New home buyers don't want a used house when only new will do. They don't want to inherit somebody else's worn carpeting, personal taste in kitchen appliances or look at some kid's initials scrawled into once-wet cement that they didn't put there. The home must be brand spanking' new, fresh and clean without so much as a finger print on the walls.
If this describes you, and you have always fantasized about buying a brand new home of your dreams, here are a few tips that can help you to protect yourself -- to make the process a pleasant experience.
The builder's sales agents are paid to represent the builder, regardless of what they may tell you. Many will use high pressure tactics to persuade you to sign the contract. Due to the high volume nature of brand new home sales, lots of builder's agents are paid less than a traditional commission; some earn a salary plus incentives, so turnover is important to their livelihood.
Don't Automatically Use the Builder's Lender
- Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it's one-stop shopping for a builder. But a builder's lender might not offer you the best deal. Moreover, the builder may own the lending company.
- Consider alternate sources to find a lender. Your own bank or credit union might offer you very attractive rates and terms, based on your banking history with that institution. Your agent may refer you to his or her private list of wholesale lenders.
- Shop around and interview your lender. Find a banker or mortgage broker whom you can trust and with whom you feel comfortable doing business.
- Insist that your lender guarantee its Good Faith Estimate. If the lender balks or makes excuses, go elsewhere, because reputable lenders will honour that request, even though it's not required by law.
Obtain Legal Advice Before Buying a Brand New Home
- Before you sign a purchase contract, talk to a real estate lawyer. Standard purchase agreements are designed to keep everybody out of court, but they don't necessarily contain language that protects the buyer.
- Ask questions about removal of contingencies and your cancellation rights. Make sure you understand your liability and commitments.
- Find out if the materials used by the builder contain chemicals that are hazardous to your health. If your contract contains a warning about health issues, it's probably because it's a valid concern and other buyers have gone to court over it.
Verify Option and Upgrade Pricing
- Determine which options and upgrades you want. Bear in mind that for many builders, the profit margin is highest in upgrades. Some builders can sell a home for almost bare construction cost because they make the bulk of their profit in the upgrades.
- Find out whether your lender will lend on all the options / upgrades you have chosen. If your lender will not finance 100% of your selections, you will be required to pay for it in cash.
- Ask about cancellations and whether you will be held liable for items the builder cannot return to a vendor.
- Some contracts give the builder the right to choose your upgrades if you do not submit your request within a certain period of time.
- To save money, consider which upgrades you could purchase and install yourself after the escrow closes. However, realize that some upgrades such as CAT-V, DSS or security wiring inside the walls are easier to do before construction.
Hire a Home Inspector
- Always, always, always get a home inspection when you buy. And hire a licensed and accredited individual to perform the inspection -- not your dad or your buddy contractor, get a real inspector. Be there for the inspection and ask questions because a new home can contain defects. The HVAC system might be too small or the plumbing could be installed backwards. Construction workers make mistakes. (And let's not even talk about the mustard-stained McDonald's wrappers stuffed in wall cavities.)
- If the inspector calls for further inspection by another professional contractor, find out if the inspector is telling you there could be a serious issue or if the inspector isn't licensed to address that issue.
What expenses you should consider when you move in to a brand new home….
- Appliances…(Fridge, Stove, Dish washer, Washer-Dryer etc….)
- Draperies, blind or window coverings..
- Common upgrades ….such as
- Hardwood floor
- Rough-in
- Paved drive way,
- Back yard fence,
- Double door entry,
- Entry to garage from home,
- 9’ ceiling
- Air Condition
4. Closing expenses such as ..
- Tarion warranty Insurance premium… http://www.tarion.com/home/
- Lawyers fee…
- LAND TRANSFER TAX CALCULATOR
- Municipal levies for school and other services….
- HST….in some cases
- Moving expenses…
- New furniture cost..
- Vacuum machine, Lawn mover, Snow mover….
- Hot water tank rental or one time cost to buy….
- Plants for front yard and back yard….
Some builders includes certain upgrades as standard upgrades so they include some items but not all. Please verify everything before you sign the doted line.
