In Part I of New Construction vs. Remodel – Which is the Best Way to Go? we discussed new home construction in Charlotte and the biggest challenges in building a new home right now.
In Part 2, I want to discuss tips and tricks of managing through a new home contract as well as the builder process. There are strategic ways to save you money and headaches before you move to the next step.
Be prepared for potential sticker shock at the Design Center. Now, if you have a bottomless bank account, or no budget or concern about appraisal, there will be no worries here for you. However, most buyers have a budget, big or small. French doors in the study, the hardwood floors on the main level that you saw in the model, metal balusters, outdoor living and so on… can all add significant costs to the “Base Price” of the home. I’ve often joked that if a buyer wants flushing toilets that will be extra.
Biggest pitfalls for spending $$ is cabinetry, tile and flooring. Before you add any pretty things, these base upgrades could eat up your entire budget. One of the things I’m careful to find out is, what’s the “average amount” of upgrades buyers are putting in a specific neighborhood? Knowing what that amount is, gives my buyers an idea of what will appraise and how to ensure they’re not over-improving or under-improving a new home for their chosen community. It doesn’t mean you can’t spend more or less. It just means you can make an educated decision. I know that you are building the home you’ll live in forever, but the reality is everyone moves every 3-5 years. When you call me when it’s time to sell, I want to be especially sure that you were advised well on any upgrades/improvements and your choice of lot. I’m always available to attend design center appointments and will whisper in my client’s ears which upgrades will add value (for appraisal or resale) and which won’t. Choosing an ultra-high end quartz countertop may cost you way more money, but don’t expect the appraiser to give any extra value when he appraises for your loan. Also, lot premiums (even if it doesn’t feel like a premium lot) are becoming more and more common and don’t always give you additional value at re-sale.
Final expectation of sheetrock finishing and tile installation. Sigh. This is a tough one. I’m super picky about tile especially. Due to our shortage of contractors, some builder’s sub-contractors rush in, and tile bathrooms or kitchens and occasionally do a sloppy or inconsistent job. I prepare my clients, and also the builder, that this is a hot button for me. I want to ensure this work is done well and appropriately. Builders feel the same, but in a fast-moving market, accountability and supervision are sometimes overlooked. These are two things I’m constantly checking during scheduled construction walk-throughs.
Remember the potential for construction delays. Weather, material shortage and labor shortage mean that builders are reluctant to give a date until the last possible minute. If you’re trying to sell another home, or plan for a move, this can be frustrating. After working with so many new home sales contracts, I’ve been able to forecast once sheetrock is completed and kitchen cabinets in, an approximate timeline for buyers to work from.
In the end, if a new home = dream home for a buyer, the most important thing is to have realistic expectations about both the process and the final product. My best recommendation if the process seems daunting, is to consider a builder inventory or spec home; these are often built with the most popular design choices, sometimes have discounts attached and best of all, are usually up and out of the ground eliminating much of the unknown.
Either way, working with an experienced Realtor can save untold grief. Their compensation is always paid from the builder’s marketing budget, NOT the price of your home. You won’t get a lower price working without one so why would you? Remember, the sales agent works EXCLUSIVELY on the builder’s behalf. They’ll even have you sign a document at time of contract that states you understand that. Every new build is slightly different. There’s some things I can predict, and some things I can prevent. Sometimes, when a new issue pops up, I’m here to problem solve. Here’s a few value-add I’ve done for many clients:
- Leveraged my reputation and relationship with builders to get best price/upgrades/incentives
- Provided insight on builder/community reputations/past issues or upcoming area issues (i.e water treatment plant proximity/school redistricting/road expansion) that the Builder sales rep isn’t always required to share.
- Advised on best values for specific lots and pitfalls that could arise with some lot choices
- Negotiated down payment plans that work for my buyers.
- Explained the nuances and risks of the unique builder contract, because the site salesperson ALWAYS represents the Builder.
- Give straightforward advice on what a buyer can expect: the good, the bad, the ugly. Set expectations to save undesirable surprises.
- Maintained solid relationships with construction managers to ensure they’re on my buyer’s side.
- Sourced landscape designers to provide on site evaluation and advisement prior to commitment.
- Shared my professional interior design advisement.
- Researched and advised on potential radon issues.
- Researched and advised on potential appraisal issues and resale concerns.
- Advised on potential drainage/site location issues.
- Shared knowledge of builder’s use of specific materials good and bad.
- Recommended top quality inspectors for pre-drywall inspections and final inspections.
- Managed the inspection report results with the builder to ensure any deficiencies get addressed.
- Navigated and managed construction manager relationship during process when issues arise – been the “bad cop” when needed and also advised on acceptable protocol when there’s confusion.
- Consistently attend builder meetings and inspections.
- Regular site visits/photos/FaceTime for clients who live out of state.
- Assisted with warranty and non-warranty issues years after closing.
- Been available for follow up forever and ever, amen. ?
I’ve had hundreds of new home clients and the process is always slightly different. I love being part of it. Sharing my experience and being part of the end result is one of the most satisfying parts of my job. Bottom line, if you’re considering building your next home, these are the top three elements that will help make it a great experience.
- Being Completely Informed
- Having Accountability for Builder and Process
- Feet on the Ground and Eyes on the Job
Make sure you’ve got these, and you can have the dream home you’re looking for! Send us your questions! We’re happy to be helpful. Happy Homebuilding!