The United States is one of the largest new construction markets worldwide with a value of more than US$ 1,162 billion. This market is fuelled by an increasing demand from home buyers who prefer new-build houses as they assume that they possess modern features and function smoothly.
If you are planning to invest in a new-construction property, you may tend to overlook certain crucial aspects amidst the excitement of owning a new abode.
Here are five things to consider before buying a new-build home in the NE Denver area.
1. Shop for a Mortgage Lender
Buying a home is a lifelong decision and you will possibly require a reliable mortgage lender who enjoys good market reputation and offers you a financially feasible deal. Committing to purchasing a property without applying for a loan can force you to choose a deal that may not suit your budget.
Therefore, before committing to the developer, talk to numerous mortgage lenders like banks, builders, and credit unions, and check how much loan you are entitled to take out. Compare the rates offered by multiple mortgage lenders and inquire about other hidden costs beyond the principal amount and interest.
Getting a good faith estimate (GFE, also referred to as loan estimate form) from your potential creditors is crucial as it helps you compare the various loan packages being offered. The GFE is a standard document that includes the complete breakdown of the estimated payment that the borrower has to pay to close the loan.
Creditors check your credit/mortgage score, which is a record of your past credit transactions and late payments, if any. This score represents your likelihood and capacity to repay a loan.
Every American citizen is entitled to receive his/her free annual credit report from major U.S. credit bureaus, namely Experian, TransUnion, and Equifax. Make sure you monitor your credit report regularly and clear your current credits in time to get a mortgage easily.
2. Hire a Real Estate Agent to Represent You through the Process
If you are relying on on-site sales professionals or the builder’s marketing team to guide you with your purchasing decision, think again! These professionals may be extremely convincing, yet may not have your best interest in mind.
These representatives are hired by the builder and hence, work on a commission. Therefore, it is wise to hire a real estate agent who is unbiased and possesses knowledge of the local market. For instance, information and advice on new-build homes in Denver can be easily procured by hiring a realtor based in the capital city of Colorado.
3. Review the Property and Its Neighborhood Carefully
Walk through the new-build home construction site and get a feel of the area surrounding it.
Bear your long-term requirements in mind when making a decision. For instance, if you are planning to spend your entire life in this house, consider its accessibility to the city center, healthcare services, day-care facilities, parks, schools, universities, and convenience stores. Similarly, if you have an elderly family member, the proximity of your home to a hospital or an eldercare facility will be crucial.
Avoid falling for the savvy marketing tactics of the on-site agents and the picture-perfect images of the property you’re considering. Be clear and realistic about your needs and choose a house that fits your lifestyle.
4. Check the Builder’s Reputation
An experienced and well-known builder will not hesitate to share contact details of his/her clientele as proof of his/her capability and past success. Talk to the developer’s customers and procure their opinions on his/her work. Check the feedback posted by other customers on various review sites.
5. Seek help from your realtor to examine the builder’s permit at the state licensing board.
It is also worthwhile to hire a property inspector who can verify the trustworthiness and competence of the builder. Snagging inspections are specially designed to inspect new-build homes. You must plan this scrutiny in the period between the house construction being completed and you signing the contract and moving in. A home inspection usually costs $400-800. However, this expense is justified considering the crucial long-term property decision you are about to make.
6. Read the Contract Thoroughly and Check the Relevant Documents Personally
Go through the contract carefully and involve your realtor and attorney when reviewing the document to avoid missing the crucial aspects. Make sure your lawyer incorporates addendums in the contract that protect your rights at each stage of the purchase.
When buying a new-build house, you are at the mercy of the developer’s construction schedule. Include a completion clause in your contract to ensure that the builder sticks to his/her timeline. The completion clause must state the date of completion of the construction, cancellation clause, and the refund amount in order to protect your interests if the builder is unable to meet his/her deadlines.
Ask the builder for the floor plan, the necessary warranty documents, the building permit, and the punch list before signing the contract. The punch list is a checklist prepared towards the end of the construction, enlisting the work not completed by the developer as per the contract.
For instance, before making the final payment, you can refer to the punch list to check if unfinished, damaged, or incorrect installations have been made. You can then work with the builder to get those tasks completed.
Check the precise upgrades and extras that are included in the offer. For instance, merely because the advertising catalog shows a house with a gourmet kitchen and a walk-in bathroom shower doesn’t mean that the cost of these features is included within the offered price of the house. Each luxury element is accompanied by a premium. Therefore, read the fine print and check what’s included in your basic package.
Investing in a new-build home is a thrilling and a happy moment for you and your family. However, in the excitement, you mustn’t forget to check on certain crucial aspects related to purchasing a new-construction property.
The above-mentioned tips will guide you towards purchasing the ideal new-build home and help you avoid issues down this path.