Many buyers have found in the last few years that buying brand new construction is the way to go to avoid the resale market with is rife with competition. However, there have been some new builds that have been known to have agents sleeping in their cars outside of their office waiting to add their client’s names to the waiting list. It’s hard to escape drama these days!
But…this article really isn’t about competition (enough of that, right?!?!), so let’s get to the points of what every buyer should know prior to buying a brand new home.
Make Sure You Have Your Own Realtor
No different than buying resale, buyers benefit from having their own agent. If you walk into an open house for a resale home, you’d meet a Realtor representing the sellers. Likewise, if you walk into a Show Room for a builder, keep in mind that you are meeting someone who may or may not be a licensed Realtor (as it isn’t a requirement for them to be a registrant in new construction if the person working in the show room is an employee of the builder, so it would be more like a “For Sale By Owner”). But, keep in mind that whoever is in that Show Room, as friendly and as professional as they may be, they are working for the builder, not the buyers.
Don’t Expect to “Get a Deal”
We are still in the market where price reductions are not the norm. However, even in the hottest seller’s market, most builders do not factor in any discounts to their pricing. Their pricing is usually what it is, period. The only changes to the price would be for any extra costs associated with upgrades that the buyer adds.
Know which Upgrades to Choose
First of all, know when you’re going through the Show Room which features are standard and which ones are upgrades. The Show Room is where the builder chooses to show off all of the possible features that they can offer prospective buyers. Make sure that you’re not going through all “starry eyed” and getting wowed by everything you see because some upgrades are extremely costly. This is where having your own representative comes in handy. Some things are a better value than others. For example, having to pay to do pot lights after possession, once the dry wall is already closed up and painted is a lot more work and cost than doing it at the time of construction. However, paying thousands of dollars for an upgraded countertop may not be worth the hefty mark-up. And not everything is going to pay off for resale. Your own agent will be able to help sort through these decisions, making choices that will pay off in the long run.
Choose the Best Lot Available
When you’re buying a resale home, you may have to wait years to find a house that you like and when you finally find a house that you like, you may not love the lot. But, when you’re buying brand new construction, especially early on in the process, you are afforded the unique opportunity to choose your building lot. When this opportunity arises, go for the best one! Upgrades are something that can always be done later, but you can’t move the house within the neighbourhood. The cost of an upgraded lot is usually a fraction of what it would cost you later if you were purchasing resale. There are only so many ravine lots. Only so many lots that back onto a forest. Only so many that are overlooking the water or the farmer’s field. Only so many lots close to the park, or the school or the walking trail, etc. Whatever it is in the neighbourhood of where the new homes that are being built that is a draw for buyers, whatever it is that sets the place apart from other communities, do your best to get in on the best location you can possibly get within the neighbourhood. It will be money well spent, believe me!
Get Your Lawyer to Review the Offer
A few years ago, I had some amazing clients that offered on their dream home. They had done some great research and found a builder that didn’t build a huge volume of homes, but everything they did was high quality. They had some very strange wording in their contract, though, that their lawyer picked up on and explained to them in layman’s terms, and we asked for the builder to amend the wording in the contract, and when they understood our concern, they were flexible and made the change. Builders usually use their own forms (not the standard forms provided by the Ontario Real Estate Association), so sometimes things can get missed or lost in translation. I was grateful that I had recommended that these clients have the lawyer review the contract their offer prior to fulfilling their conditions, and I know they were, too.
Remember, whatever you choose to do, whether it’s buying new or resale, make sure that you proceed with your eyes wide open. Don’t get too enamoured by beautiful furniture, rugs, flowers, artwork, window treatments, etc., as none of these things will be there the day you get the keys. And you want to make sure that your decision was based on factors that make up a wise real estate decision – LOCATION, LOT, and LAYOUT are the top 3 features I would be looking for if I were a buyer today.