Do I need my Realtor when looking at new homes?

Is it necessary to have a Realtor represent you, when you are interested in purchasing a brand new home from a builder?

It is always good to have “another set of eyes.” Just like you would get a second opinion on other important decisions in your life. This is the largest purchase you will ever make. You are expecting your new home to have certain features. You are envisioning what your yard will look like. You are assuming that the 2 car garage will fit both of your cars, and that the driveway is not going to have a slope. You didn’t think the line of trees in your back yard would be removed. Even if a tree wasn’t sopposed to come down, if 3 sides of the roots were cut during construction, that tree must come down.

Who is going to care for your yard? You or the association? Is your home part of a homeowners association or a condo association? What are the differences between both associations. There are many more answers that you will need to know, in order to make the right decision for you. But, if you don’t know what to ask, how will you be sure? You assume that the new homes salesperson who is selling you the home and homesite will tell you all of this. Some will and some may not.

Being that your new home is such a large investment, working with another Real Estate professional can be a wise decision.One who can read blueprints, as well as site and grading plans, landscape plans, and who also understands builder options can offer comfort to you in the building of your new home!

If you are looking for a Realtor to assist you in the purchase of your new home, please feel free to contact me.

Which Home Builder has a better value?

When you are looking to purchase a brand new home, the largest purchase that you probably will ever make, of course you are looking for a good value. A lot of people think that they want the least expensive home in the area, but is this really what you want?

Of course you want a good price for you new home. But maybe what you really want is a great value for the features that you are looking for in you home and homesite (lot).

Maybe there are 3 different home builders that are all selling homes in the same location that you are considering to live in, and you just look at the one that has the “cheapest” price. You may not be getting the best value for what you are looking for.

Lets assume that all 3 builders have homes that are very similar in size. Builder “A,” has a base price of $300,000 for the homes that they are selling. Builder “B,” has a base price of $303,490, and Builder “C,” has a base price of $305,990. 

If you are looking only at the price of the new home, you may not even visit Builders “B” and “C”. Builder “B” may be including a fireplace and hardwood floors. Builder “C” may be including a garage at their base price.

Maybe you are looking to get a fireplace in your home. If you choose to go with the home builder who has the lowest base price, you may in fact be paying a higher price, once you add the cost of the fireplace to the base price of the home.

If you didn’t care about a garage for your car, but really need extra storage space, for example, Builder “C,” that includes the garage may cost less than paying for an attic with stairs or adding an extra room that you would use as storage.

Sometimes the location of your new home is more important than the sqaure footage of the home.. Maybe you entertain often, and need a home that has a lot of off street parking for your guests. Or maybe you like gardening and need a nice side or rear yard to plant flowers etc. Sometimes this home may cost a little more, than another home, but mat be a better value to you.

When buying a new home, value and cost may not always go hand in hand. It really depends on what is important to you and to your lifestyle. Before choosing not to visit one builder due to their higher base price, think about what you really need in your home. Why not see what they are offering in their homes? You may be surprised to find out that their homes may be the bet value for you!

Don’t “write”(on a new home), until you “site.”

An old saying in the new home industry business was, “You site, you write.”

Sometimes a buyer was very interested in a specific home, was comfortable with what the monthly mortgage payment would be, and had the amount of money necessary for the down payment on the home.

For some reason they were still unsure if they wanted the home.

Going out on the site, also known as the “lot” or” homesite,” was when a lot of potential buyers became actual buyers.

Here, they were able to envision such things as how large their back yard would be for entertaining or for pets, how big their deck or patio could be, and how many cars would fit in their driveway.

They also could get an idea of whether the current grading of their yard would change during final grading. Just because a home site may currently have trees on it, doesn’t mean that any or all of these trees will remain there. They may need to be removed before construction of the home. Even though it may not look like the trees will be in the way to build the home, the builder will know if they need to be removed. If there aren’t any trees on the site, there may be a final landscape plan which shows where trees will be planted, once the community is complete.

A lot may appear very flat, without any hills or steepness in the land.  Or it may have some sloping, where there is an incline or decline on the land.This can also change drastically during the final grading of the lot.

There may be a road, or a future community, or storm water management facility that may be built in front or in back of your home in the future.

When you decide to purchase (write or sign a purchase agreement / contract) on a brand new home, it is very important that you know all of these things.

The sales representative or building supervisor can show you the final site and grading plan, and landscaping plan. They can explain to you, if and how the site and community will change.

 

 

Options, upgrades and included features on a new home

The #1 questions that I would hear almost every single day, from someone walking into the model home was, “How much does this model home cost EXACTLY as it is?”

Most people who walk into a model home, think that they want their new home just like the model home. If the salesperson quotes the total sales price including all of the upgrades that are in the home, most people will think this price is unaffordable.

Many people feel that if they purchase a new home and don’t get all of the options or upgrades that are in the model home, that they won’t like their new home.

What most people don’t realize is that there are so many options that are in the model homes, that many purchasers don’t even want. One example of this is the intercom system. Although a lot of people like this, some will not spend approximately $1400 for this feature. Others will purchase a system on their own, after they move into the home.

The model homes usually have a very high quality of carpet. This is due to all of the traffic that comes through the model homes, day in and day out. If you prefer a good quality of carpet, many times the 1st or 2nd upgrade is sufficient. In addition, an upgrade padding underneath the carpet will do wonders for the feel and wear of the carpet. This is relatively inexpensive, compared to the highest upgrade of carpet.

Most of the time, there is hardwood in the model homes. Although hardwood is a desirable feature, there are usually a few variations of hardwood options. A 3″ hardwood is very attractive, but also can be expensive, compared to a 1″ hardwood.

Many times there are builder incentives that may reduce the sales price.

The builder may include a certain amount of free upgrades when you purchase a new home. This will allow you to get some of the options that you really want, without increasing the price.

Sometimes the builder may include a free finished lower level in your new home, for example. Depending on the type of home, this can run anywhere from a $5000-$12,500 savings. Or there can be an option that is included for the community, such as an upgraded garden bath.

The best thing to do is to sit down with the sales representative, to go over all of the features that are included in your new home home, as well as features that you would like in your home. Your “dream home,” may be more affordable than you even realized!

Why do the Real Estate taxes appear to be higher on a new home?

When I have discussed Real Estate taxes on a new home that was comparable in price to a resale home that someone had seen, my quote is usually higher.

This does not mean that the new home has higher taxes than the resale home.

In many counties, taxes are based on a percentage of the sales price of the new home that you purchase .

If the seller is selling their home for a higher price than what they paid for the home, there is a good chance that the taxes will go up, once the county reassess the value of the home and land. Therefore the taxes on a new home and a resale home of comparable price, may be equivalent.

If the price that you are paying, is lower than what the homeowner paid for their home, your Real Estate taxes may not necessarily go down. Taxes may be assessed over a few years, by the county. Sometimes there is an increase in taxes over this few year time period. To be sure you will need to speak to the county department of taxation and assessment.

Real Estate taxes that you pay on a home, generally can be used as income tax deduction. You will need to consult with a tax advisor to see if you can “write off”  your Real Estate taxes.

 

Should I save more money before I purchase a new home?

If you have VA eligibility, you may be able to purchase a home with a minimal down payment. VA loans are for those who have served in the military. You don’t necessarily need to have served active duty. (For more on VA loans go to http://www.benefits.va.gov/homeloans).

FHA loans require a 3.5% down payment. For example on a $250,000 home, the down payment would be $8750. Lets assume that you decide to save an additional $5000 before you purchase a new home. In this scenario, your down payment will be $13,750.On a 4.25% interest rate,  the additional $5000 is a savings of approximately $29.00 per month on your monthly mortgage payment.

If you would prefer to have the lower monthly payment by putting a larger down payment on your home, you also must consider how long will it take you to save this amount. If the interest rate increases, your monthly mortgage payment may not be lower. Although there are extended interest rate lock-in available, most interest rates are usually locked in for a period of 60 days. This means that if you settle after 60 days of locking in to an interest rate, your rate will be what the market rate is on that particular day.

If you purchase a new home, the builder will typically require you to settle when the home is complete. Sometimes you can purchase a home that is ready to be moved into, known as an inventory or spec home. If you don’t want to settle on the new home until you can save more money, the builder may not allow you to purchase this particular home.

If you need to save money and are looking to purchase a home that will not be complete for several months, many times the builder will work with you. They may put you on a payment plan, that allows you to save money while your new home is being built.

I have found that some new homeowners prefer to use some of the money that they can save for furniture, moving costs, etc. If they have extra money during the year, they may put some towards the principal amount of the loan. This will allow the mortgage to be paid off quicker.

 

I’m not sure that I can get qualified for a mortgage

Just because your credit score or financial status may not be where you have heard or read about where it should be, doesn’t mean that you won’t be able to purchase a new home.

When a mortgage company (lender) looks at your personal information for a loan, he is looking at a multitude of factors. Although income and credit are important, there are other factors that will be considered in deciding whether one can receive a loan at this time.

Even if you are not qualified for a loan at the present time, it may be possible for you to recieve a conditional pre-qualification from the lender. This may allow you to purchase a brand new home that may not be  ready until 4- 6 months.

Many lenders will be able to tell you what specific requirements are necessary, in order to get approved for a loan. They will put together a plan for you, that will outline what needs to be done to satisfy the requirements.

There are also some reputable companies that will work with you on improving your credit. They specialize in credit repair and assist you in getting derogatory items removed from your credit file.

A lot of customers that I have met, think that they need to wait for their credit to go up, or pay down some of their debt, before they meet with a lender. I will tell you what I have told them. Unless you are a qualified loan officer, you will not know exactly what needs to be done, in order to get a loan.

Who knows? You may be able to get a loan now, and not even know it. Even if you do need a some time to get approved for a loan, many lenders will give you a pre-approval letter which will allow you to purchase a new home that hasn’t even started construction yet.This will allow you to choose the site and all of the selections in your new home!

 

Homeowners fees vs. Condominium fees

Most of the customers that I have met, are confused about Homeowners Association fees. How could they vary so much between different communities? What do the fees cover?

It is important to understand that although a home in one community may appear very similar to a home in another community, the “ownership” between the communities may be different. For example, a town home in one community may be part of a homeowners association. A similar style home in another community may be under a condominium association.

The fees and maintenance responsibility of the homeowner can be very different depending on the type of association in the community. Many times the Homeowners Association will take care of maintaining all of the open space including storm water management ponds. Sometimes the association is responsible for the upkeep of the homeowners front and backyard.

Town homes can also be under a condominium association. Most people only think of condominiums as apartment style homes. The structure of a home does not determine if there is an association, or what type of association is in the community.

Many condominium associations are responsible for the exterior maintenance of the homes,including the roof, siding and lawn care. There is a master policy which will cover the replacement cost of rebuilding the home. Under a master policy,  the homeowner will usually only need to purchase a condominium policy (instead of a homeowners policy), that will protect against personal property and the interior drywall.

When looking to purchase a home, it is important to know what you, the homeowner, will be responsible for, as well as what the association will take care of. The rules and regulation section should also be understood.This section will discuss rules for decks, fences, vehicles etc.

If you purchase a home in Maryland that is in a  Homeowners Association, you have 5 calendar days to read the documents allowing you to cancel the contract without liability. If the home is in a condominium association, you have 14 calendar days to read the documents and cancel without liability.

Some people love living in a condominium association as they don’t care to do any exerior maintenance on the home. Others prefer to live in a homeowners assocation as the fees are lower and  they feel as though they have more freedom. Lifestyle plays a major role in determining which type of association will be best for you!

Will a Brand New Home cost me more than a resale?

In looking  at how much a new home will cost, it is important to look at more than just the purchase price of the home. There are many other factors that may contribute to your cost, in purchasing a new home.

For example, a new home builder may provide a warranty on your new home. Many builders include a 10 year structural warranty that includes a 2 year warranty on plumbing, heating and electrical problems that may arise. Sometimes this warranty is transferable, if you sell your home within the 10 years. Manufacturer warranties are also proovided on the new flooring, appliances, windows, roof etc. These warranties can be an added value when selling your home.

Many builders are “Energy Star Qualified,” homes. These homes are at least 15% more efficient than homes built to 2004 International Residential Code (IRC). Some of the additional energy efficient features of these new homes, make them 20%-30% more efficient than homes built without these features.

These energy efficient features include such things as “green building,” effective insulation and high performance windows. The heating and cooling system, lighting system, as well as all appliances in the home must meet strict guidelines of the Energy Star program. To find ENERGY STAR builders, go to http://www.energystar.gov/index.cfm?fuseaction=new_homes_partners.locator

Another factor to consider when looking at cost, is your out of pocket expense.Many builders will contribute towards your closing cost. Some will pay up to 6%. For example, on a $250,000 home you may save  $15,000. In some cases, you will only need a down payment on the new home.

You will want to consider all of the possible costs when looking at different homes. As you see, there are more costs, than just the asking price of a new home.

Your New Dream Home

Alot of my experience has been with first time home buyers. This is an exciting time, filled with a lot of emotion, a little stress, and the need for information in making this big move.

Even if one has owned a home before, it may have been many years ago. Sometimes the home was not a brand new home. There are some differences between a new home and a resale home, that one may not realize.

Sometimes people are moving from out of state or are buying their first investment property.

There are always questions, that arise in buying a new home.

My goal is to be able to assist you with information that you are seeking in buying a new home. Some information is useful to everyone, whereas some information is useful to you, specifically.

Looking forward to this unique experience….My New Home Advisor!