Brand New Homes – Tips and Insider Information
I sold my first brand new construction home in 1994 to now husband and partner Kurt Grosse. He was the easiest home sale I ever made! However, in the 28 years since, I learned A LOT, and things have changed A LOT – and they are not to the buyer’s advantage.
The man I sold that first brand new home to happened to be a Nevada Building Engineer. Kurt was working with all of the top Nevada builders, fixing their framing and wood problems for years. He was also engineering their homes, helping them build a better home.
We would go out to construction sites together every week for my clients. Eventually, I convinced him to come work with me full-time. Kurt still does weekly construction monitoring for every client we have – free of charge. He finds and has builders correct issues on EVERY home we sell.
Below I’ve tried to give you some tips and insider information about buying brand new construction homes. If you want to know about something not here or in our other new construction home blogs, call us.
New Construction Builder Changes We’ve Seen
The biggest change that we’ve seen in Las Vegas home builders in the last 25 years is in how savvy these home builders have become. There are very few small builders left in town. Many builders have merged so they now sell hundreds and even thousands of homes a year.
There is very little negotiation of price. Sometimes a subdivision will have a home on “special,” but it’s basically, “buy our home or don’t. Someone will.” Sales agents at the communities work for the builder and the builder alone. Buyers think they’re on their side, but it is not legal in Nevada for them to represent both builder and buyer.
Purchase contracts are ALWAYS written in the builder’s favor. Some contracts are actually TERRIBLE for a buyer to sign- take a Realtor with you to see brand new homes. Contract clauses can be negotiable, but prices usually aren’t. The phrase “Buyer Beware” has never been so true.
TIP # 1
The price of the home does not change if you have a Realtor. Each Realtor offers something different. If we are your agent on a new construction home, our knowledge and new construction building expertise are on your team for months! Kurt monitors the construction for you every week and does all walk-throughs with you as part of our service. At closing, we gift you with the best new construction home inspection available to further protect you. If you are not in Las Vegas, try to find a Realtor with building expertise.
Builder Representation At Their Models
Always remember that the sales tract agent works for the builder and only the builder- not you. Don’t get fooled into thinking that they’re nice because they want to help you. They want you to buy THEIR home, and they may be nice people.
Nowadays, the program is for Realtors to take our clients to the community on their first visit to receive a “finder’s fee.” We get asked to be quiet, let the tract agent take over, and collect a paycheck when the home is completed. 99% of the Realtors we know collect finder’s fees. We work because we believe we can help to protect you and your investment.
FREE Buyer Representation
Home Builders in Southern Nevada pay for you to have Buyer Representation from a Realtor IF you go with them on the first visit to the community. Your sales price is not negotiable whether you have a Realtor or not, so get the free buyer representation. If you interview Realtors, ask what they do for you. You want a Realtor who has personally knows construction and builders.
If you register with a builder online before you visit, BEWARE. Read the fine print because you may be giving up this benefit. Let your Realtor register you or If you want to register, use a different name- just in case.
If you do not take a Realtor with you on your first visit, ask if you can look at the models and bring your Realtor later. Leave if they say no. Staying will cost you thousands of dollars. We suggest you don’t look without a Realtor and do not give them your name or sign anything period.
Are New Construction Prices Negotiable?
You are not allowed to make an offer on a home, and you cannot negotiate the price. The price is black and white. A builder pays for you to have a Realtor represent you if you have followed their rules- let your Realtor work for you.
You pay the same thing with or without a Realtor, so get the best- we are free! Sometimes there are “Builder Specials.” These are usually completed homes, possibly without flooring, where you must buy the upgrades and decorator items already specified in the home.
New Construction Home Contracts
With builders becoming big business, contracts now are in their favor. Some builders have BAD clauses. Contingencies are allowed in many contracts until a certain phase of construction. Other builders charge you for things that are not standard closing costs in Nevada but make you think that they are. There are also “in-house lenders” who are possibly tied to incentives. Know that there is a lot of money in loans. See links below for loan blogs we’ve written.
An example of a BAD Contract Clause: There is a Las Vegas builder whose contracts say that if you don’t complete the purchase for any reason, they’ll keep all earnest and upgrade monies paid. This means: If you added a bathroom for $30,000, you would pay all or part of that upfront.
You’ll walk away from every penny if you can’t get your loan next week, next month, or upon completion. Scenario: COVID-19 gives you no income for a month, and you no longer qualify for that loan amount and cannot buy the house.
“Too Bad, So Sad” is their policy. What if your spouse dies? Obviously, 6-9 months to build a home is a long time with many variables. We’ve seen many people put over $50,000 down ahead of time towards upgrades … We do not recommend that builder.
Home Building Changes
Building Codes have changed for the better- to protect the consumer more. Responsibility for construction damage has changed, meaning they charge sub-contractors when their workers damage materials- if they know about it.
What concerns me most is the technology of building products. If you are not up on current building materials, you’ll need to read about them, hire a new construction home inspector, and/or hire a Realtor who protects you- paid by the builder or not. Please read our blog about New Construction Inspections. Example: Do you know what a radiant barrier looks like? Would you know if it was installed?
The Builder’s Framing Walk-Through
A framing walk-thru is for the buyers to see inside the walls before drywall is put on. This is when you need to verify that EVERY pre-drywall option is there- like wiring, plumbing, and structural options. Different builders do this differently. Some say, “Here it is.” Others go through everything with you.
My partner, husband, Realtor, Former Nevada Building Engineer (PE, CE) does the framing walk for you and/or with you. He’ll verify every option for our clients during the walk, look for bad framing connections, checks trusses for cuts or breaks, and even looks at vent locations for squareness. This is a crucial step because if items are missing after the walk-through, most builders will not change things.
Buyer’s Final Walk-Through
The final walk-thru and buyer’s orientation have also changed. What’s new is that a brand new home orientation is needed! There are complicated products in houses nowadays. Remember, this walk should not be about seeing how pretty things are. You’ll want to learn the locations of system items and look for damage, chips, and scratches. Many builders end their cosmetic warranty at the walk.
Some builders will list touchup paint as a line item. Others, you’ll have to look carefully or do it yourself later. What matters to you financially are any scratches or chips on glass, mirrors, countertops, appliances, and cupboards. Today’s contracts mostly say that these warranties end during the walk.
The builder’s final walk-through is for the builder to explain the home’s systems and features to you. What’s changed is technology – it has become a big factor throughout every property. It’s much easier for the builder to show you how to program devices (or do it for you) than for you to learn them.
NOTE: Most people don’t know if things are installed correctly. How do you know if there’s an inside-out window panel? Are you going to look in the attic for broken trusses and to verify that insulation is 100% there? How about looking for missing roof flashing or broken roof tiles? Do you take their word that everything is okay? Just because everything looks nice does not mean that it’s perfect!
Moving In – The Certificate of Occupancy
A Certificate of Occupancy is the building department’s paper saying that the builder did their job and that their official building checklist is complete, And the buyer can move in. What’s changed is that the inspectors don’t ever reinspect the entire house.
Once an item is checked off the building department’s list, they don’t reinspect again. Numerous sub-contractors can damage another subcontractor’s work and not tell anyone. Insulation is checked off by the certificate the insulation company provided. Building inspectors do not look in the attic before closing.
NOTE: The attic, roof, and windows are where problems are found years later because the home wasn’t inspected by your inspector before the builder’s warranties expire.
Warranties For Your Brand New Home
A home generally comes with a complete house warranty for one year. Sending in cards for additional coverage and recalls is your job. A builder gives a 10-year structural warranty. Experts say that the average structural warranty claim is over $40,000. What’s changed is the length of time the warranty is and, of course, coverages change.
New Construction- What To Do To Protect Yourself
You want someone on your team who is knowledgeable enough to protect you. A Realtor costs you nothing, so why not get the best Realtor for free? All you have to do is take one with you on your first visit to a housing development- but- you want a Realtor who does more than driving you to different housing tracts and sits quietly through your contract writing.
There are thousands of Realtors out there, and they do not function equally. Many offer zero protection to you due to liability. When a Realtor has been in the construction industry, their quality of care expectations change.
Do you want a highly paid Realtor-Chauffeur or a Realtor who knows enough to go to your home site each week to check on your investment? See our blog about New Construction Monitoring. Ask us for a referral to a “Realtor-Protector” in your city.
New Construction Builder Protection Tips:
- Find a Realtor with building experience. Ex-contractors, Ex-engineers, home inspectors, etc., are the best. If you can’t find one in your city, call us. We will find one for you, or we may know one depending on where you are looking.
- Find an experienced New Construction Realtor who knows the different builders. Contract protection is essential. Keep Your Eyes Wide Open- know what you’re signing.
- Interview and don’t settle for less in a Realtor- you’re making a huge investment. Also, don’t assume that just because you call a “New Construction Real Estate Team,” that you’ll get the kind of experience that protects you. You want an experienced PERSON, not a team- your assigned agent can be a “newer agent” or a “showing agent.”
- Always have a New Construction Home Inspection! Shop for the best inspector. A Resale Home Inspector is not the same as a New Construction Inspector. We feel that this is so important that we gift every client an inspection. Find the best Realtor and use their recommendation. Ask your Realtor for this ahead of time- they should give you an inspection.
- You cannot do anything about warranties or building inspectors. You need to be aware. Reversed window panes cost you thousands in heating and cooling bills. Know that when you sell your home, the buyer will have an inspection. If things are found beyond the 1 year warranty period, you get to foot the bill. Repairs cost A LOT more than an inspection would have.
With How Quickly Homes Are Built, It’s Up To You To Protect Yourself!
This blog was written by Terri Grosse. Terri and her partner and former Nevada building engineer husband, Kurt Grosse, are 28 and 25 year Las Vegas Valley real estate agents. Their goal is to protect their home buyers and sellers in every way they can. With how quickly homes are built in Southern Nevada, their skills and knowledge are invaluable. Call or text them with questions or to schedule a housing consultation today at 702-750-7599.
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