How to Buy a House Preconstructionby Jann Seal, Demand Media
During the early and mid-2000s new construction flourished, with homebuyers and investors buying out each phase within a short time. Developers raised prices, buyers watched as their investment increased in value before it even came out of the ground, and builders worked feverishly to keep up with demand. In today’s slower market pre-construction homes are still available but buyers are more educated and builders more cautious when writing purchase contracts on pre-construction homes.
1 Investigate the reputation and completion record of the builder, especially if the property is a condominium. Ask for contractual assurances of a completion date. Offer to pay the down payment in increments, with payment due as each agreed-upon phase is completed.
2 Sign in at the model site’s visitors' center indicating you have your own real estate agent, even if he’s not with you. Gather all the information you can on the properties offered. If you’re interested in going further contact an agent to represent you, instead of using the builder’s agent as that person has a fiduciary duty to the builder.
3 Shop for a mortgage with different lenders even though the builder will try to get you to use his approved lender. It is your right to find your own lender. Get a good faith estimate of your mortgage costs from each and choose the one that best meets your needs. Ask how long the offered interest rate is in effect as pre-construction often means at least six months' wait before the mortgage can be fulfilled.
4 Ask the builder if you can see a “basic” model home, one without thousands of dollars in upgrades. Meet with the builder’s design director to discuss your upgrades, knowing that each one adds to your purchase price, and consequently your mortgage. Buy major upgrades that require installation as the house is being built to avoid a high cost of installing it later. Get the builder’s price for items like granite countertops and upgraded appliances and compare them with a local purveyor's prices to save money.
5 Look at the plat map for the layout of your new community and determine which lot you want. Examine projected traffic patterns, where vacant lots appear behind the builder’s lots and know that construction may occur on them, and ask what nearby woodland is protected from development. Be aware that in many new home developments the lot size is small to accommodate more homes per acre. Choose a premium lot for additional privacy and resale value.
6 Request that the builder write into your purchase contract the amount of money you’ll be required to pay to the community’s homeowner’s association once construction is complete. Do not accept a projected amount as it can climb considerably.