For those in the market for a new built home in Austin, Texas or anywhere in the country here are a few tips and things to keep in mind to not only protect yourself but also make the home buying process as smooth and enjoyable as possible.
The first step is to hire a good buyers agent. Some people think they do not need an agent to buy a new home because the builder has their own sales agents. This is a big mistake and puts you at a great disadvantage because these agents are paid by and represent the builder. Often times they will use high pressure tactics to convince you sign the contract and act in the best interests of the builder.
This is why it is essential to hire a buyer's agent to represent you. Builders all pay the commission to a Buyer’s Agent and at the same time they do not discount the price of the home if you do not use one. An experienced Agent will help you negotiate and save you thousands of dollars. Your own Agent will represent you, be your fiduciary and is required to disclose the positives as well as any negatives about the transaction. They are representing your best interests! Builder’s agents do not discuss any potential drawbacks and are only interested in getting you to sign on the bottom line.
Don’t Automatically Use the Builder’s Lender
Builders will often try to force you to use their own lender because they will be kept fully informed of your personal progress. At the same time the builder’s lender will typically not offer you the best deal. In some cases the builder owns the lending company being used and this can be an additional profit center for them. Always consider more than one option to make sure you are receiving a competitive loan based on your credit situation. As a Mortgage Broker & a REALTOR I always offer my clients a reduced fee financing option when I represent them as their Realtor. My interest rates are often ½ point lower than their best offers with lower closing costs.
Verify Option & Upgrade Pricing
Determine which options and upgrades you truly want. Always know that for just about all builders the profit margin is the highest in upgrades. Some builders can sell homes for almost just the cost of construction because they make the majority of their profit in the upgrade costs. Choosing too many upgrades can also put you in a position where the home will not appraise. This is another reason the builders want you to use their lenders. You are less likely to have your new home not appraise for the purchase price then they are involved in the financing. This is a circumstance you do not want to be in and another great reason to use a different lender. If the home does not apprise out with another lender the builder will be forced to reduce the sales price saving you additional money. If you use their lender, the home will typically appraise for the purchase price so you end up overpaying if the appraisal is not accurate.
When choosing upgrades take a hard look at what you can purchase and install after you close. Things like Ceiling fans and light fixtures can be installed afterward for much less than a builder will charge and you can typically purchase top of the line items for the same price as the “builder quality” items they would have installed.
Make Sure the Builder has a Good Reputation
There are at least a couple builders I will warn my clients about. These are builders that cut corners to keep costs low. If a buyer has had a bad experience with a builder, the word will get out quickly in a community. Check around to make sure things you do hear about are not isolated incidents because it is hard to actually keep everybody 100% happy. Do talk to neighbors and really take a close look at the quality of the construction. I will also personally take my clients to older communities built buy the same builder they are considering so they can see how the older homes hold up as they age.
Hire a good Home Inspector
Make sure you always, always get a home inspection when you buy, new or old. Many people think because the home is new they can skip the inspection but this is a big mistake. You want to hire a professional and as a Realtor we can recommend many expert home inspectors that will do an excellent and thorough job. Do not be fooled by the builder’s inspection. This is one of the last items that take place before you are ready to go to closing. This is primarily a time for you to find defects and other cosmetic items you want repaired before you move in. This is not a full inspection of the home! An inspector will actually spend about 4 hours going through everything in the house. From making sure the A/C unit is properly sized to checking if the roof is properly installed and vented.
These are just some of the topics of discussion that any new home buyer should be considering. Always remember that the builder is looking out for themselves and you need to have somebody on your team that you can trust to do the same.
About the Author
Don Groff is a licensed REALTOR & Mortgage Broker in the Austin, Texas area. He has over 10 years of experience in these fields and is also a consultant. You can contact Don at 512.669.5599 to discuss this article or any other real estate or mortgage questions you may have. You can visit http://www.AustinRealEstateScene.com to search the Austin MLS and read about ever changing Austin Real Estate Market. Don can also be reached via email at email@example.com.
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