Buying a home that is newly built is a dream for many. But doing so is different than buying an existing home in several ways. The negotiations, timeline, contingencies, and process for taking possession all have unique characteristics when buying new construction. Be sure to understand the complexities of these differences and make sure your real estate agent does too.
When buying a home in a new development, the negotiations are often boiled down to a single offer form. The site sales agent will work to minimize negotiations and the offer process typically requires that the offer be submitted on single page form provided by the builder. Many details that are negotiable when buying an existing home a not negotiable when buying new construction. Examples are earnest money, inspections, and close date. If the offer is accepted, the purchase and sale agreement is written.
The purchase and sale agreement will be provided by the builder. The terms and conditions found in the builder's standard contract favor the builder in most respects. Many such terms and conditions are needed by the builder to prevent them from being penalized due to items outside of their control. Regardless, the buyer must realize that the contract language offers few protections for the buyer. Be sure you understand the terms and conditions of the builder's purchase and sale agreement.
Most often, when a buyer purchases a home in a new development they are buying a home that has not yet been completed. It is not unusual to wait 4 to 6 months to take possession of a home in an new development. The close date for the purchase is dictated by the build schedule, not the buyer's need to move. When buying an existing home, a buyer can usually negotiate the closing and possession dates to suit their needs.
One would expect a newly built home to not require an inspection. However, every new home is built by a group of subcontractors to the developer and those subcontractors can and do make mistakes and may cut corners. When you purchase a newly built home the builder usually will not allow the transaction to be contingent upon the outcome of a home inspection. While they will allow the inspection to be done, they do not allow the buyer to negotiate changes to the contract or terminate the agreement based on the inspector's findings. The builder will address safety and code issues and will commit to their building standards as they interpret them and that is all.
Prior to taking possession of a newly built home the builder's customer service representative will walk the buyer through their new home to demonstrate all the systems and mark any issues in the home that need to be corrected. This new owner's tour typically happens a few days to a week prior to the planned close date. The builder will typically agree to fix items noted during the tour that don't meet their construction standards. Many builders will address items that are to standard but not to the liking of the buyer as a gesture of good will. But as a buyer you must realize that the construction standards dictate the contractual obligation of the builder. If the builder says an item is to standard, the buyer has no other protection in the contract that would cause the builder to fix an item of concern.
Buying a newly built home can be very exciting and a great experience. When doing so be represented by your own agent who can negotiate in your behalf to produce the best possible outcome and hold the builder accountable throughout the process. Most builders require that your agent register you as a buyer with their sales agent during your first visit to the site sales office. So be sure to have your agent with you anytime you visit a new home development.