Many new home shoppers are confused and overwhelmed by the different pricing packages offered by new home builders. Following are some considerations before choosing a builder and community:
- Is the building lot included in the home price? This is an important and obvious question to ask the builders representative upon your first visit to a model home or sales office. The price of the home should include the building lot, unless you own your own building lot and are seeking a builder to build a home on your lot. Keep in mind in the world of real estate ownership, it is the land which is considered first in the valuation and appraisal of property, while the home is actually considered an “improvement” to the property.
- Is the location of the community in an area which will hold value? The location of the community/lot is of great importance. You should know the different factors in valuation between a big beautiful home which is built in a less desirable location, and a home in an area which will hold value or go up in value because of the desirable area in which it is located. Sometimes what appears to be a bargain is not! Always remember, location, location, location.
- Will the builder carry the construction loan, or will that be your responsibility? A common practice among small home building operations is to expect you, the buyer to take out the construction loan. If a home builder does not have credit to acquire a construction loan and take responsibility for the expenses associated with building on the lot they own and are selling to you, should you trust that builder to have access to take draws from a construction loan that is in your name and that you are ultimately responsible to repay? Probably not. This of course does not apply if the builder is being contracted to build a home on a lot that you are going to acquire or already own. Usually a lot owner who is ready to build will be responsible to get their own construction financing.
- Why does one builder include so many upgrades, while another builder does not? Unveiling the mystery “base price” of a home in which the builder has included what they call in the ad “all the upgrades included” is not an easy thing to do. Builders know that most people will not try to break down the price of the home to discover what was actually paid for each upgrade. Who knows how much a slab of granite for the countertop really costs the builder? A good rule of thumb is to look for a builder that offers a lower base price and will show you upfront the list of inclusions, as well as a list of prices for each and every upgrade, so that you can choose which options you would like to add to your home, and how much each option will cost you. Our mothers told us, honesty is always the best policy, and that matters in home building too!
If pricing information is hidden from you, and important details aren’t disclosed, you cannot make an educated decision about a home builder. But on the other hand, if you are offered upfront pricing information before and during the building process, you are most likely working with a home builder who does business with honesty and integrity. Search out the best deal you can in a good area and buy with confidence, knowing you were able to do your due diligence and make the best choice for your new home!
