Construction of new subdivision homes is escalating across America. Whether you are considering the purchase of a condominium in a new urban complex or a single family home in a master-planned suburban community, the process for purchasing new subdivision homes applies equally. Here are some tips to make buying a newly-constructed home easier.
Tip 1: Standard House Hunting Rules Apply. House hunting starts with writing down attributes that your new home should have, such as location, features, size and price range. Buyers of new subdivision homes should develop a checklist, too. Location of the subdivision should face the same considerations as existing homes, such as commute distance, school district, proximity to shopping, etc. However, location within the subdivision can also influence re-sale value. Homes located near the center of the development are generally considered to have a higher value, though it’s not unusual for homes on the edge of a subdivision that enjoy extra privacy or a special view to be worth more.
Tip 2: Work With An Agent. Buyers of new subdivision homes should be represented by their own agent. The developer’s sales staff are often full time employees who may (or may not) also be licensed real estate agents or the developer might contract with a local brokerage to sell their homes. Either way, buyers should have a qualified agent who represents their best interests without the risk of a dual agency situation. Most developers offer a commission to agents who represent buyers, check to make sure your agent will be paid by the developer or plan to pay your agent for their services directly.
Tip 3: Keep Track Of The Dollars. Many new subdivision homes are purchased while still under construction, providing the opportunity for buyers to choose from a wide range of options in the finished product. Options have price tags, so it’s important to understand the cost of every option and how each one impacts the bottom line purchase price. Buyers should also look for recurring costs common in subdivisions, such as monthly or quarterly homeowner association fees and special city or county tax assessments for maintenance of streets, parks and schools.
Tip 4: Perform Standard Inspections. Plan on having the same inspections performed on your newly-construction home that you would have done for an existing home. Developers may say inspections are performed by their crews or by the city’s permit compliance inspectors during construction, but those inspections don’t always identify faults in the finished home that the developer should be obligated to correct. “Punch lists” of items requiring repair in newly-constructed homes are common and developers have been known to put off making those repairs until after escrow closes. Buyers should hire an independent home inspector and require that faults identified in the inspector’s report be repaired prior to closing escrow, just as they would with an existing home purchase.
Tip 5: Close On Time Or Have Options. Escrow closing dates for homes under construction can vary. Inclement weather and other unforeseen delays can push out completion of construction and push out escrow closing by weeks or months. Some developers use a two-phase sales approach, wherein buyers put down a deposit and are then required to close escrow within a certain number of days after the developer receives final inspection approval from the city (sometimes called a “certificate of occupancy”). If unable to negotiate price adjustments or penalties for delays, keep moving plans flexible and try to negotiate an escape clause that allows you to cancel the purchase if delays become unreasonable.
Have questions about buying a home in a subdivision or any other topic relating to buying and selling real estate? Drop me a line!