Tips for avoiding costly mistakes and buyers' remorse

5 Steps to Buying a New Construction Home in the Twin Cities

You’ve decided to buy a new construction home. You’ve shopped a few new home models and found a community you like. So it’s time to sign on the proverbial dotted line, right? Not so fast. Buying new construction can be more complicated than buying an existing home so make sure you have all the facts. 

In this blog, I share five steps to buying a new construction home in the Twin Cities that will ensure you avoid making costly mistakes and don’t end up with a bad case of buyer’s remorse.

And don’t miss my pro tip when I show you how to save money while still getting what you want in your new construction home.

Step 1 Research the Builder

Before you sign a purchase agreement for your new home, make sure you research the builder. You can verify the builder’s license, check their credit rating and financing, and see if any complaints or lawsuits have been filed against them. Also, you can learn a lot about your builder by talking with their previous clients. 

Ask for a list of previous clients, or, if you’re buying in a development, talk with neighbors already living there. Ask how the building process went for them. Did the builder complete the project on time and within budget? If issues did arise, was the builder responsive to their concerns? Were there unexpected expenses? How satisfied are they with home now that they’ve moved in? Did they have any regrets?

Step 2 Hire Your Own Realtor

Buying new construction can be complex. You need someone knowledgeable about the process who isn’t employed by the builder and is looking out for your interests. 

And in most cases, having your own agent won’t cost you anything. The builder as the seller pays the buyer’s agent commission. So why wouldn’t you get the peace of mind that comes with having your own agent?

Step 3 Make Sure You Understand All the Costs

Builders generally have a base price for the home and a separate price for the lot. And different lots may have different prices depending on things size and proximity to a road or a water feature. On top of the base price and the lot price, there will be additional costs for construction option ad-ons, such as a finished basement or deck. The builder may also have a package price for standardized finishes and appliances, you can choose upgrades…for a price. These things can add up quickly. Make sure you know the total price of your home so there won’t be any surprises at closing.

Step 4 Understand the Financing Options

Some builders require you to use their financing, and others may offer discounts if you do so. If you have a choice, make sure you talk with an outside lender who understands new construction financing. 

See how the interest rates and loan costs compare. Even if you choose to use the builder’s lender, you may be able to negotiate a better deal if you know your options.

Step 5 Get a Home Inspection

Lastly, just because it is new construction doesn’t mean you don’t need an inspection. In fact, you may want to have more than one. Some buyers chose to do a pre-drywall inspection just to make sure the foundation and structure are sound before the walls go up.

And it is a good idea to have a final walk-thru inspection before you close, much like you would if you were buying a pre-owned home. By having a final-walk through inspection, you can identify any problems or unfinished items and make sure those things are fixed or finished before closing.

Pro Tip: Don’t Get Distracted by Shiny Objects

Okay, now it’s time for my pro tip. If you’re buying or building a new construction home, stay away from shiny object syndrome when selecting cosmetic options for your new home. Some items and finishes, including appliances, bathroom fixtures, and custom paint colors can be done much less expensively once you’re living in your new home. You can save money by limiting your upgrades to things it would be difficult or highly inconvenient to replace while you’re living in your new home.

If you haven’t seen them yet, check out my other videos in this series on buying new construction, you can find links to them in the information section below.

Had a good (or bad) experience buying new construction? Share it in the comments below. Have questions, don’t hesitate to write or email me.  I’m here to help. And don’t forget to check out my other two blogs in this series on buying new construction.

Is new construction the right choice for you? In this video, I ask five essential questions every buyer should consider.

Are all new homes built the same? Not exactly. Find out more about types of new home and home builders in this video.

J Trout Lowen is a Minneapolis Realtor® and an expert and helping buyers and sellers navigate the Twin Cities housing market.

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