Buying New Construction in the DC Area | 7 Things You REALLY Need to Know
1) Beware Buying Without an Agent Experienced With New Home Sales
This is very important: If you have any intention of being represented by a real estate agent, don’t pop into the model just on a whim. Even if you’re driving by, resist the urge to go inside. Why? Because I said so, that’s why. (I’m a mom, I’m bossy, what did you expect?)
2) Beware: No Negotiations
Builders have their own contracts. There is no form contract that we will be filling out together like we would if you bought a resale. These contracts are going to protect the builder and they are not going to protect you - at all. The price is the price, there is no negotiating that you can do on the price. If you don’t like the price, they will sell it to someone else.
3) Beware the Builder Contract
The contract is very long. It’s going to stipulate that you can’t go into your home while it’s under construction unless the builder has a set appointment with you like the pre-drywall walkthrough. It will outline where your deposit will be held which is important. A small builder may not have enough money and they use your deposit for their construction. You never ever want to agree to this. Large and national builders will hold your deposit in escrow, but smaller builders may not. If you find a builder who needs your deposit to build the house, you need to walk away. That is not good.
4) Beware the Builder Credit
Every builder offers a closing cost credit if you use their preferred lender and title company. It’s usually in your best interest to just use their title company because they have run title on the property. You should capture at least some cost savings since they have title insurance already on the property from the builder’s original purchase. They should be able to pass on a savings on title insurance for you. That may not always happen though so it’s worth asking the question.
5) Beware the Closing Costs
Generally, in the metro DC Area we have what we call transfer taxes and recordation taxes. The contracts call for the sellers to pay “transfer” and the buyer to pay “recordation” and those numbers are usually equal. Builders used to pay their own closing costs for their side.
6) Beware the Options and Upgrades
The model home is alluring, sexy and very enticing. It begs you to come in, coo at the features, swoon at the fixtures and decide you need things that you never knew existed. I promise that there is a ton of buyer psychology behind why the model homes are decorated the way they are. The designers who have this job are highly skilled at working on your senses to make you want this home. And this home likely has $250,000 of options and upgrades.
7) Understand the Differences between Large Builders and Small Builders
Large homebuilders are typically less flexible than smaller builders, but it also depends on the builder. Large builders have a process and rules and they tend to not stray from their process and rules. The ones who own their own mortgage and title companies are really going to have you over a barrel, but the consolation is you’re going to get a great home from a builder with a high standard and great reputation.
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Melissa Terzis
📲 (202) 253-9105
📩 Melissa@MelissaTerzis.com
🌐 www.dcrealesta...
TTR | Sotheby's International Realty
1515 14th St NW
Washington, DC 20005
Office: (202) 234.3344
- Melissa Terzis | DC Real Estate Mama