New Construction – Restraining order or purchase order?

New construction – a buyers’ dream that usually turns into a nightmare.

Many buyers who want, and can afford, new construction is because they have dreamed of what their perfect house will be and are now at a place in life where they can get what they want. And it won’t be a used home but a shiny new one that they chose the colors, cabinets, flooring, floor plan, etc.  They start out the process all excited and wide-eyed about planning their home.  They will talk about it incessantly to anyone who will listen.  They will spend tons of time on Pinterest looking at all the ideas.  It’s so exciting….until it’s not.

giphyThe reality of new construction is that it is an ENORMOUS headache for every person involved.  Fun and excitement soon turns into frustration and anger.

The reason is primarily because of poor organization of the sellers’ real estate agent (they love getting these subdivision listings but hate all the work and communication that’s involved) and the inability to get updates and information from builder, builder troubles with sub contractors to work on schedule, delays for weather or permitting and inspections with the towns and the changes a buyer wants to make and the list goes on and on and on.

Depending on where the builder is at in the development phase, you may have a home to view that’s in various forms of completion or sometimes you have to make the decision based on the plans and specifications that’s been provided and you just choose the lot.  Then there is the completed model that has every bell and whistle so that you want everything you see and it drives the price up for you.  Every developer is different in how they want to handle it.  Some won’t start building until they have a buyer, some will start one or 2 models and then start taking reservations, etc.  And then the fun begins! (insert sarcasm).

When you are preparing to view new construction subdivisions, one important thing you need to know is that THE BUILDER WILL USUALLY NOT ACCEPT HOME SALE CONTINGENCIES!  And some of the things you want to view right out the gate is the allowances and specifications.  I can almost guarantee you that what you see on that allowance package is intentionally minimal because the developer wants you to upgrade.  You’ll want to know how many recessed lights are included, how many cable outlets, what the allowance is for lighting, tiling, carpeting, hardwoods, etc.  And you should always keep in mind that the figures you are seeing on that sheet are at the builders cost!  So when you make changes, cha-ching, cha-ching the price goes up.  And typically any modification or upgrades you make, the builder will want 50% upfront or have you pay directly to the tradesperson that will be doing the additional items.  Trying to figure out the details of every little thing in your new home is such a laborious process and building your new home is not for the feint of heart because of the time you will spend looking and changing and site visiting.  You’ll want to go visit the site all the time (which drives the builders and their agents insane).  Each time you visit, you’ll find something else you want to change.  The time spent chasing the sellers’ agent and builder is insane.  They are all your best friend in the beginning of the process and then they go underground when you want to start visiting the site, doing change-orders, etc.  You will be told it will be 4 months for delivery – NOT.  You’ll be lucky if you’re in your new home in 6 months and this is where the frustration levels really escalate.

The shell of the house will go up fast and a buyer is lead to a false sense of security that this will be on schedule.  And then about a month in, progress starts to slow.  Each time you visit the site, it doesn’t look as though much has happened.  Frustration mounts.

You’ll go in to the shell of the house and see the studs up and find that you don’t like something about the set up.  You’ll want to change it and builder says too late.  Frustration mounts.

You’ll be told to go order your kitchen cabinets with the budget and find out that you can’t possibly make your dream kitchen with that allowance so you have to spend another $15,000.  Frustration mounts.

You’ll be told to choose the tile for kitchen, bathrooms, and find that you don’t like the tile and want to upgrade or you don’t want the walk in shower, you want tile.  More money.  Frustration mounts.

You’ll visit the site and still not much progress.  Frustration REALLY getting up there.

You’ll visit the site and find that they screwed something up.  Frustration bubbling up.

You’re approaching your closing date and the house is no where near ready.  Frustration bubbling.

Kitchen cabinet doors warped, need new ones, it will take 2 weeks, more delay.  Frustration boiling.

Closing date comes and goes and not much progress.  Frustration boiling over!

It’s a crazy, crazy process and the frustration is compounded by these real estate agents for the seller’s not answering phones or emails.  They’re tired of seeing you and hearing from you.  They’re dealing with 3, 4 or 5 other buyers wanting answers.  They are also trying to still sell regular sale homes to buyers so that they can pay their bills because new construction commission checks don’t come in for several months until the houses get built and closed on. So they try avoiding you and your agent even more because they have other things they’re doing.  But they wanted those subdivision listings!  They are getting yelled at by the builder because the builder is tired of hearing from us too with changes and fixes and he wants to know why the other lots aren’t selling, etc. (because their agent is selling other homes and no longer devoted to the subdivision). They want their commission checks and they are all eager in the beginning but that goes sour real fast.  By the time you all close, the buyer can not STAND the sellers’ agent or the builder because, don’t forget, there will be a punchlist of items seller didn’t complete prior to closing but you just wanted to get into your home and you agreed to allow builder to do these things after you close.  BIG MISTAKE because now you, the buyer, are left chasing the builder for these items and they’ve already moved on to the next house.

It’s so important for you, the buyers of new construction, to work with an experienced agent that is versed in this insane process.  There are so many details to the process and virtually everyone who builds  say they would NOT do it again.

BEST ADVICE:

  • Get the allowances, specifications and builders warranty in advance of visiting the subdivision
  • Find out if your deposit will be used to build or put in escrow
  • Find out how upgrades are handled
  • Find out what modifications can and cannot be made to the floor plan
  • Get everything in writing.  Every change, small or big, get in writing, every discussion – have your agent follow-up with an email.  Any upgrades that are free or cost, get in writing.
  • Keep an account of money you spent for chandeliers, additional light fixtures, cabinet pulls, etc.  Most builders will allow you to do this and have their tradespeople install (at an additional cost of course).
  • Any agreements with builder, get in writing.  It gets so confusing with verbal agreements and requests.
  • You, the buyer, are dealing with one house, while the agents and developer are dealing with several so it will be up to you to have good record keeping!
  • Set up a schedule to visit the site regularly with your agent and sellers’ agent and have your agent put the minutes of the meeting in an email to all parties.
  • Keep a running punchlist so that at your scheduled meetings you can keep asking for the items to get done.  You want the smallest possible punchlist when you go to closing because chances are they will never get done.

The process could certainly be made easier if builders would just chose better qualified agents to represent them and their subdivision.   There are plenty of big name agents out there that only do subdivision listings and that does NOT mean they’re good at it.  It doesn’t have to be such a difficult process but it truly is made that way by the lack of communication and organizational skills of the builders’ real estate agent and too many unplanned visits to the home.

RELATED ARTICLES:
NEW CONSTRUCTION TRENDS 2018
New Construction Process


And, as always (here comes the plug to work with us:-) if you are looking to buy or sell, give the team at Key To The Dream Realty Group a chance and text or call us at 781 269 2195 or email us at info@keytothedream.com.

Search for homes now.  Click HERE.

We service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, Uxbridge, Blackstone, MA.  We service Bristol County, Massachusetts as well (Attleboro, North Attleboro, Easton, Norton, Mansfield, MA)  and  all of Rhode Island!  We have experts on Cape as well and in the City of Boston and surrounding towns.  We go where you need us to be because we know you want to work with truthworthy, honest and hard-working real estate agents!  Have car – will travel 🙂