Buying a new build home is quite different from buying an existing home. Some of the primary reasons this is the case is that newly built homes primarily include up-to-date designs and new designs and incorporate the latest construction standards. It is also worth mentioning that most newly built homes are usually sold before they are completed. This means that the process of making the purchase is quite different.
The process of buying a new build home
Step 1: Finding the home, researching the builders and location
Naturally, the first step is finding the home you want to purchase. Here, you can use the internet or hire a real estate agent to help you find new developments in your area. However, it is worth mentioning that the new build home doesn’t have to be part of new development. When most people decide to purchase new build homes, they either have a specific builder that they like or go to a location with a new development project. Some people may also have a location in mind. In this case, they would have to find a builder in the specific area.
Whichever route you take, the first thing you must do is to get a real estate agent. While most realtors do not encourage buying new construction homes, they will still come in handy. The real estate agent will help advocate for your interests throughout the purchasing process. The agent can also help guide you towards convenient locations and the best builders according to your needs.
At this stage of the process, you must also ensure not to settle for a property, location, or builder that you are not 100% sure about. Also, a big mistake you could make is settling for a place you would not want to live in just because a builder you like and trust is operating in the area. Builders tend to convince clients to do this. However, with a real estate agent, you will be able to make wise decisions. You may also want to check the builder’s background, consistency, reputation, quality of work, and reliability before deciding. Likewise, you should find out all you can about a location before settling. It is always wise to take your time at this stage because the decision you make here is paramount. Therefore, try to resist the urge to rush through this step.
Step 2: Getting your finances in order
Once you have chosen the specific home you wish to get; the next step is getting your financing in order. It would help to enter the market with an accurate idea of what you will be working with in terms of funds. This information will help you set your budget and know what you can afford. This way, you do not go around hunting for homes that are beyond your price range. You can also get your financing in order. For instance, if you do not have the money to purchase the home, you can start finding a lender or organizing the sale of your current home to get cash for a deposit for the construction home. More often than not, you will be required to provide a deposit of around ten per cent of the house’s total price.
It is worth mentioning that most developers or builders usually insist that you secure your financing, especially mortgage financing, before exchanging contracts. However, most lenders set their mortgage offers for only six months. This means that if the purchase is not complete within six months, you would have to apply for an extension or reapply for the mortgage later.
Can you negotiate for a new build home?
When buying a new build home, you will be dealing with the builder and not the owner, as is the case with buying an existing home. Therefore, negotiating the prices can be very challenging. Builders are not usually emotionally attached to the properties. Their work is to construct and sell houses. Consequently, they are not typically fond of cutting prices for clients because the other buyers may also expect similar discounts. They are also usually determined to sell the homes for the specified selling prices to show their lenders that they are worth the predetermined prices.
However, this does not mean that negotiating is entirely off the table. You can negotiate specific aspects like upgraded cabinets and flooring. This means that you can ask the builder to upgrade the house so that when you pay the specified amount, you receive your money’s worth.
Additionally, if you are looking for low prices on new build homes, you can choose to get one of the first ones in development. Builders often offer low prices for the first few houses in a development. This is done to attract buyers and get some cash flow to complete the project. However, if you do not manage to become one of the first buyers, you can always try negotiating upgrades, as explained above.
Step 3: Check what you are buying
Buying a new build home means that you will be paying for the property before it is completed. This means that you do not get to see the complete house before signing papers and investing your money. However, this does not mean that you cannot see what you are buying. It would be wise to ask to visit model homes in the same development. The models will give you a feel of what the house will look like when completed. However, you must know that your house doesn’t have to look exactly like the model. For instance, if you choose to negotiate some upgrades, it would have to ask for a list of the features and their costs. Ensure to ask questions and get satisfactory answers to know what will be included and what to expect at the end of the construction.
Step 4: The conveyancing process
The legalities of purchasing a new build home are more complex than regular conveyancing. This is because of the high risks involved in buying a new build home. Issues like non-compliance with planning regulations, NHBC inspection failures and incomplete agreements for infrastructure and maintenance complicate the conveyancing process. The conveyancing process for buying a new build home usually starts once you have made an offer. You must hire a conveyancing solicitor as soon as you receive word that your offer has been accepted.
Why do you need a conveyancing solicitor for buying a new build?
The conveyancing solicitor will help with the following tasks;
- Ensuring that the builders have the appropriate planning permissions and that the property is constructed according to the planning permissions.
- Checking if the roads are adopted correctly and if the drains and other utilities are correctly established.
- Highlighting any restrictive agreements written into the lease for the house or registered against the freehold
- Explaining whether the house is leasehold or freehold
- Setting out details of the lease
- Going through contracts and explaining their details to the buyer. This helps prevent significant issues in the long run.
Additionally, a conveyancing solicitor will ensure that the contracts are in your favour and your deposit is fully protected in case of any issues in the long run. The solicitor will also help ensure that there is a long-stop completion date. This is the date by which the property should be completed. A good solicitor will always act in your favour. Make sure that your solicitor explains all the details in the contracts correctly and that all inquiries and changes are made before signing.
Step 5: Inspections and warranties
The best thing about hiring a conveyancing solicitor is that you do not worry about the legal proceedings. Once these details, including the payments and the legal processes, are ironed out, the next step is to inspect the house. Many people assume that since the home is brand new, they do not need to inspect it. However, this step is vital. You will need a professional inspector for the task. A good inspection will allow you to work with the developer to correct issues before you close.
It would help if you also asked for manufacturer warranties for all the new appliances in your new home. Ensure to ask the builder to explain the warranties, what they cover, and how long they are valid. Do not make the mistake of signing your closing contracts before understanding all the details.
Step 5: Closing
The closing is usually done after the house has been completed, inspected and all warranties have been explained. The closing stage is where you sign the contracts, complete the payment, and exchange property ownership from the developer to you. Before closing, it would help to sit down with your real estate agent and your conveyancing solicitor to go through the contract and all its provisions. This will help ensure no confusion; all details in the contract are ironed out, there are no irrelevancies and restricting clauses. Do not be in a rush to sign the papers before having your agent and solicitor walk you through the details. Once you have done this, you can sign and close the deal. Your conveyancing solicitor will handle all the legal proceedings after closing.