Wednesday, January 20, 2021

6 Things You Need To Know When Purchasing New Construction Home

Whether you're a first time home buyer or has gone through the process of home buying before, here are six things you should know when purchasing a new construction home.

6 Things You Need To Know When Purchasing New Construction Home

Research the neighborhood and the builder

It is your responsibility as a buyer to do your own due diligence and research the area you want to move into. Go over the list of things that are important to you as far as the neighborhood/area is concerned. Does it have a dog park for your fur babies? If you have kids, are there parks around? Is the school rating acceptable? How far or how close are the dining areas and shops around. Is there heavy traffic around the time you leave or return from work?

When it comes to builders, check their reviews. How many homes are they building. Drive around the community and if you see one of neighbors, ask them what they think of the builder. How satisfied are they of the product. Would they recommend the builder to their friends and family and while you're at it, ask them how they like living in the area. 

Know what's standard and options

Model homes are stacked with many upgrades to show the full potential of what you can do with the house. You're going to be impressed when you walk in and that is what it is for. Keep in mind that this is not what the base price offers. Many times, the sales office carries the standard items for the flooring, cabinets, countertops, elevation, etc. You can take a look at those. An experienced Realtor can point those out to you and if not, the best thing to do is have your agent schedule an appointment with the sales agent for the specific model home you're interested in and the sales agent can assists you.  

Everything has to be in writing

In real estate, everything has to be in writing. Most builders offer incentives, financial or otherwise, when you purchase from them. Having said that, make sure that it is written in the contract when you sign it. It is good practice to repeat what they promised via email so you have it documented. That way, you can always referenced back to what they say on the email. Even so, just because it is written on the email by the sales agent, doesn't mean that it is so. It needs to be part of the contract if builders are to honor them for sure. 

What's the tax rate and is there HOA

In the state of California, you pay an ad valorem tax (property tax). Mello-Roos is an additional tax that you pay on top of the property tax that is created to pay for infrastructure and/or services within a certain district. You need to know what your tax rate is because it could impact the estimated monthly payment that your lender quoted you. Supported by the same estimated monthly mortgage, the amount of loan you're preapproved for would be less with Mello-Roos than that of a home without it. 

You need to know if there is HOA fee and how much because again, it affects how the lender calculate your payment. What are you paying for? $300 monthly HOA fee for taking care of the parks with no other amenities may be too much for you. You need to know before signing the contract so you can make an informed decision and not have buyer's remorse. 

There may be financial incentives when working with the builder's preferred lender

As a buyer, you need to know that there may be some financial incentives when working with their in-house lender. It usually is a certain amount of credit towards buyer's closing cost. Instead of using your own money for closing cost, it's extra money you can use towards upgrades for your home. 

Your agent can assists you in purchasing new homes

The sales agents are there to represent the builders. Who is representing you? Who would look after your best interest? You need someone in your corner who can help you navigate the new construction home buying process. It's no cost to you so make sure you work with an agent who has experience on new construction homes. Whether you work with an agent or not, you're going to pay the same amount for the home anyway so might as well have someone who will have your back. 

These are six things you need to know that will help educate you prior to signing that contract. The more you know, the better so you can make as informed of a decision as possible. 

Note: If you or someone you know is looking to own new construction homes, I'd love to help! 

Angela Carpio, Realtor


Coldwell Banker ABR

Lic. #01967762


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