Have reliable Buyer Representation. This means you should have your own agent. Builders and developers promote the belief that their sales agent is able to do all that any licensee real estate agent can do for a buyer. In truth, the builder can effectively limit the assistance to the buyer when the sales agent is the builder’s representative. The builders and developers come out ahead when a buyer uses only the builder’s or developer’s sales agent. Keep in mind the builder’s representative’s job is to help raise the average price in the development and keep the profit margin high. The builder’s representative secures his or her employment by keeping the builder’s goals their highest priority. The builder and representative have a relationship that works well for both.

Sometimes the builder’s representative is a real estate agent. In this instance, buyers of new homes should consider the responsibilities of a dual agent under state real estate license laws. Most states require written disclosure of dual-agency to both parties. Written disclosure of potential dual agency is mandated in Illinois, while acceptance of that dual-agency remains a choice for sellers and buyers.

Buyers of new construction should opt for representation by a knowledgeable agent who has a strong legal responsibility to them. It’s important to remember that most developers require your agent to accompany you the first time you visit a sales center. The first visit is usually determined by the date that you first sign a guest list. If you are out for the afternoon on a lark, be aware that it is O.K. to decline signing until your agent is with you. If you decide not to “bother your agent” until you are more serious about a purchase, you may be giving up your right to choose knowledgeable independent representation. State that you are working with a Realtor. It is traditionally the sellers’ responsibility in this market to pay both the buyer’s and seller’s representatives, so you can easily see who saves money in a situation where you give up your right. It’s important to realize that your agent can help you best by accompanying and guiding you early on in the home-hunting process, well before it matures into the home-buying process.

Your agent is best qualified to help you if she or he is a Realtor who is also a Licensed Real Estate Broker, an Accredited Buyers Representative, a Certified Residential Specialist, and also a Graduate Of The Realtor Institute. Also important are a full time commitment, extensive knowledge of the local area and many years of experience in the local market. Years of experience can equate to an understanding of the market not possessed by a newer agent to the area. The newer agent might be able to tell you what is happening in the present market (“These homes are selling like hotcakes!”) but may not be aware of local market history or past local trends and their potential effects on your home investment. High volume production is a benefit primarily to the agent, not necessarily to the home buyer. The ability and motivation of your agent to commit to you and follow through with high quality service is most important to you.

Your Buyer Representative can support you in gaining information from the builder and many other sources you may not have considered.

Early on, investigate mortgage costs. Delays beyond a builders control can prolong the completion of your home and may add to your mortgage costs and living expenses. It is wise to have contingency plans for managing cost overruns, extending temporary housing, and obtaining bridge loans. Investigate rate-lock expiration dates on mortgages, and construction or temporary loans. If experienced and offering full service, your chosen Realtor will be able to make solid recommendations for choosing the most competitive and reliable lenders as well as assisting with contingencies.

Your agent can also help you with a realistic estimate of local property taxes which can impact the affordability of your home purchase. Builders may underestimate your projected property tax because the homes have not yet been assessed.

This early research will help you determine how much you will spend on the base price of your new home and any upgrades you would like to include.

Be sure to find out from the builder what are standard features and the cost of upgrades. Model homes are a display tool and typically filled with every upgrade offered. Realize the cost of the model home is likely much higher than the advertised starting prices for a development.

Choose the right builder. Sometimes the builder is also the developer, but not always. If you are considering buying in a subdivision that has existing homes, you can walk the neighborhood and talk with your potential neighbors. Yet, these homeowners may not be inclined to be entirely open. Their hope is that the builder finishes up construction in their neighborhood and moves on before they need to sell their homes. They won’t want to turn you away by sharing less than positive experiences and thus slow down that completion process. Better to ask for references from past projects the builder and developer has been involved in. Your highly experienced Buyer Representative can help you investigate the developers previous projects, length in business and complaints filed with business bureaus.

Developers often inflate the popularity of their projects. Before you rush into a purchase, consider how many of the new homes are under solid contracts versus those simply on hold with contingencies to be met prior to groundbreaking.

Realize that builder incentives are factored into the marketing plan. Free upgrades and appliances are sometimes thrown in to induce buyers to write contracts to purchase. You will be paying for everything that goes into the new home.

Some incentives are offered on behalf of the builder’s preferred lender. Still, compare mortgage costs with other companies. You can often do better with your own lender.

If you are considering buying pre-construction to get a better price, verify that the developer has received a green light from local building authorities and has a proven track record of timely completion. Discuss with your Realtor the advantages to buying this particular site location. You will want to avoid a project that sells slowly and deters future resale potential.

Along with the purchase contract, you will become a party to other agreements in conjunction with your purchase. Get a copy of the development’s Covenants, Restrictions, By-Laws and other governing documents. Builders usually promise to give you a copy at some point after you sign a contract. Your agent can get you a copy from other sources if you are not in a rush to purchase. It’s best to see it in writing before you sign on.

When reading the Covenants, Restrictions and By-Laws, you may discover there is a maximum allowable ratio of owner purchased to investor purchased property, and a maximum allowable tenant ratio. How is this enforced? You may not be permitted to lease your property out when you move away. Your agent can give you insight about the pros and cons of these clauses.

Consider that resale ability strongly affects your financial investment. Ask your agent to help you look at your purchase objectively. In a long term residence, you can better afford to personalize the home specifically to you and your family. Celery green carpet or citrus orange walls will be very affordable to change after you have enjoyed the look for many years, but not necessarily if you intend to sell this home in three years. Some floor plans may prove to be difficult to resell, although the builder finds them to be popular when brand new. Potential functional obsolescence may be difficult to foresee and can best be pointed out by the experienced agent. Again, what the builder finds to be popular now may not resell easily. The sparkle on a brand new home can even overshadow an unfortunate location or lower quality craftsmanship.

Learn the builder’s policy toward professional inspections and the type of warranties that come with the home. Builders usually offer one, five, or ten year warranties on structural components of a home and rely on manufacturers warranties for appliances, lighting, carpet, air conditioners, furnaces, windows, siding, and overhead garage doors.

New construction is not immune from defects, lackluster workmanship, and environmental hazards. An experienced Realtor will have knowledge of several excellent home inspectors from which you can choose. Never waive your rights to professional inspections on your behalf. Your agent can help you with the proper timeline for your inspections and work with the builder to gain access when needed. For insurance purposes, access to construction sites is limited. Stipulate in your purchase contract the timing of your visits and professional inspections during the construction process.

Builders often require a non refundable deposit prior to groundbreaking. Sometimes upgrades must be paid for in advance to reduce the builder’s risk. Ideally your deposits would go into a third party escrow account, but some builders will not agree to this. Your experienced Realtor may be able to advise you on a builder’s history on deposits and escrow.

Learn the builder’s policy on final inspections near the closing date and escrows for unfinished work. Sometimes weather or supplier problems can delay completion of a home. The builder will usually want to close on schedule and give you a timeline for completion. At closing, be sure this timeline is in writing and that your Realtor is present and receives a copy of the document. If the builder puts funds into escrow to insure completion, all the better.

Bear in mind that builders’ contracts are written by their own attorneys and are designed to protect the builder. They differ from Realtor Association approved contracts which often have provisions to protect both buyers and sellers. When you sign, that contract is binding. You may need a real estate attorney to review the contract before you sign. Your attorney’s role is to use knowledge of the law to advise you of legal ramifications of the contract. Your agent’s role is to use knowledge of local real estate transactions to assist you with wise decisions and help you to negotiate the terms. An experienced agent can often tell you if a particular builder is likely to be negotiable on terms or price. Insist that your agent be present in all meetings with the builder and that the agent will receive copies of all paperwork you sign throughout the building process. A strong agent can also support your interests throughout the transaction, giving you leverage if the product about to be delivered is less than promised.

A buyer must often obtain a certificate of occupancy from the local municipality after the new home has passed all building code inspections but no later than closing. Most mortgage lenders require this before they will grant the loan. Cash buyers must request this as a stipulation in the contract. The builder will notify you of the closing date on your new home and your final walk-through inspection which is usually up to seven days before closing on your new home. Your Realtor will be available to be accompany you on these critical dates.

With expert guidance, the decisions you make in the home buying and building process can result in a wonderful home and a wise financial investment. Work with Rosemary Chiaverini for expert guidance and reliable representation in your new home purchase. Rosemary is an Accredited Buyer Representative, Graduate of the Realtor Institute, and Certified Residential Specialist. The process begins with your first buyer counseling session. You’ll soon be on your way to success.