So you’re thinking about buying a new home. Fantastic! Getting a new home built can be a great experience. But you’ve got to be careful. Here are some things you need to know before buying a new home.
- Check out the builder thoroughly. Bigger firms will have lots of reviews. Smaller ones may require some digging. Check out the other neighbourhoods they’ve built in. Make sure you go with someone with a good track record.
- Is the builder transparent and upfront about costs? Some builders refuse to give pricing on upgrades until well after you’ve signed on the dotted line. And not knowing the prices before you sign takes away your ability to negotiate a final price on your home. Instead you are at the mercy of the builder who can charge you what they see fit.
- Use the conditional clause for a lawyer’s review of your contract. The assignments clause is particularly important. Assignments are something builders frown upon and their sales contracts usually include strong restrictions. There are significant financial implications for the buyer with regard to assignments. In the majority of cases you won’t be able to get out of your contract if you change your mind or run into financial difficulties.
- Make sure to find out what happens if your closing date is moved due to delay. The builder will know this but you should also have your lawyer go over this in the review. The lawyer should also pinpoint additional potential costs and put a cap on them where possible. The review includes a quick synopsis of what you’ve signed. Your lawyer should be able to answer any (and all) questions you may have about your contract.
- Insist on a financing clause as well so you can go to your bank, lender or mortgage broker and discuss your purchase with them. If you’re buying as an investment you’ll need to let them know. An investment property requires a substantial down-payment when compared to a primary residence, and qualifying for a mortgage can be difficult.
- Find out if the builder allows you to hire your own contractors. A custom kitchen or finished basement are the kinds of things you might inquire inquire about. And if a room is left unfinished are you going to get a reduction from the builder?
- Ask if the builder will allow substitutions for appliance packages and if you’ll be credited on the swaps you make. Find out if you can use the credit anywhere or only at the builder’s supplier.
- Your hot water heater will often be a rental here in Waterloo Region. And if you’re like me and don’t like this you’ll need to let your lawyer know before closing. The lawyer will make sure that you own the water heater outright.
- Salespeople sometimes promise things that aren’t part of the deal. Paving, landscaping, fencing and decks are items to ask about. The builder’s sales rep should be able to show you where these items are noted in your paperwork. And if they aren’t there in black and white you can be sure you’ll be paying for them later.
These are just a few of the things you need to know before buying a new home. It’s possible the builder’s sales rep will leave you in the dark about this stuff unless you ask. They work for the builder, and that is where their loyalty lies.
You should get buyer representation if you’re thinking about buying new. You’ll get expert advice and be connected with all the right people to help you through the process. A buyer’s agent works for you. And that is a pretty important distinction. Otherwise it’s just you against the builder.