ResalesTips for Buying an Unbuilt Home
As an increasing number of Americans are snatching up new homes at record
levels and technology"s role in the home-buying process continues to mount,
many homebuyers are thrust into the position of buying their homes site
unseen.
The National Association of Home Builders reports that new-home sales in
August reached a record 996,000 units on a seasonally adjusted annual basis.
"Very low interest rates and the widely held view that housing is a very
good investment are largely responsible for the surge in new home sales,"
said NAHB President Gary Garczynski, a builder/developer from Woodbridge,
Va.
In addition, many home shoppers are relying on the Internet to conduct
virtual tours of new-home plans and research home prices, availability, and
options.
The National Association of Realtors recently reported that 62 percent of
buyers with Web access surf the Internet to shop for a home; 41 percent use
the Web as a tool in searching for a home.
As a result, an increasing number of new-home shoppers are buying their
homes site-unseen, usually after viewing models and then selecting a lot.
Some buyers know even less about what they"re getting into.
In 2000, California"s largest homebuilder, Kaufman and Broad Home
Corporation, held an online auction, selling 18 new homes in just 19
seconds. The homes, which ranged in price from the mid-$90,000s to the
mid-$300,000s, are located in Riverside, San Bernardino and Los Angeles
counties.
In addition, rising home prices - triggered in many regions by demand
outstripping supply - means the competition to buy a new home grows fierce
as homes are being sold before they"re built.
While this may cause some level of uneasiness as you wait out weather
delays, watch fluctuating mortgage rates, and worry that the builder may be
taking shortcuts to get your house built as quickly as possible, there are
ways to avoid potential problems. The Better Business Bureau suggests you:
Investigate land plans. While you may know where your house will be
located on the community map, look into what will be happening around you.
Go to your local land planning office as well as any current zoning
requirements and any proposals that have been submitted to develop land near
your home.
Visit your builder"s other projects. Check out the quality of the
community, landscaping, and other amenities. Talk to residents there about
their experience with the builder.
Check with your BBB for a reliability report on the developer. BBB
branches maintain files on many companies in their service area. These
reports, which cover the past three years, will tell you how long the
company has been in business, complaint patterns, whether the company is
pre-committed to a dispute resolution program, whether the company is a
member of the BBB, and whether there has been any enforcement actions taken
by a government agency.
Find out about the homeowners association, if there is one. Obtain a copy
of the rules and ask how much fees are.
Scrutinize the contract. You may want to have an attorney review it before
you sign it. Make sure upgrades are included. You should also add a
statement that allows you to visit the site at several designated times.
Keep your deposit check as small as possible.
Protect your mortgage rate. When the closing date draws near, you"ll want
to lock in your interest rate. If the builder is delayed in delivering your
house on time, ask your lender if you can extend your lock-in rate. If that
isn"t successful, ask the lender to close the loan and hold some of the
money in escrow until the appraiser verifies the home is complete.
Most importantly, you"ll want to inspect the house thoroughly when it"s
done. You should strongly consider hiring a professional home inspector. Be
very thorough in inspecting every aspect of the home - systems, roofing,
counters, fixtures, flooring, walls, and landscaping - for potential damage.
As NAHB says, once you move in it will be difficult to prove whether damage
was caused during the building process, especially considering the potential
for damage that can occur during move-in.