3 Insider Tips for Buying a New Construction Home

3 Insider Tips for Buying a New Construction Home

#1 Tip:  Do not get cozy with the builder's representative.  

They are not your buddy...they are nice, friendly, dress well, look good and you will like them.

They will also like you…

But, they work ONLY for the builder to get them the highest price and best terms...not you...regardless of how well you “click” with them.  

3 Insider Tip for Buying a New Construction Home

Their only job is to have you fall in love with the community so that you buy their new construction home and not the other builder construction down the street.

Builder agents are trained to point out only the good features and ignore the rest…

#2 Tip:  Do not spill the beans about your income, cash available, or maximum budget. 

They don’t need to know how rich or poor you are and you don’t need to tell them...even if they ask.  

3 Insider Tip for Buying a New Construction Home

The less the builder agent knows about your finances, or what you do for a living,  the better off you will be.

Likewise, do not let them know that you just found the house of your dreams. 

As your trusted Buyers Broker we always give you 100% confidentiality, so we will never blab your personal information, how much you love the house or how high $ you will go.  

Please don’t spoil your home buying power by talking too much...

That means if you are looking at the builders web site, please do not fill out the mortgage pre-qualification and tell them about your “inheritance”. They do not need to know where your home funds will come from or how much you really have.

#3 Tip: Only communicate with the builder agent through your Buyers Broker or your attorney...always copy us.

This is not because we are nosey...it is only so that you are not cornered into agreeing to something that is not in your best interest.  

Trust me, that happens…sometimes the builders rep will ask you to accept something that you should say “NO” to.  Sometimes, we find out after it is too late to help you.

For example:   The builder might want to substitute an appliance, light fixture, color of cabinets etc.  That is OK if the quality is the same or if you really don’t mind the change...but what if the change gives you a different color or a lower quality?

3 Insider Tip for Buying a New Construction Home

Don’t feel obligated to go along with what the builder's agent wants...let us sort it out so you are not pressured.  The final decision will always be up to you.

If the sellers/builders agent calls you about making a decision, please tell them to send any request to your trusty Buyers Broker (that's us!) so that we can review it first.  

If you have questions, let your Buyer Broker know so that we can get the answer for you. 

You are being represented by a competent Buyer Broker...take advantage of that and do not put yourself in the middle of a problem…

Sometimes, a buyer cannot control their emotions looking at brand new homes.

They let the whole world know how much they LOVE, LOVE, LOVE that particular home.  After they “tell all” about how badly they want to buy it, they turn around and want us to negotiate a lower price, or get some free appliances (or upgrades) for them...  

Does that make sense? Of course not...just remember...the less you say the better.

Most buyers are not equipped to know all the nuances of New Construction building…which is why the builders reps sometimes contact the buyer instead of their agent.  

We have had a builders ask for extra money for features already paid; replace 12” tile with 8”; and install a larger (closeout) bath tub which they claimed was an upgrade…the problem with the oversized tub was that now the shower door did not open all the way because the tub was in the way. 

Buyer negotiates with the seller direct:

3 Insider Tip for Buying a New Construction Home

True Story #1:  Buyer hired us to negotiate a good deal for them with a custom builder.  

We set a time to meet with the buyer, the builder and his agent to discuss what features the buyer wanted in their custom home and discuss the cost.  

When we got there (on time), we learned that the buyer had already negotiated with the seller and the price was already set in stone...no opportunity left for re-negotiations or concessions or a better deal. 

The buyer blew it...

Most brokers would have been happy that the negotiations were already completed and that they did not have to bother with it.  However, that did not sit well with us.  

We knew that we could have negotiated a better price for the buyer...and the buyers were so darn nice!  Too late now...  

Not only that, but later when the builder rep asked about doing a punch list walk-through, the buyer declined.  OMG...no...please...don’t cheat yourself!!  Let them fix the problems before closing!

This is a perfect example of why you should not communicate directly with the builder's rep. Had we known about that, we would have insisted on protecting the buyers best interest by scheduling a comprehensive walk thru with the construction manager to make sure that everything was as it should be, and not allow buyers to omit that step.

We know what needs to be done and are experienced at handling it.  Another good reason why you should communicate only with your buyer broker, not the builder's agent...they work for the builder...and only for the builder.

3 Insider Tip for Buying a New Construction Home

Besides, the time to get everything fixed as promised is before closing, not after the builder no longer remembers who you are.

Another new construction buyer beware transaction:  

True Story #2: This time it was a community where the seller/builder agent has worked many years. 

She wanted everything “her way” and set out right from the start to control everything about the transaction.  

She was so sweet, you could almost see the sugar dripping off her words.  For real. Buyers were smitten... 

  • First, she had a problem with the buyers having an attorney.  That is 100% none of her business; buyers may hire 5 attorneys if they like (or more…)
  • Then she announced that buyers had to pay full price, with not even a 10-penny discount. She behaved as if there was a bonus due to her for selling the property at full price…(actually, that just might be a possibility...) 

Not to mention that brokers are legally and ethically obligated to present all offers...even offers they don't like.  It is never up to what any agent thinks about the offer.

Since the buyer was paying for their own title insurance, they decided to have their attorney provide their title insurance and closing docs.

Yet it is illegal for anyone to force a buyer into purchasing title insurance from anyone in particular.  It is a negotiable item in the contract.

The pushy “builders' agent” had a meltdown when the buyer wanted their attorney to do the title work/title insurance.  She argued and insisted the buyers use “her” own title company...an affiliate company. 3 Insider Tip for Buying a New Construction Home

Let your attorney or your Buyers Broker handle it...we are working only for you and never the builder.

What is RESPA?

The law (RESPA: Real Estate Settlement Procedures Act) requires that brokers disclose what the true relationship between the real estate office and the title company (or other affiliate) is, and disclose the cost and what the benefit to the office is.  

Of course, that does not happen...that part is usually a big secret. Controlled business arrangements (affiliates) need to be disclosed, not hidden... 

Here is the craziest part...on all new construction, the buyer is always required to pay for their own title insurance. When the buyer pays for their title insurance, they get to pick and choose anyone they want to do the title work and closing. 

So you, the buyer, can use anyone you wish to purchase your title insurance. Don’t let any builder rep bully you into using someone they have in their pocket. 

It is YOUR hard earned money...do you want to spend it on the seller’s title agent, who has a “buddy-buddy” relationship with the seller?  

Or should you make the smarter choice and use a title attorney who is 100% on your side? 

3 Insider Tip for Buying a New Construction Home

WHAT A SMART NEW CONSTRUCTION HOME BUYER NEEDS TO DO...when the builders agent starts sending you “stuff”...or asking you for “stuff”:

The first time that happens, your response should be clear that they need to communicate directly with your broker or at least copy them on all correspondance.

Maintaining a dialogue with the builder's agent only creates problems in your future.  By letting your Buyers Broker sort it out, that will assure you will not agree to something that is not in your best interest and not make you uncomfortable.  I promise that you will still get to make all the decisions.

I recently had another buyer who fell into the seller's pushy agent trap when the buyer agreed to go along with a new timeline contrary to what the contract stipulated.3 Insider Tip for Buying a New Construction Home

So with the new timeline, at closing, the buyers did not receive the keys, did not receive the warranty, or all the extras that they were promised. 

Builder did not complete the unfinished issues until after closing.  Buyers were also talked into doing the new home orientation after closing...seriously, after closing the buyer has no negotiating power.

Not good...completion should be done before closing.  After closing, you, the buyer, have no leverage to get anything from the seller...the transaction is closed, your money has been disbursed and the time for negotiations is over.

The contract dies at closing, and some builders no longer want to resolve your unfinished problems since you have already signed all the closing documents and the money has been funded.

How important is the purchase contract?

3 Insider Tip for Buying a New Construction Home

The new home purchase contract is most important. The contract is the blueprint for what is to happen in this transaction.  It spells out the duties of the seller and also the duties of the buyer.  

The problem with most sellers brokers is that they do not read the contract and want to operate on what they “feel”.  Buying a new construction home is not about “feelings” or what someone else “thinks”.  It is a business transaction with a legal contract in place.  Both sides need to follow the contract.

Don’t sell yourself short...stay informed...it is your money...

For expert buyer representation, contact us 727-202-9130. Call us for all Tampa real estate for expert buyer representation

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