The intoxicating smell of a new home is similar to the feeling of buying a new car. Being the first owner of a home can be a special experience. Along with enjoying the new home journey, it is important to make informed decisions, and protect yourself when making such a substantial investment to minimize headaches and risks.
New Home vs Resale Home
New homes usually cost more than resale homes on a price per square foot. The premium paid to buy a new home is offset by lower initial ownership costs. New homes have lower utility bills, lower maintenance costs, and lower insurance costs than older homes.
For the first few years, most new homes won’t need paint or remodeling either. Since most new homes come with only a basic landscape package, many new home buyers invest time and money enhancing their landscaping and watering new plants and lawns.
Who Looks Out for the Buyer
While falling in love with the thought of a new home, it is important to protect your best interests.
It is important when visiting new home communities to tell the builder’s agent you will have a buyer agent working with you. Ideally, have your buyer agent with you when visiting new home communities.
The onsite agent in a new community works only for the builder. While the onsite agents are generally very knowledgeable and helpful, their goal is to protect the builder’s bottom line and exclusively represent the builder’s best interests.
WARNING: If a builder’s agent or builder’s rep tries to encourage or entice you as a buyer to have no buyer agent representing you, it is a red flag that the builder may have a poor reputation for quality or may try to take advantage of the buyer’s lack of experience in new home transactions.
To protect yourself, it is best not to discuss any pricing, special incentives, or details on extras directly with the new home representative. A buyer’s agent can research what other buyers are paying in the community and what extras might be able to be negotiated for you.
Buyers should have their own agent who represents their best interests. Always research the team or buyer you select to work with, because a team’s solid track record of experience and knowledge with new construction is important. Look up online reviews on Zillow and Google for any team you choose to work with.
The buyer agent can also be the ‘bad guy’ during the construction period, home inspection, and walk through period if there is an issue with construction. That helps the owner to retain a good working relationship with the builder during the warranty period for a year or longer after closing.
The buyer’s agent also carries more weight if they work for a well known, local team like Path & Post, because the builder and builder’s agent know if they do a great job, the team may bring other buyers to the community. Likewise, if the builder does a poor job, word will travel fast in the team’s office to stay away from the community.
New Construction Warnings
New home buyers sometimes mistakenly believe a new home will have fewer potential issues than a resale home, but that is not always the case.
Be sure to read our New Construction Warnings before moving forward with a new home.
Path & Post recommends buyers pay for home inspections in both the pre-drywall state, as well as upon completion of construction. New home inspections are different from resale inspections, so it is important to only use an experienced home inspector who is certified in new home building codes. New homes are never perfect, and can even have structural defects, and they often have building code violations, which can be surprising to a buyer. Path & Post can recommend a top new home inspector based on our many years of experience.
Spec Homes vs Presale Homes
In a new home community, there may be homes already built and ready to purchase, called spec homes, short for speculative homes. An already completed home is the most affordable way to have a new home because spec homes do not usually have expensive or custom upgrades. The builder is paying the cost to carry the home, and that makes it more enticing for the builder to sell it.
If an existing home is not an option or doesn’t have the features desired, a buyer can opt to build a new home from scratch, which is called a pre-sale home. A contract to build a pre-sale home includes details of the home’s features, upgrades, allowances, floor plan and lot selected, along with any special stipulations or negotiations between the buyer and builder. Buyers of a pre-sale home in an established new home community are usually limited to the floor plans offered by the builder, with some builders allowing additional customization options.
Financial Considerations with New Homes
Most builders require a non-refundable builder deposit to start building a new home, because they incur the expense to build a home for a specific buyer whose selections are unique to that buyer. Since the builder deposit is typically non-refundable, buyers need to make sure they are fully qualified for the purchase before moving forward and risking a significant deposit. Buyers also need to research the builder and make sure they are comfortable with the builder’s construction quality, financial stability, and reputation.
Most builders in a new home community will require any personal selections like for flooring and fixtures that exceed the allowances built into the contract are fully paid in advance since those are unique to the buyer. Builders also typically require any changes during construction be substantially or mostly paid for at the time of the change.
Buying a new home often involves signing a specific builder’s contract, instead of the standard Georgia Association of Realtors contracts most often used. Be sure to read every word of the builder’s contract carefully and make sure you understand it.
Enjoy the New Home Journey
As you watch your pre-sale home being built, or you are ready to close on your spec home, enjoy being the first owner of a new home. We believe where you make your nest and create memories is important, and building a new nest can be especially exciting and meaningful!
