|Are you thinking about having your home built?
It is done all the time, right? Right. Many people who have
decided to have their homes built will usually enlist the services of a
REALTOR® to help them with the building process. Here are
some of the reasons why:
Location, Location, Location
Even before you select a homesite,
you should consider resale value. Before I even build my home?
Absolutely! You need to be secure in the fact that your lot or land
is located in an area where there are, or will be, comparable homes to the home that you want to build,
and that they are built by comparable builders .
Whether you need them or not, school systems tend to be
a big factor in resale value and time on the market. A home that
is located in an excellent school district will usually sell much faster
and at a higher price than a comparable home that is not.
If there may be a chance that you will be moving from
this home within a few years, you will want to consider how much future
new construction will be within a few mile radius. Sure, sometimes
knowing that answer would take a crystal ball. Why do I need
to know that? It is hard enough to compete with resale homes
when you are wanting to sell a home, but competing with new construction
can be very frustrating and costly. Why? Because
generally prospective buyers would much rather buy a brand new home where
everything is new and under warranty. Sometimes as an incentive to
buy their homes, builders will pay for the buyer's closing costs, as well
as offer other incentives. Therefore, it is not an uncommon practice
to have to price your "used" home below the price of comparable new homes.
In addition to the price problem, you also will need to offer to pay for
a portion of a buyer's closing costs. If you do not, most probably
the buyer will just go on down the street to the builder that will pay
these costs, leaving the buyer with more money in their pockets.
Take a look at the layout of the lot and the surroundings. Are
there any concerns with regard to drainage? How about high tension power lines?
What will be, or is, already built nearby? Hopefully nothing that will affect
the value of your home. What about this lot will give you added value?
These are all things that a REALTOR® either knows from experience
or can find the answers to.
Time Is Of An Essence
If you are in a hurry to get moved into your home, building may not work
for you unless you are open to the idea of making an interim move while your new home
is under construction. Most homes take between 4 to 6 months to build. Depending on the size,
some can actually take even a year or longer. Be cautious of a builder that says they
can build a home in less than 4 months. However, it could be possible if some of the
preliminary work is already completed.
One thing to keep in mind, usually a builder will not even start
construction on your new home until after you have been approved for your mortgage,
that is, if you will be needing one. A lot of builders have established relationships
with certain lenders. Do not fall into the trap of having to use a builder's lender.
You have every right to select your own lender. Your REALTOR® deals with lenders
on a daily basis and will give you guidance on your best mortgage lender and mortgage
product. It ususally will pay to shop around and compare rates and most importantly,
buyer's closing costs that will be charged by lenders.
Caveat Emptor (Buyer Beware!)
If you are considering building a new home without using the services
of a REALTOR® will you be represented by the builder or the builder's representative? Certainly not! The builder and/or his representatives are just
representing the builder. You have nobody looking out for your best interests, unless
you enlist the services of a REALTOR® and execute a Buyer-Agency form or Buyer-Broker
Will I pay more for my new house if I use a REALTOR®? In most cases
the answer is, NO! With most builder's the agent's professional service fee is
already built into the price of the home, whether you use a REALTOR® or not.
However, if you should decide not to have your own "representation", do not erroneously assume
the builder will reduce the price of the home by the amount of the professional service fee.
What you actually will be doing is putting that amount of money right back into the builder's
pocket. Now that you know the price of your home is not determined by the fact that you do or
do not use a REALTOR®, does it not make more sense to be represented?
Is the builder that I want to use a good, reputable builder?
Your REALTOR®, in most circumstances, can provide you with the information to
arrive at an answer to this question. Occasionally, a new builder will appear. Do not
be too quick to "contract" with him. If he can build your house for less money than anyone
else has quoted you, ask yourself, "Why?" Ask him for references. You and your REALTOR®
need to check with the Attorney General's office, as well as the Better Business Bureau to see
if there have been any complaints filed against this builder and if so, were they remedied to
the satisfaction of the complaintant. Ask your REALTOR® to check out the the builder with
other sources that we have at our disposal.
Ready, Set, Go
You have now enlisted the services of a REALTOR®, found a lot that you like,
and a reputable builder. Now it is time for you and your agent to take the building plan that you
like and sit down with the builder to "price it out." Your REALTOR® has been through this
many times with other customers and sees many homes on a daily basis. At this time, your agent
may make suggestions to you of different ideas in order for you to get the most home for your
money. Your agent, although you may not presently be thinking about it, will have your best
interest in mind with regard to resale, and may make suggestions that will only enhance your resale
dollar. FYI, the small added expense to upgrade your carpet padding will benefit you in the long
Once you have included everything you want in the house, and have arrived at a
comfortable price, it is time to draw up the building contract. It is at this time that you
should make it clear to the builder that you want your REALTOR® totally involved in the
entire process, starting with the contract. Make sure the builder gives each page of the contract
to your agent to read and make any agreed upon needed adjustments before you are given it to read
and approve. This is one of the most critical times of the whole process and one of the
most crucial reasons you need representation by a REALTOR®.
Pricing and writing the contract will probably take a few hours. Do not make
any plans that might conflict with your contract appointment. I can not stress the importance
of this step of the process. You need to be 100% focused on the subject without any outside
interferences. Which leads to one other "delicate" matter. You may have wonderful children, parents,
aunts, uncles, or friends, but leave them at home! The fewer people involved at this
point the less confusing for you. Children become easily bored and wrestless. This appointment
would be without a doubt the most boring thing you could ask your children to try to sit though.
Do everyone a favor, especially the kids, do not bring them. You can take the floor plan home for
them to see their new house. Afterall, that is all it is right now, a house on paper. Do not leave the premises without a copy of everything
that you have signed.
Make sure any changes to the contract have been initialled by both you and
the builder. Once again, just remind the builder that all contacts to you are to be made through your REALTOR®. Your agent
can not possibly protect your best interest if left "out of the loop" of conversations and meetings
between you and the builder. I can almost positively promise you that the builder will try to
circumvent your agent. It will be up to you to tell the builder that he will need to talk to your
agent and not you.
This Is Getting Me Excited! What Is The Next Step?
Yes, building a house can be fun and exciting. But it can also be a nightmare.
Use the experience of your REALTOR® to make sure everything goes smoothly.
If you will be needing a mortgage for this home, and the
majority of buyers do, you will need to decide which lender you will be using. You will be told by the lender what documents you will
need to bring to your loan application appointment. You may be asked to bring a check to pay for the credit report
and appraisal. It is possible that if your builder previously agreed to pay for these items, then you may be
reimbursed these expenses at closing. You really don't need to have your agent attend your loan application
appointment with you, unless you feel uneasy about going by yourself. The loan officer is not your enemy.
Believe it or not, he actually wants to lend you the money!
Tell Me More!
Soon, you will be notified by the lender that your mortgage loan has been approved.
The builder will notify your REALTOR® that it is now time for you to make your color selections.
Take your agent with you for this process and, if you would like, someone else with a knowledge of decorating. Do not
be surprised if your agent keeps telling you to, "Keep it neutral." Your agent is actually
telling you in so many words that if it should become necessary to sell the house before any of
these items need replacing, you will save money in the long-run by selecting neutral colors now.
Why Did They Stop Working On My House?
They most probably have not stopped working on your house. There is usually some
sort of contruction going on even if you can not see it. All construction is scheduled in stages. One
stage can not proceed without the completion of the prior stage. The part of the construction process
that seems to look like work has been halted, is the interior work. You may find yourself driving by
the construction site daily. This can be both fun and exciting! Every day you will notice changes
occurring. You may think that your house will probably be completed way ahead of schedule. WRONG! The exterior construction
seems to just fly by, but like I previously state, once the crews are inside, it will seem like they
will never finish the house.
If you should notice something that you feel is not right, do not express your
concerns to the crew, call your agent immediately! Construction workers can be tempermental soles.
They have schedules to maintain. If they think something is wrong, they will just pack up and go to
the next site. Your REALTOR® will notify the builder of your concern, who in turn will check into
it. If there is a problem, the builder will handle the construction crew to get the problem rectified.
The Final Countdown
Your new home is in it's final stages of completetion. The closing has been scheduled
by the builder. He will properly notify your agent of the day and time. Your REALTOR® will
be notified of the time for the final walk-through, which both you and your agent will attend along with the
builder's construction supervisor. This walk-through will be your first chance to find any mistakes or problems,
if there are any, be it however so small. The supervisor will mark these areas that
need attention. Most of these corrections will be made prior to closing, however, if there are any that may take
more time, the builder may need sometimes up to thirty days after closing to correct.
It Is All Yours!
The big day will finally arrive! The closing will be no big deal. Aside from you and yourREALTOR®,
the builder or his representative, and the title closer will usually be the only people in attendance. Once again,
please leave your small children at home. You will sign all the mortgage papers, collect some information from the builder,
get your new house keys, shake everyone's hand, and leave. You may feel a little of a let down. Afterall, so many months of anticipation, and it will
all come to an end in about a forty-five minute closing. Your new home will
now be all yours to enjoy for many years.
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