New Build Home buying Mistakes to avoid!!!
So you are thinking about buying a new home and have decided that a new build is what you really want, that’s a great idea, nearly one third of home buyers opt for a brand new build! It means you can customize your home to meet your personal wants, needs, and style! You have lower maintenance costs on a new build, and unexpected surprises (like asbestos, major plumbing issues, or electrical upgrades) are unlikely!
However, there are definitely some pitfalls you need to be aware! To help you avoid making these new build home buying mistakes, a list of things to do has been compiled below.
Falling in love with the show home!
Everything you see in a show home is typically an upgrade! From the flooring options, to the counter tops, to the actual floor plan, they show you the best of the best, but it will cost you! There is some haggling room when it comes to new builds and upgrades, make sure that if you are opting for several upgrades, that you ask for discounts, it is likely you will receive them (and of course the more upgrades, the larger the discount you should receive).
They don’t read the details!
Remember you are looking at a digital rendering or a brochure, not a real home! So when picking your finishes and your floor plan, make sure you get every detail in writing and that you understand everything completely! If you are looking at a condo and the floor plan states 700sq.ft. make sure that is interior, not including the balcony!
They don’t use their own lawyer!
When you are signing a contract for one of the largest purchases in your life, you should always have your own legal representation! That means taking your contract to a lawyer to look it over and make sure you are protected. Yes it will cost you money, but it could save you a lot more than lawyer’s fees!
They don’t get an inspection!
This is a big one, you may think “Oh but it is brand new, what could be wrong”, but the reality is you should always get an inspection! You want to make sure everything has been done correctly so you don’t have issues down the road! Yes you have a warranty, but it only lasts so long! You should have an inspector do a walk through before you take possession, you should have another inspection done before your warranty expires (around the 10th or 11th month of possession).
They don’t fight delays from the builder!
Tarion regulations stipulate that critical dates for your new build are included in your purchase agreement, therefore if the builder misses a date for any reason, the buyer can either agree, ask for compensation, or get out of the deal all together! It is advised that if there is a delay notification from the builder, you should consult a lawyer before responding with your decision!
They don’t consider the fact that they are moving into a construction zone!
There is going to be noise, mess, road construction, and more! Unless you have the last home in the last development phase. Some times it will take a while to get your grass, driveway, or other finishing details done! You may also have to live in a construction site for a little while, so if you aren’t prepared to handle that, maybe consider buying an existing home instead of a new build.
They don’t understand the warranty, or act swiftly on using it!
In Ontario, all new builds (Detached, semi, condo, etc) have mandatory warranties. However, if you are thinking about moving out of the province, be warned, only BC, ON, and PQ have such mandates. For those provinces that DO have mandatory new build warranties, it is important to review the specific details of the warranty, and to note the date of expiration and make sure what you know is covered and till when! You don’t want to miss getting something fixed because you are over your warranty!
When it comes to utilizing your warranty, time is of the essence! You should never wait to contact the builder if you have a claim for your warranty. It can take a while for the builder to get back to you, and even longer for someone to actually come see your property! The responsibility is unfortunately on you to get the claim in early enough that you have time to hunt the builder down to get your problems fixed!
Many people, especially first time new build buyers, are surprised at the costs associated with closing their new build. When you first sign your agreement, many of the closing costs are estimates, and buyers aren’t necessarily expecting those figures to change, but they can, and do!
They buy at the wrong time!
If you are buying a new build for the purpose of an investment property, getting in early is key! By the time a builder actually opens the purchasing to the general public and does their grand opening, potentially 50% of the units have already been sold to pre-sale VIP’s. How do you take advantage of this? You need to be connected to the right realtor!
However, like all real estate, there is a potential to pay for a home and then have its value decline due to market changes! That doesn’t change just because you are buying a brand new build! What does change, is that you might actually have some negotiating options if enough buyer’s work together. Additionally, you should be aware that if your contract price doesn’t match your final valuation, your mortgage lender may not grant you the amount of your original purchase agreement! That means you may need a larger down payment, or default and lose your deposit.
Whether you decide to buy a brand new build or not, your first step in the home buying process should be to call me and get pre-approved so you know how much house you can actually afford! You don’t want to get into a contract and lose money because you haven’t done your due diligence!
Feel free to contact me any time to get started.