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New Construction Homes
If you're in the market for a newly constructed home, note that problems may occur. An unreliable developer can complicate the process. You could lose your deposit if the developer goes bankrupt before finishing. It's important that you prepare by doing some research, asking questions and making sure you get all the answers you need.
Consult with a lawyer and review your contract closely. Is there a clear timeline listed for the construction process? Can the developer change the finishes you've chosen without notifying you? Keep in mind that contracts prepared by or for the developer will generally favor its interests, not yours.
Research the developer. Find out what the company's track record is with big residential projects. Has it had any disputes? Has it cancelled any projects? What is its reputation with the Better Business Bureau?
Because there are several steps to buying pre construction, make sure you know the drop dead date, or the point after which you can't back out. This point is before construction is finished, so make sure you are happy with your purchase by then.
Find out what you can about the property manager and look over the covenants, conditions and restrictions. Is the maintenance budget reasonable? Are the plans for the pool going to make your fees increase a lot?
Inspect it before your close. You should bring a qualified home inspector to make sure the construction is sound and that it meets all your needs.
Check the site regularly to see if the process is on schedule. Know your rights. Find out what your state's home warranty law can do for you. Most warranties will shelter buyers from major structural problems, usually for about 6 to 10 years.
Prepare for delays. Developments fall behind schedule for various reasons such as strikes, material shortages, and bad weather. These delays may not be the fault of the developer; it should make a good faith effort to rectify the problems. These delays could have an effect on the interest rate of your loan. Try to lock in an interest rate. If construction delays affect your closing date, find out whether your lender is willing to extend the lock in period. Make sure your contract allows you to pay the presale price even if your home increases in value before closing. A delay could affect your move in date. Try to remain flexible with your move in date. Make sure that the delay of your occupancy date is reflected in your closing date, and notify your lender of the change. You don't want to start making mortgage payments before your home is finished.
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