The 7 Deadly Secrets Your Builder Doesn’t Want You To Know

 

The following secrets may keep you out of trouble if you are considering buying a new home.  Most buyers unknowingly walk into a new home sales office without the following important information.

 

1.  The earnest money check should be made out to a title company.  All builders require earnest money.  Some, retain the funds, instead of depositing the earnest money with a title company.  This practice doesn’t become a problem until the prospective buyer is unhappy with the builder.  Then the builder has complete control of the money.  If the earnest money is deposited with a title company, signatures from all the parties are required in order to disperse the funds.   

 

 

2.  The information about the builder’s guarantees are important. What type of structural warranty does the new home come with?  Is it warranted by the builder alone or is a third party involved?   Companies which warrant the structure of a home, require standards from the builder. The requirements generally include a minimum amount of experience building homes and specific structural standards to be followed.  A good structural warranty of some type will keep away possible headaches in the future.  And, of course, always get it in writing.

 

 

3.  Beware of the model home surprise.  What you see is not what you always get.  Be specific.  Ask the on-site sales person to specifically point out what is an extra in that model.  Never assume anything.  Be prepared to ask in every room of the house, “What is an upgrade in this room?”  The on-site person may think you are crazy, but it is better to know you are getting what you expect. 

 

 

4.  You can negotiate.  Don’t be afraid to ask.  Most builders will expect for you to pay for an owner’s title policy.  Ask the builder to pay it!  Although it is true that builder’s prefer not to negotiate on price, they will negotiate on extras.  Ask for special financing concessions.  Think through the items which are most important to you and add a few more.  Then be willing to be reasonable by throwing out  the things you don’t really want. 

 

 

5.  You do have a right to choose your own lender.  Many builders prefer to have you obtain financing through their mortgage company.  Don’t blindly accept this.  They would prefer to have their mortgage company so that they can control the transaction. Sometimes that’s good and sometimes that’s not.  Shop around for the best rates and service. 

 

 

6.  The builder’s contract is for the builder’s benefit. When you are purchasing a new home the contract being used has probably been prepared by the builder’s attorneys.  The builder does not have to use any standard contract.  If you are not a specialist on contracts, be leery of what you sign. 

 

 

7.  The on-site sales person, as charming as he/she may be, represents the seller.  That sales person is an employee of the builder.  Most on-site sales people are not licensed real estate agents.  Many buyers feel they will get a lower price by not using a real estate agent.  That’s simply not true.  The commission of an agent is figured into the overall sales of the builder, not on a per transaction basis.  When a builder figures his cost, it includes the fact that many buyers will employ an agent, and he figures that percentage over all the homes he builds.  Since most agents are paid from the sale, they provide their service at no charge to the buyer.  This allows the prospective buyer to level the playing field with a representative of his own.  Since the builder has someone representing him, shouldn’t you?

 

Call 214-207-0210 to receive the proper representation when purchasing your new home.

 

(Tod Franklin is a Texas Real Estate Agent.)