The biggest investment many of us will make is buying a house, and
mistakes can be costly. To help weed through the home-buying jungle,
we’ve gathered the knowledge and strategies every home buyer should know
before beginning the hunt.

1. First, visit with your real estate agent.

Know
how much house you can afford. If you currently own a home, you need to
know the net proceeds from its sale to calculate how much cash you’ll
have available. Your real estate agent can analyze this to narrow down
what that net proceed figure is likely to be. If you are a first-time
buyer, you should get PRE-APPROVED for a mortgage loan. This will define
just how much of a home you can afford. Your lender will then provide a
“Pre-Approval” letter which can be presented with any offers made. This
will always improve your bargaining position with the seller.

2. Put experience on your side.

When
considering the purchase of New Construction remember that the sales
agent in a model home represents the builder, not you. Unless you have a
professional real estate agent working on your side, you are not being
represented. Your real estate agent can help you to understand new home
construction, warranties, financing, and differences in price, quality,
and lot selection to help you obtain the best value.

3. Not all builders are created equal.

Some
builders are known for their craftsmanship, while others are known for
innovative use of space, below-market financing, or exceptional customer
service during construction and after move-in. Your real estate agent
can help you find the best home for your needs.

4. Get the whole story.

Investigate
the reputation and financial strength of the builder. Be sure to obtain
“spec sheets” that cover the home features, which can cover everything
from floor plans to energy efficient ratings, and from
immediate-delivery inventory to lot availability.

5. Negotiate with the builder.

Many
buyers don’t realize that there may be room for negotiating in the
price, upgrades, or options. You often have the most possible room for
negotiation on the completed but unsold home. Builders may offer
discounts or special financing to help close a sale.

6. Make sure the contract works for you.

Be
certain that your agreement with the builder includes some safeguards
for you. These should include putting your deposit in escrow, itemizing
your upgrades by description and cost, access to the site to check on
construction progress, a weekly scheduled appointment or conference call
with the builder, and a 30-day advance notice of the closing date. In
many states, new home construction contracts are NOT regulated by your
state Real Estate Commission. The contract is typically written to favor
the builder. Have your realtor review these closely.

7. Financing can make or break you.

Builders
may offer special financing packages. It is customary for the builder
to tie upgrade incentives to an in-house mortgage company, so the
builder may not offer those incentives unless the buyer is willing to
use the in-house mortgage company. But using the builder’s financing is
not the only option in the highly competitive world of mortgage lending.
You should shop everything, including interest rates, points, and
lender fees.

8. New doesn’t mean perfect.

New homebuilders
typically use modern materials that are durable, low maintenance,
stronger, quieter, safer, and even wired for the next century. But new
doesn’t mean perfect. Your contract should provide for the option of
hiring a home inspector. You and your real estate professional should
prepare a list of items for the inspector to pay particular attention.
It is appropriate for you be present during the inspection. It can be
quite educational. Use what you learn from the inspection to create a
builder “punch list” to fix major problems and complete touch-ups before
closing.