Brand New Homes – Tips and Insider Information
Buying new construction homes is not easy. 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 that I sold that first brand new home to was a Nevada building engineer. Kurt represented most of the top Nevada builders fixing their framing and wood problems for years. He was the engineering firm that fixed their building mistakes.
We would go out to construction sites together every week for my clients. Eventually, I convinced him to work with me full-time. Kurt still does weekly construction monitoring for every client we have – free of charge. He finds mistakes and asks the construction superintendent to correct issues on EVERY home we sell.
Below I’ve given you some tips and insider information about buying a new construction home. Brand new construction home buying needs to be sensible and you need to evaluate your choices. Call us if you want to know about something not here or in our other new construction home blogs.
New Construction Builder Benefits Still Offered
The most important benefit still offered to new construction home buyers is that builders pay for buyers to have Realtor representation. In Las Vegas, THERE IS NO CHANGE TO THE PRICE OF THE HOME. That means buyers get a FREE Realtor to represent them. This can be invaluable if you choose a Realtor that will protect you.
Of course, there are conditions for a buyer to receive this valuable benefit. Most importantly, a Realtor must register the buyer online and accompany them to the model home for the buyer’s first visit. Don’t look at model homes without your Realtor.
Know that brand new construction homes are not built perfectly! Contractors make mistakes. Manufacturers make mistakes and City building inspectors never reinspect items so they can get messed up after their home inspection.
We represent you throughout the entire process including monitoring your home’s construction every week. If you are not in Las Vegas, find and interview Realtors who have construction expertise. We can recommend you to a Realtor in most cities.
The second benefit that is priceless is the builder home warranty. Home warranties differ depending on the builder. What’s the same is that you need to discover issues within the warranty period or they are your responsibility.
New Construction Builder Changes We’ve Seen
The most significant change that we’ve seen in Las Vegas home builders in the last 25 years is in how savvy national home builders have become. There are very few small builders who build single family homes left in Las Vegas. Builders have merged with National builders, who sell hundreds and even thousands of homes a year.
There is very little price negotiation or incentives offered by the builder. Sometimes a subdivision will have a home on “special.” Usually, it’s basically, “buy our home or don’t. If you don’t, someone else 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. Builder’s mortgage lenders are there because they make a lot of money from you getting a home loan. Shop interest rates and fees.
Purchase contracts will ALWAYS be written in the builder’s favor. Many builder contracts are TERRIBLE for a buyer to sign- take a Realtor with you to see brand new homes. READ EVERY WORD OF YOUR CONTRACT.
Contract clauses can be negotiable, but prices usually aren’t. The phrase “Buyer Beware” has never been more accurate. In Las Vegas, new construction home buyers agree to buy the house or lose every penny of their deposit. Be Pre-Qualified if you are getting financing.
TIP # 1 – Interview Realtors Before Looking At New Homes
When buying a new construction home, the price of the home does not change whether you have a Realtor or not. Buying a brand new home is a long and complicated process. Shop for a Realtor who knows construction. With thousands of Realtors in every city, interview and choose one that can protect you and your investment.
If we are your agent for a brand new construction home, our knowledge, and new construction building expertise, work to protect you in the process 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 protect you further. If you are not in Las Vegas, try to find a Realtor that does more than chauffeur or decorating.
Tip #2 – 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 upon completion. 99% of the Realtors we know collect finder’s fees.
If you register with a builder online before you visit, BEWARE. Give a friend’s name and read the fine print if you think you need to register. Signing anything may mean that you gave up this benefit. Your Realtor can get you this information too.
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 may cost you thousands of dollars. We suggest you don’t look at models without a Realtor. Do not give a builder your name or sign anything until you choose that builder’s home – period.
Everyone says they are a “New Construction Home Realtor. Not true. Realtors who are construction experts work for you because they have a higher standard of care than a regular Realtor. They help protect you and your investment.
Tip #3 – New Construction Home Inspections
When buying a brand new construction home in Nevada, Home Builders do not want you to have Buyer Representation. The builders do not want you to know things that protect you. Think about how much easier their lives are if someone who knows construction isn’t on your team.
Energy efficiency is a big benefit to buyers. Know that energy-efficient products utilize technology. If there is a manufacturing error, you may never know and they don’t have to repair the problem. Do you know how to test a Low-E Window? Do you know what a radiant barrier looks like?
Will you verify that there is adequate coverage and enough insulation in the attic? How about inspecting your trusses to verify that they are not broken or cracked? Will you look at the roof for missing flashing or cracked roof tiles? Ever?
I know it sounds crazy, but get a New Construction Home Inspection. They are usually different people than a resale home inspector. Special tools are required for smart and energy-efficient homes. Always have your home inspected by someone who tests windows, moisture and uses an infrared gun.
Are New Construction Prices Negotiable?
Once you have chosen a home and floorplan, it’s time to go into contract. You are not allowed to make an offer on a home these days, and you cannot negotiate the price. The price is black and white. A builder only pays for you to have a Realtor represent you if you have followed their rules. Let your Realtor work for you and explain your contract to you along with the builder representative.
Sometimes there are “Builder Specials” for homes for sale. These are usually completed or close to completed homes. They probably will be “specced” by a previous buyer or decorator but you’ll at least have an option for flooring. You must buy the upgrades and decorator items already specified or built into the home.
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New Construction Home Contracts
With builders becoming big business and this being a “Seller’s Market,” means that every contract is in their favor. Some builders have REALLY BAD clauses. READ YOUR CONTRACT! It’s also a good idea to check your builder out with the BBB Better Business Bureau.
Contingencies are allowed in many contracts until a particular phase of construction. Builders currently are charging buyers standard Nevada closing costs that have not been buyer closing costs in the past.
There are also “in-house mortgage lenders” who are possibly tied to some of the builder’s incentives. Know that there is a lot of money in loans. See links below for a few of the loan blogs that we’ve written. A $10,000 incentive may not be worth it – do the math and shop interest rates.
An example of a BAD Contract Clause: There are a few Las Vegas builders 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. Upon cancellation, there goes your money.
Read Your New Home Builder’s Contract
Be sure to read every word of your brand new home builder’s contract. Besides the standard contract, read the additional disclosures. A soil report is so important that if you don’t understand it, consult an area soil map and consult a professional if necessary. Las Vegas has expansive soil issues and some areas are worse than others.
A casino can be built a couple of blocks away so state law requires gaming disclosures. Look at zoning disclosures. Commercial buildings or a multi-story building as a neighbor can affect your life for years.
You’ll also walk away from every penny that you paid if you don’t qualify for 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. It happens – there goes your money. Be prepared with a contingency plan.
“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. Please have contingency plans for alternative financing in case of emergencies.
Home Building Changes
Building Codes have changed for the better- to protect the consumer more. Responsibility for construction damage has changed. This means that a builder will charge sub-contractors when their workers damage another contractor’s materials in the house- if they know about it. If an employee has to pay for damage or a mistake they made, do you think they report 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. You can also hire a new construction home inspector, and/or hire a Realtor who protects you- paid for by the builder or not. Please read our blog about New Construction Inspections.
The Builder Framing Walk-Through
A builder framing walk-thru is done mainly for the buyer to see inside the walls before drywall covers everything. 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, Realtor, Former Nevada Building Engineer (PE, CE), Kurt, 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. He also checks trusses for cuts or breaks and even looks at vent locations for squareness.
Your framing walk-through is a crucial step. If option items are discovered as missing after the walk-through, most builders will credit you but will not correct the error. Know and photograph what’s inside your walls before drywall is installed.
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. They are explained to you.
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 touch-up 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: Do not take their word that everything is okay. Just because everything looks nice does not mean that it’s perfect or your dream home!
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, What’s changed in the last 28 years is that building inspectors don’t ever inspect the entire house, they look at their checklist.
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 many problems are found years later. When people resell their home, their buyer’s home inspector finds issues and the seller is responsible to fix them.
Replacing reversed windows can get very costly. Broken trusses require a building engineer to design a repair and then a contractor to fix it. Please have your new home inspected by a professional inspector before you move in.
Warranties For Your Brand New Home
A home generally comes with a complete house warranty for one year. Sending in appliance warranty cards for additional coverages and recalls is your job. A builder usually gives a 5-10 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 valid for, and of course, lower coverages are stated.
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 new construction home development. You want a Realtor who does more than drive 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.
Building a Custom Home
When building a custom home in Nevada, builders also will pay for you to have buyer representation. Again, find a Realtor that knows custom home builders. You want one who will do more for you than help you pick your paint color. A new home purchase and building a custom home are completely different time commitments.
When building a custom home, it can be built on your land or some custom home builders have lots available. There are communities in Las Vegas that sell ready-to-build on lots specifically for building a custom home. Where do you want to live? Do you want a city view or a golf course view? Maybe you like the horse or rural areas, or maybe you want to live near water? You have options.
Once you have your land, you still have a gazillion choices to make. Fantasy shopping is also required when building a custom-built house. Between land, home design, and then appliances, lighting, and features, by the time you get to designing your backyard you can become exhausted. Choose the level of time that you want to spend.
Summary: 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.
- 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. ASK for credentials! You want an experienced PERSON, not a big team because your assigned agent can be a “newer agent” or a “showing agent” who will be kind but will not protect you.
- Contract protection is essential. Keep Your Eyes Wide Open. Know what you’re signing.
- Always have a New Construction Home Inspection! Shop for the best “New Construction” Home 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 a new construction home inspection. Use who your Realtor recommends. Consider asking your Realtor to gift you with an inspection – they probably will.
- 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. Low “freon levels” also cost you money each month. Know that when you sell your home, the buyer will have an inspection. If things are found beyond the 1-2 year warranty periods, you get to foot the bill. Repairs and utility bills cost A LOT more than an inspection would have.
The above tips apply to anyone buying a single family home or a multi family home. Always use a real estate professional who can protect your interests. Whether you are making a real estate investment in Las Vegas, NV, or Houston, TX, there is a professional Realtor that knows construction.
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 25+ year Las Vegas 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 Terri and Kurt with questions or to schedule a housing consultation today at 702-750-7599.
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Updated November 6, 2021