Five Important Tips for Buyers of New Construction Homes

New construction activity has exploded here in the South Puget Sound area. This development has created a large inventory of new homes to choose from. With lender bonuses and other incentives, it's very tempting to walk into a model home and to walk out with a signed purchase and sale agreement.

Here are steps you can take to ensure that your interests are protected and that the new home purchase runs as smoothly as possible.

Step 1: Use Your Own Agent

Most of the site agents work for the builder (ask if they are buyers' agents) and, as such, will protect the seller's best interests. Find your own Realtor and let the site agent know that you have representation. Often you'll have to register your agent in the sign-in book. Most builders have already pre-negotiated a commission for a buyer's agent with the Multiple Listing service, so your own Realtor will cost you nothing.

Step 2: Research the Builder

Check with the Better Business Bureau on any complaints about the builder. Your agent should have an idea of the quality of work and reputation of the various local builders. It doesn't hurt to check with the neighbors to see how satisfied they are. A builder with nothing to fear will not hesitate to let you check his/her references. Also check if the builder has provisions built into the purchasing process that limit the number of investor purchases in the community, to ensure that the development will be mostly occupied by the home owners.

Step 3: Don't Automatically Use Their Lender

Many builders have a pre-arranged relationship with a lender, or have established their own mortgage companies that will offer you a bonus if you use them. Just remember "There's no such thing as a free lunch!". These bonuses are often in the thousands and this money has to come from somewhere; mostly in higher interest rates, other fees, or yield spread premium. Seek a good faith estimate from several lenders and compare them with each other. Let the other lenders know that the builder offers a bonus and go with the company that truly offers you the best terms. It pays to shop around.

Step 4: Research the Neighborhood

Find out if the schools are equipped to handle the influx of additional students the new development will bring. Is the infrastructure sufficient to handle the additional traffic? What other neighborhood projects are in the works? Your Realtor will be able to supply you with information about zoning, plans and future projects.

Step 5: Hire a Home Inspector

Most new construction homes come with a warranty, and the builder will assure you that the homes have just been signed off by the municipal inspectors before they were released for sale. This is no guarantee against mistakes and construction flaws. Get an independent party to check the home. All too often, home inspectors find damage that would have gone unchecked for a long time and would then have cost the home owner lots of money. Your home is probably the biggest financial investment. Spend the money to get it inspected before you purchase it.

Sandy Nelson
Realtor for Olympia Area Real Estate
www.sandynelsonrealestate.com