Here are six common mistakes to avoid when buying a brand-new home:
1. Not securing a pre-approved loan first
Before you go looking at model homes, talk to a lender to find out what kind of mortgage you’re entitled to. This will give you a realistic idea of what you can actually afford and can help you avoid getting in over your head. In the worst-case scenario, a smooth-talking salesperson can get you to agree to a mortgage that can hurt you in the long run. “They find themselves at the whim of a builder’s salesperson who promises financing,” says Sid Davis, president of real estate brokerage firm Sid Davis and Associates. “Many home buyers take on mortgages that are toxic.”
2. Not insisting on a good faith estimate
This mistake often goes along with the first. According to the Truth in Lending Act, a lender must provide a potential buyer with a good faith estimate—a list of all fees and other costs associated with the loan. This list includes the APR (annual percentage rate) of interest. If you don’t receive a good faith estimate from the lender—whether it’s a bank or a representative from the building company—within three days of the loan being presented, beware.
3. Not checking up on the builder’s reputation
Seeing a beautiful completed home is one way to judge whether you want to go with a particular builder—but it’s not the only way. What went into building that house—did it take three times longer than promised? Did the builders include everything in the original plan? Were they pleasant to work with? Before you agree to work with a building company, ask their previous clients or others in the neighborhood for their candid assessment of their experience with that builder.
4. Not having a Realtor negotiate for them
We’d all like to think we can stand up for ourselves in a negotiation situation, but in reality many home buyers don’t negotiate much at all out of fear of being seen as hostile, or out of ignorance of the finer points of real estate transactions. But a home is one of the largest purchases you’ll ever make in your life, so negotiation is a must! If you’re not comfortable with your own negotiation skills, hiring an expert real estate agent is a wise investment. Not only will an agent stand up for you when needed, but his or her expertise can help you get things you wouldn’t even know to ask for. “Buyers can walk away with not only the best rates, but thousands of dollars in upgrades as well,” says Davis.
5. Not getting a professional inspection
Some people assume that because a house is brand new, then there’s nothing wrong with it—but that’s not always the case. Be sure to have a home inspection done by an independent professional inspector before closing on the home. It’s an inexpensive step that can save a lot of money in the long run. The inspector may uncover design flaws or help identify things that will cause problems down the road. You’ll want those things taken care of before you close.
6. Not asking for a final punch list
Before you close on the house, the builder should provide a final “punch list” of little things that need to be fixed before the home is finally finished—everything from loose screws to larger issues. If the builder doesn’t automatically supply this list, be sure to ask for it. Once the punch list is complete, walk through the home to make sure everything’s right. Don’t close on the house before these things are done!
If you want an agent who can help you make the most of buying your dream home, or if you just have a question on how the process works, give someone at The Haro Group a call!
Source: National Builder Trade-in Program