The Homebuyers’ Guide to NEW HOMES

1. Get in Touch with Your Agent. Before you visit your first model home, sit down with your agent and do your homework. You’ll want to be prepared so that you can determine a comfortable price range for your new home. Determine a Comfortable Price Range If you own a home, you’ll first need to know the net proceeds from its sale in order to determine how much cash you’ll have to work with. Don’t simply estimate this but carefully calculate every possible selling cost.

2. Sellers’ Agents Versus Buyers’ Agents. Here’s a good point to remember. The sales agent in the model home represents the builder, not you. They are known as sellers’ agents. As a buyer you can work with a buyers’ agent at no additional cost.

3. A Builder For All Reasons. Like all tradesmen, builders vary in their fields of expertise. For example there are builders who specialize in craftsmanship, others who are known for their innovative use of space, and those who offer below-market financing or customer attention during construction and after move-in. Determine your own specific needs or preferences then shop around for a builder that will best address your requirements.

4. Get the Facts About Your Builder. Before making a final decision, it is wise to check out the reputation and financial strength of the builder. Get “spec sheets” on home features covering everything from floor plans to energy efficiency, including lot availability and delivery of your home.*

5. Check Out the Neighborhood. Find out from local land-use officials what else is planned or could be constructed in the area, especially where vacant land is applicable. Review the rules for the homeowner’s association, or find out if one will be set up. Think of how you will be affected by commuting routes and times.

6. Be Sure the Contract Works in Your Favor! When spelling out the particulars of an agreement with your builder, ensure you protect yourself by having safeguards written into the agreement.

7. Financing — What’s Best for You? Some builders, especially in high-volume communities that place large numbers of loans, can offer special financing packages. However, because “home loan” lending is highly competitive, you have many financing choices other than those being offered by the builder. Shop around for everything, from rates to lender fees. Appraisals, inspections, surveys, attorneys and closing fees can vary as well.

8. Just Because it’s New… Doesn’t Mean it’s Perfect. Yes it’s new and typically it’s built with modern materials that are durable, low maintenance, stronger, quieter, and safer. But because nothing is perfect, even if it’s new, consider hiring a reputable, licensed home inspector. Consider budgeting for items to be modified or added later on.

1. You may be able to get your lender to help you with your down-payment and closing costs. Even if you do not have enough cash for a down-payment, if you are debt-free, and own an asset-free and clear (such as a car), your lending institution may be able to lend you the down-payment for your home by securing it against this asset.

2. You may be able to get your lender to help you with your down-payment and closing costs.

Even if you do not have enough cash for a down-payment, if you are debt-free, and own an asset-free and clear (such as a car), your lending institution may be able to lend you the down-payment for you.

3. You may be able to find a seller to help you buy and finance your home. Some sellers may be willing to hold a second mortgage for you as a “seller take-back”. 

4. You can buy a home even if you have problems with your credit rating. If you can come up with more than the minimum down payment or can secure the loan with other equity, many lending institutions will consider you for a mortgage. Alternatively, a seller take-back mortgage could also help you in this situation.

5. You can, and should, get preapproved for a home loan before you go looking for a home. Preapproval is easy and can give you complete peace of mind when shopping for your home. 

1. Rose-coloured glasses Most of us dream of improving our lifestyle and moving to a larger home. The problem is that there’s sometimes a discrepancy between our hearts and our bank accounts. You drive by a home that you fall in love with only to find that it’s already sold or that it’s more than what you are willing to pay. Most homeowners get caught in this hit or miss strategy of house hunting when there’s a much easier way of going about the process.

2. Failing to make necessary improvements If you want to get the best price for the home you’re selling, there will certainly be things you can do to enhance it in a prospective buyer’s eyes. These fix-ups don’t necessarily have to be expensive. But even if you do have to make a minor investment, it will often come back to you ten-fold in the price you are able to get when you sell.

3. Not selling first You should plan to sell before you buy. This way you will not find yourself at a disadvantage at the negotiating table, feeling pressured to accept an offer that is below-market value because you have to meet a purchase deadline. If you’ve already sold your home, you can buy your next one with no strings attached. If you do get a tempting offer on your home but haven’t made significant headway on finding your next home, you might want to put in a contingency clause in the sale contract which gives you a reasonable time to find a home to buy.

4. Failing to get a pre-approved mortgage Pre-approval is a very simple process that many homeowners fail to take advantage of. While it doesn’t cost or obligate you to anything, pre-approval gives you a significant advantage when you put an offer on the home you want to purchase because you know exactly how much house you can afford, and you already have the green light from your lending institution.

5. Failing to coordinate closings With two major transactions to coordinate together with all the people involved such as mortgage experts, appraisers, lawyers, loan officers, title company representatives, home inspectors or pest inspectors the chances of mix-ups and miscommunication go up dramatically. To avoid a logistical nightmare ensure you work closely with your agent.

1. Appraisal Fee Your lending institution may request an appraisal of the property which would be your responsibility to pay for. Appraisals can vary in price from approximately $350-$500.

2. Property Taxes Depending on your downpayment, your lending institution may decide to include your property taxes in your monthly mortgage payments. If your property taxes are not added to your monthly payments, your lending institution may require annual proof that your taxes have been paid.

3. Survey Fee When the home you purchase is a resale (vs a new home), your lending institution may ask for an updated property survey. The cost for this survey can vary between $1000-$1200.

4. Property Insurance Home insurance covers the replacement value of your home (structure and contents). Your lending institution will request proof that you are insured as it protects their investment on the loan.

5. Service Charges Any new utility that services your hook up, such as telephone or cable, may require an installation fee.

6. Legal Fees Even the simplest of home purchases should have a lawyer involved to review all paperwork. Shop around, as rates vary greatly depending on the complexity of the issues and the experience of the lawyer.

7. Mortgage Loan Insurance Fee Depending upon the equity in your home, some mortgages require mortgage loan insurance. 

8. Mortgage Brokers Fee A mortgage broker is entitled to charge you a fee in order to source a lender and organize the financing. However, it pays to shop around because many mortgage brokers will provide their services free to you by having the lending institution absorb the cost.

9. Moving Costs The cost for a professional mover can cost you in the range of:  $125-$175/hour for a van and 3 movers, and • 10-20% higher during peak demand seasons.

10. Maintenance Fees Condos charge monthly fees for common area maintenance such as groundskeeping and carpet cleaning in hallways. Costs will vary depending on the building.

11. Water Quality and Quality Certification If the home you purchased is serviced by a well, you should consider having your water checked by your local experts. Depending upon where you live, determines whether or not a fee is charged, to certify the quantity and quality of the water.

12. Local Improvements If the town you live in has made local improvements (such as the addition of sewers or sidewalks), this could impact a property’s taxes by thousands of dollars.

13. Land Transfer Tax This tax is applied whenever property changes hands and the amount that is applied can vary.