5 Tips on Buying a New Construction

Amanda Vang
Amanda Vang
Published on January 12, 2021
Watch or read below to learn the 5 tips on buying a new construction!

1. ALWAYS work with a Real Estate Agent

Yes, you should always have your own real estate agent representing you as a buyer’s agent on new construction homes. You have to bring your agent on the first visit to sign you in!

Please don’t forget that.

You may wonder why you need an agent when there’s already a sales representative at the model homes or site that answers all your questions. Well, that is because the sales representatives work for the builder and they are supposed to sell the community. Therefore, you should have someone representing you. The builder’s agent is ultimately looking out for the best interest of the builder. The buyer’s agent is looking out for the best interest of the buyer. It does not cost you anything to work with your own agent. The buyer doesn’t pay the agent a commission to work with them on the purchase of a new build. The commission is paid by the builder who is the seller. 

Working with an agent like myself, brings a lot of value to the process such as being familiar with the new construction process and providing valuable input.  You always want your agent to be with you at the very beginning process all the way to the end. There is a lot that is involved with the real estate transaction, and you may not fully see/understand at the surface. 

If you visit a new home construction site without your agent, and you registered, your agent will not be able to represent you as a buyer’s agent and will not be able to negotiate on your behalf.  I understand sometimes you just want to pop into a new construction site over the weekend but I highly recommend to hold your horses and schedule a time with your agent because trust me, your agent is there to protect you and have your best interests at heart.

I have also seen this situation before and want to bring this to your attention. Some times when you go visit new construction sites, the seller representative will say things like you don’t need to have an agent because you need to work with the builder’s agent or the seller representative insists you work with them since they are also an “agent”, but don’t fall into that trap. The builder’s agent cannot force you to work with them. If you don’t want to be in this kind of awkward situation, always bring your agent! 

2. Understanding the upgrade costs of new construction

Buyers fall in love with the model home. The model homes are there to help buyers envision what their home can potentially be like, however, when a buyer goes into an empty home with the exact same floor plan they sometimes don’t have the same feeling about the place because it doesn’t have all the upgrades that they saw in the model homes.

The builder has a design studio where you can pick out all your finishing such as floorings, cabinets, backsplash and many more depending on what you want to have in your home. You can end up spending hundreds of thousands of dollars here. This is another reason why you need your agent to help guide you through the design process so you stay within your budget and can give you ideas on cost savings and resale value tips. Just because you spent $100,000 in upgrades doesn’t mean you will get $100,000 back when you sell your home. Again, work with an agent through the entire process!

Some builders have construction options to choose from such as turning a den into a bedroom, changing a tub out to a shower stall, adding a balcony, etc., It is important to understand the cost and how that all adds to your bottom line. 

3. Negotiating with Builders

Your agent can help you better understand what you’re paying for.

This is a crucial part of having an agent on your side. Your agent can save you tens of thousands of dollars. Some buyers think they can just negotiate with the builder but that is not always the best case. There is an incentive for the builder to build a relationship with the agent so the agent can bring more of their clients to the community. Some builders LOVE working with agents because we have already done the prescreening with our clients. 

Builders don’t like to negotiate on the base price however they will be open to negotiating on credits such as upgrades and closing costs. Not all builders are going to give you credits, sometimes it just depends on their inventory and product.  

There have been many times where I was able to save my clients anywhere from $30,000 – $80,000 on purchasing a new construction home. Again, there is high value on why you should work with an agent!  

4. Watch out for higher closing costs

All closing costs for new construction homes are usually pushed to the buyer’s side except for the buyer’s agent commission. 

This can be thousands of dollars in extra closing costs that you wouldn’t be paying if you were purchasing a resale house.

5. Home delivery date, time and expectations

Sometimes time estimates are not entirely accurate.

Let’s say your builder estimates that it will take four months to build your house. That is their goal, but in reality, they can never be entirely sure when that house will be completed. Builders have to deal with weather issues, materials being supplied in a timely manner, contractors doing work correctly, permits, inspections, and so much more. It is a lot to manage and everything doesn’t always move along smoothly. It’s important to stay flexible in terms of timelines.

If you are thinking about buying a new construction home, I hope you found this video helpful. If you are looking for a new construction home in San Jose, CA and the surrounding Bay Area, I’d love to help. Check out some of the new construction tours in the area on my YouTube Channel and let me know which community/floor plans you like!

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