6 Costly Mistakes That New Construction Home Buyers Make

More than 350,000 buyers buy new construction homes in the United States every year. Unfortunately, many of these buyers will lose tens of thousands of dollars along the way.

For such a massive financial and personal investment, buying and/or building a brand new home can feel surprisingly distant. Though you are the spearhead of the entire building process, you have to put your trust in a handful of third parties who specialize in each individual task in the process. Unless you have firsthand experience, it can be hard to know if you are being taken advantage of, whether there may be cheaper options available to you, and if certain steps are even necessary at all.

The key is to remember that builders, developers, financiers, even agents – they all are working for you, and you have the final say in all your decisions.

To help you save on your bottom line, here are some key things to look out for when building and/or buying a new home.

1 – They Don't Ask the Builder for Upgrades Or Other non-Price Incentives During Negotiations

Many times, if builders refuse to negotiate on price, they will be more than willing to negotiate on upgrades. They want their sales prices to reflect higher numbers, so they are less likely to give in to offering discounts on the base home price. However, they are more likely to give a free upgrade or offer you special services, as a gesture of their gratitude and to win your continued business.

2 – They Pay Too Much For Financing

Builders often lure clients with attractive seeming incentives such as a $1000 credit, or a rebate to help cover the financing of the project. But an incentive is only as valuable as the initial arrangement. In other words, if the overall project cost is unreasonably high, a rebate will likely only be bringing the costs back down to normal, and sometimes not even that.  That’s not to say these incentives are always as result of an inflated price: possibly there is a connection between your representative/agent and the building company for instance. But it’s something to be on the lookout for, especially if you don’t have as much trust in them as you would like.

3 – They Don't Understand the Contract

Contracts are riddled with fine print, and even if read carefully it’s not guaranteed you’ll actually understand what’s being said in them. For such a huge financial endeavor, contracts are not to be taken lightly. Even if the builders you meet appear completely reasonable, it’s likely that they are not the ones working out the contract behind the scenes. Always consult your personal representative on contractual matters, since they are experienced in such matters and it's their job to ensure you are not taken advantage of.

4 – They Don't Consider Market Trends

It’s critical to stay as up to date as possible on market trends. That way you will know the best time to buy and have a good sense of where your leverage lies. Speak with your agent or representative about the latest insights and developments with the market. Remember: your agent is on your side, and a good agent will look out for you to ensure the decision you’re making it both the right one for you, and a sound one in terms of the overall market.

5 – They Assume All Builders Are The Same

Quality doesn’t just come from thin air; it takes years of experience to develop a skillset. For builders, the quality of their construction is of course the underlying and most critical element. Without the ability to execute great work, there is no way to sustain business. But construction quality is only one aspect of the overall quality of the building process. Your builder needs to be reliable. They need to be reasonable. They need to be forthright. Utilize the handy resources of the internet to comprehensively research your builder and their competitors, and see how other people’s experiences went, in order to make sure you are choosing the right builder for you.

6 – They Think the Builder’s Agent Is on Their Side

An agent’s job is to look out for whomever they represent. There’s no getting around that fact. The builder has an agent and so do you. This is for a reason, and a good one. Though you will be cordial and develop a rapport together, it is any agent’s job to get the best deal for their client. Now, any good agent will know not to get too pushy for their client's interests – for fear of losing the business altogether. But you still need your own agent to do the same, in order to find a mediating common ground.