Tips on Working with Builders when Buying a New Home

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Valuable Tips on Working with Builders...

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Finding the Right Builder

Let's Talk Price

Options to Consider

Before You Sign on the Dotted Line

Finding the Right Builder

In your initial stage of previewing different builders, you should ask the following questions:

What is the price range of the homes?

What is the anticipated delivery date?

What is the finished square feet of the home? (This usually includes only the two upper levels of a two-story home).

Are they offering any financial incentives to buy?

What was the price of a comparable home sold earlier in the same development (to evaluate equity)?

What are the standard options offered at no extra cost?

Common standard features can include:

Flooring
- hardwood in hall foyer
- carpet in living, dining and family rooms, stairs and entire upper level
- vinyl kitchen flooring
Kitchen
- appliances (stovetop, oven, refrigerator, dishwasher)
- cabinets (oak)
- countertops (formica)
Bathrooms/Plumbing
- bathroom tile (4x4 ceramic tile)
- plumbing fixtures (chrome or brass)
- rough-in plumbing for bathroom in basement
- washer and dryer hookup
- vanity tops (cultured marble)
Other
- basic landscape package, including grass and shrubs
- interior and exterior brass lighting fixtures

Is there a Home Owners Association? If so, what does it cover? And, what does it cost per month? Will money be escrowed at settlement to cover payments?

Items that can be covered by the HOA fee include (varies widely):

community center
maintenance of common grounds
pool and tennis courts
road maintenance/snow removal
tot lots / walking or jogging paths
trash removal
utilities (some condominiums)

Prices can range anywhere from $20 per month up to $200 per month depending on what is included.

Let's Talk Price

The standard additional cost to add options to your home is about ten (10%) percent of the base price. Keep in mind when negotiating price, there is a large "mark-up" on the cost of options. The more options you purchase, the more likely the builder is to negotiate a discount in the total sales price.

Ask the builder if your home is on a pipe stem (these roads are generally not maintained by the county).

Ask if your lot is located next to a Storm Management Area (S.W.M.). If so, you may also be able to negotiate a lower price.

Many builders will pay 1-2 points. That is, one to two (1-2%) percent of your loan amount is deducted from the purchase price of your home.

Ask for a Good Faith Estimate of closing costs if using the builders lender. Also ask about locking in your interest rate and find out if they charge a fee.

Options to Consider

In higher priced luxury homes, some of the below options may be offered as 'standard features.' Generally, however, these are available at an additional cost:

Appliances (larger or more features, add microwave)

Cabinets (upgrade to maple, cherry, etc. and 42" in length)

Ceilings (vaulted, tray, 2-story)

Countertops (granite, corian)

Doors (upgraded interior doors, i.e. french doors)

Dual Zone Temperature Control

Electronic Garage Door Opener

Exterior Features (upgraded lights, portico, stoop and steps)

Fireplace (gas or woodburning)

Flooring (ceramic, marble, hardwood, upgraded carpet and padding)

Garage (2-3 car front or side loading)

Home Office Packages or other pre-wiring options

Home Theatre Packages that can include DVD

Instant Hot Water in kitchen

Intercom System

Irrigation System

Lighting (adding recessed lights and upgrading fixtures)

Media room w/ surround sound

Moulding (upgrade to two and three piece chair railing and crown moulding; other decorative moulding)

Paint packages (two tone)

Plumbing (upgraded sinks, tubs and fixtures)

Room Extensions (always optional unless standard with particular elevation)

Security System

Sidewalks (brick and stone)

Siding (brick, stucco, stone, vinyl)

Staircases (split or curved)

Water and Air Filtering Systems

Windows and Dormers (additional and/or different styles)

Keep in mind that, if structurally feasible to wait, outside venders may cost less than the builder to add some of these options to your home.

Before You Sign on the Dotted Line

You will generally have 2 weeks from contract signing to decide structural options to your home. The builder may accept changes to interior options such as flooring, lighting and cabinetry until they have poured the foundation to build your home.

Be sure to review all homeowner and condominium documents for restrictions that may affect your lifestyle.

The time to build your home will vary depending on factors that can include time of year and weather conditions, and how strong the demand is for new homes which can affect the availability of labor and materials. The time span can range anywhere from 4 months to 1 year. Be sure to read the builders sales contract to see that it includes time limits on how long they have to build the home and that it includes provisions for you to void the contract and get your money back at within a reasonable time (usually 1 year).

Ask your REALTOR® or the builders Sales Manager to explain what the builders position is on the following:
- Appraisal Contingency
- Financing Contingency
- Delays in Construction and Delivery
- Advance Notice of Settlement Date
- Pro-rating of Utilities and Taxes
- Scheduled Walk-Through Inspections
- Warranties on Materials and Labor
You will want to be sure that in all instances, if the contract is voided for any reason other than Purchaser neglect, that you will receive your deposit, and any down payments you have made, in FULL. It is always advisable to seek legal counsel from a qualified real estate attorney before signing any agreements.
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