IS NEW CONSTRUCTION FOR ME?
Buying new construction can be a great way to go. It can also be full of additional risk and concern… what if the builder doesn’t finish the home? What if they do a bad job? On the flipside… you get a brand new home, you get to pick selections such as countertops, tile, and cabinets. Some builders will even do moderate customization beyond that such as floor plan changes or roof decks. We’ve sold hundreds of new construction condos, town homes, and single family homes. There are a lot of good builders in Chicago. After doing this for nearly 20 years we realize most builders really do care about delivering a good product and do like happy homeowners. With that said, there are some key items to think about when purchasing a new home:
- It doesn’t matter if the builder is big or small. Some of the best homes are built by small builders that no one has ever heard of.
- The best indicator is quality. Thoroughly look over any properties he/she has built such as a model home or maybe ones that are sold but not closed yet. Hiring a professional inspector prior to a purchase is probably taking it too far, you’ll have the right to do that after purchase. There are many indicators of quality… is the drywall flush, is the millwork straight, are pendants centered above the island, etc. Spend some time and just look around.
- Ask for referrals of past projects/addresses they have built. Ask for homeowners referrals too. While builder’s don’t often have past home owners ready to chat they should have a body of work that you can research.
- Have your agent ask their peers. This is a big indicator of how a builder works. Experienced agents will likely have a pulse on the builder already. Beyond that they have great resources and can ask around and network with other agents and their experiences with that builder. It’s often our secret weapon.
- Understand that builder contracts are “one sided”. They always prefer the builder to the purchaser and I can assure you that you’re going to have to use their purchase agreement. The main thing to look for is the attorney approval period. This gives your attorney a chance to request modifications to the contract. It’s very common and in fact important to a buyer. While you wont be able to hedge your risk from every possible turn of events, a few key modifications will help reduce the risk.
- Builders take risk too. In fact the entire project is a risk! It’s their money, time, and reputation on the line, There are literally thousands of decisions that need to be made to build just one home. They then have to navigate multiple trades and sub contractors to city and county requirements, inspections, and protocol. Builders today don’t make the margins they used to so when you’re trying to negotiate you usually have better luck if it’s a win-win for both parties.
- Instead of trying to work the price down, your best strategy might be to work in the upgrades and changes you’d like. Its common knowledge that many builders don’t move on their price. There are numerous reason for this… they have other homes to sell in the area - a reduction in one is effectively a reduction in others. The cost of land and trades rarely goes down and usually goes up. Its very common for materials and labor to cost 5% or even 10% more to build by the time permits are in place. It may not sound like much but it adds up quick when profit margins are around 15% - 20%.
Buying a new home contains many of the same principles of purchasing a re-sale home. Understanding a few key differences can make a big impact on the transaction. Not only to secure the home, but to collaborate best with the builder and make sure you ultimately get the home you want for the price and terms you find agreeable. Please call us anytime if you’re considering a new home purchase. We’re always happy to answer any questions or represent you along the way.