So far this year, mortgage rates continue to hover around 3%, encouraging many hopeful homebuyers to enter the housing market. However, there’s a good chance rates will increase later this
Questions to Ask When Buying a New Construction Home
Dated: April 14 2021
Why Buy a New Home?
New homes offer certain advantages over resale homes including modern architecture, increased energy efficiency, warranties and lower maintenance costs just to name a few. Plus you'll know that you are the first one to live in the house!
Should I Use a Buyer Agent?
Yes. The Builder has their representative who is looking out for the Builders best interest and you should have a Buyer Agent representing your best interest during the negotiation, build and closing.
Don't I Save Money by Not Using a Buyer Agent?
No. The Builder is going to sell all of their homes without negotiation on the Base Price because the Builders Bank will not allow any variation on the Base Price to protect appraisal values of the new homes. So if you do not use a Buyer Agent, the Builder will simply pocket that Buyer Agent commission as additional profit on your home.
Will I Get a Commission Rebate From My Buyer Agent?
You should! Typical Buyer Agent commisison on New Construction Homes is between 1-3% of the Base Price. Since the Buyer Agent effort is lower during a New Construction purchase, you should consder asking your Buyer Agent to split the commission with you at closing to help pay for some of your closing costs. Since the Buyer is actually financing the commission as a part of the purchase, it just makes sense to use part of that money to pay for your closing costs. It's the greatest financial leverage you have when buying new construction and it's your money after all!
What is Included in the Base Price?
The base price refers to a fixed list of included features that the Builder considers standard. When you tour a model, the finishes you see are likely upgraded and cost extra. Be sure to discuss with your Buyer Agent which features are included and which are upgrades.
How Much Home Can I Afford?
How much home you can afford drives many decisions you make throughout the home buying journey. First and foremost, we recommend getting qualified by a reputable lender as they can help you determine your budget. As your Buyer Agent, our preferred lenders will lay out for you the difference in the numbers so you can make an informed decision on who to use.
What is an Earnest Money Deposit?
Essentially, an Earnest Money Deposit (EMD) is a deposit a Buyer makes on a home they want to purchase. All builders collect EMD's as it represents the Buyers good faith in buying a home and is typically non-refundable. Let your Buyer Agent help you with ths negotiation as well!
Will I Receive Any Financing Benefits?
Builders frequently provide assitance towards closing costs with the use of their Affiliated Lender. If the Buyer chooses to use the Builder's Affiliated Lender, the Buyer usually receives financing incentives. However, you should carefully review the overall numbers that you are offered through the Affiliated Lender. Some affiliated lenders increase their rates to cover the financial incentive they are offering. In that case, you end up paying more in the long run than if you went with an outside lender and used a commission rebate from your Buyer Agent.
Buying new construction is exciting! It has many benefits and plenty of financial opportunities for you to come out ahead of the competition. Use a Buyer Agent willing to give you a commission rebate at closing and take advantage of all of these benefits! You will enjoy your new home knowing that you put your hard earned money to good use! Contact us today to get started on your new construction purchase!
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