This is Part 12 in a series of posts about how to tackle the home buying process.
New home sales are everywhere in Northern Virginia. Spend an hour driving around Loudoun County and you’re likely to come across at least a dozen new communities out of the 145 or so total. It seems like a relatively easy process too – Pop into the model homes, find one you like, and the sales associate will help you fill out the paperwork, pick your options, and you’re on your way! Buying a new home is a great option, but it’s important to be informed about how the process works and how it differs from the purchase of an existing home.
- The new home sales contract only protects the builder should something happen.
- Using a real estate agent provides representation and protection for the buyer.
- Typically, if you visit a new home site for the first time without an agent, an agent can no longer represent the buyer.
- Once you see enough model homes, they are going to start looking the same. To avoid getting overwhelmed, focus on each home’s location, price, standard features, and delivery time (time it takes to be built).
- New home sales take longer than existing home sales because of delivery times. With the exception of quick and immediate delivery homes, it can take anywhere from 3 months to a year.
- Once you decide on a development, you will reserve a lot, and set a time to come back and write the contract.
- Some lots may have a lot premium (higher cost) based on their location within the community.
- The base price (“Starting at…” price) will almost never be the final price due to upgrades and options. Many new homes do not come with washer/dryers or stainless steel appliances, for example. Expect to pay around $30,000-$50,000 over the base price for mid-range updates, and up to an extra $100,000 or more for all the bells and whistles.
- On that note, don’t get too carried away with upgrades and options – For resale purposes, granite is granite whether it’s Level 1 or Level 5 granite. Instead, focus most on options that can’t be changed later, such as lot location, elevation and structural options.
- Be cautious of builder incentives. For example, they may offer $10,000 towards closing costs if you use their lender, but their lender may then charge more in points and fees. It’s always a good idea to get estimates from multiple lenders.
- Be prepared to make a deposit of around $10,000 the day you write the contract.
- Be prepared to make an additional 25% deposit on each option you select.
- Be prepared to review the community’s HOA documents within 3 days of writing the contract.
- Be prepared to get prequalified by the builder’s lender, even if you don’t plan to use them, within 7 days of writing the contract.
- If you are using a real estate agent, they will coordinate 3 inspections for you to attend throughout building process: Foundation, pre-drywall, and pre-settlement.
- Once you are moved in, remember that the first year’s tax bill will be based on the land amount only, so it will be much less than what you can expect to pay going forward.
Check out the New Homes Guide to find new communities in your area.
Stay tuned for next week’s post which will discuss what to expect at settlement.