How do I buy a New Home

    You first get with a professional new home negotiator. You then find the new home builder you want to build your home. You see what standing inventory there is and if it fits. Next check out the phase and building schedule to see if buying this particular new home makes sense.

    During the negotiation phase with your negotiator and the new home builder’s agent, you will be present and your negotiator should be taking notes and asking pointed questions that result in extra benefits for you, specifically.

    Ensure that you don’t sign anything at the new home center or new home builder community without first getting the approval of your negotiator. This is extremely important because some of the new home builders will not allow for you to have your own representative if they identify you went and viewed the model homes without your negotiator.

    The new home builders pay your agent to have your own representative/negotiator. You just to have them with you on your first visit.

    Some deeper questions, FAQ, and answers related to the question of, “How do I buy a new home?”

    How long does it take to buy a new home from start to finish? Considering you find a new home that has been built and maybe has fallen out of escrow for some reason pertaining to the home buyer, you may be able to move in within the time it takes to do your inspections and have the loan funded. That could be anywhere from 30 days to 60 days, depending on the type of loan and what your new home negotiator was able to get.

    If you are buying a new home that has not been built as of yet within the current phase, it could take 3 months or more, depending on the new home builder’s schedule. If they have all resources working on a single home – three months would be the shortest time and that would still depend on the city checking off the various permits and inspections by city personnel.

    Most new homes from selection to build out are 4-6 months from the day you walked through the model homes with your real estate negotiator.

    Can I buy a new home with no money down? Yes, if you are a military veteran and are able to use the Veterans Administration, VA loan, then you can buy a new home with no money down. There are also some other types of lending that may offer a zero down option. The new home builder’s lender may also offer some creative alternatives to the traditional types of home financing. However, always make sure you also have a second lender option so you can have a second opinion. Some loan programs are bad and will cause you heartache down the road, so hence the reason you have your professional negotiator on your side when buying a new home.

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    New Home Questions, Answers and FAQ’s continued:

    Can you negotiate the new home price? Absolutely. Everything in real estate is negotiable. It is going to depend on a lot of factors how “negotiable” the new home builder will be in deviation in the prices which have been researched and set. This is where your own negotiator will be worth their weight in dollars. They will investigate the dates on which the new home builder has their prices modified. How the past phases have been priced and what future phase releases are potentially going to look like. In addition, your negotiator will be aggressive with regard to homes that have not sold and look to undercut those due to understanding how that affects the new home builder’s investor portfolio and rank.

    What are the steps to buying a new house?

    • Step 1, find where new homes are being built.
    • Step 2, do research on the builder to see what people are saying about them in a positive or negative way.
    • Step 3, make sure you get with a new home negotiator with a solid background in real estate negotiation.
    • Step 4, view the models in person with your negotiator by your side.
    • Step 5, your negotiator will ask the new home builder’s representative questions pertaining to your interests.
    • Step 6, if you choose to proceed, your negotiator will make an offer in accordance with your best terms at heart.
    • Step 7, you will either leave an EMD, Earnest Money Deposit or prepare to get one to escrow after the builder accepts or when the countering process is final.
    • Step 8, new home contracts are completed between you and the new home representative with your agent/negotiator present.
    • Step 9, escrow opens, you are getting additional financing numbers from the new home builder’s lender and your own – they are competing for your business.
    • Step 10, you will be scheduled for the design center to choose upgrades which were obtained via your negotiator and those which you choose to be paid for or be financed.
    • Step 11, you will visit the property numerous times to see how they are coming along with the construction. You also may get a bit of dirt from where the slab is to be poured to save for sentimental value if it’s before that phase of construction.
    • Step 12, the building process will continue until the home is completed.
    • Step 13, you will sign escrow and loan paperwork with paying attention to what you had been promised by the new home builder’s agent via your negotiator.
    • Step 14, you will walk through the completed home with your negotiator and the new home builders representative and also have a home inspector hired to accompany you.
    • Step 15, escrow will close and you will be presented with the keys.
    • Step 16, you will be given a completed home inspection report which you will give a copy to the new home builder’s site manager to have the “found items” corrected.

    How much money should you save to buy a new home? Most of the new homes come with basic things. Window coverings should be saved for ahead of time. Also, the down payment that will be required is also another item that you will need. This can vary depending on the type of loan you are getting. If you are a Veteran, using a VA loan, then you will probably be able to not have any “down payment” money. However, you are going to need money to make the escrow deposit amount that the new home builder will want. That can be $5,000.00 or more. I have seen that amount as much as 3% of the purchase price. In some cases, this can be negotiated in the case of a VA or FHA buyer. It’s going to depend and should be left up to your negotiator. Chosen upgrades and discounts that were not negotiated by your real estate agent will typically be financed into the deal. You will need money for the home inspector – which can be from $400.00 on the smaller home end to over $600.00 for a 3000+ square foot home. If you don’t have enough furniture, you should set aside money for the buying of it as well.

    What kind of credit score do you need to buy a new home? Most of the new home builders follow suit with the national lending guidelines established by the banks and private mortgage companies. Most lenders allow for a minimum of a 620 FICO score to be able to borrow money to buy a new home. However, this also depends on your overall credit profile and type of debt to income ratio, past credit and more.

    Do new home builders pay their closing costs? Yes, they will pay their own – the commission for their agent, the commission for your negotiator (real estate agent), their part of escrow and their title fees.

    Do you need a realtor to buy new construction? No, you don’t. But it’s free and the right new home negotiator can help you immensely – as seen above.

    How much should you put down on a new home? Regarding the down payment. You have to put the minimum down payment as required by your mortgage lender. That can vary a lot depending on the type of loan program you qualify for and the one you want to use. Remember this rule of thumb, for every $10,000.00 you put down you are going to be saving approximately $50.00 a month in payment. I don’t know about you, but to me, $10,000 is a large amount of money. It seems that the impact is minimal when you put that much down over and above what is required. I advise most of my clients to keep that savings going and to not inject too much more unless you have a lot or have gift money to apply. This is something that you are going to want to speak to those whom you trust about. Also, for these types of questions, financial advisors and wealth coaches are awesome.

    What is the average down payment on a new home? This is going to depend on the cost of the new home. If the new home is over $750,000.00 then we see a majority of those home buyers having 20% down payments. Those monies are typically from a recent home sale or will be from a home we are selling for them with a concurrent close. 20% of $750,000.00 is $150,000.00. Below that amount, we see a lot of Veterans Loans when we represent our new home clients. That type of loan would carry with it a very low or no down payment. We also represent a lot of clients with FHA, Federal Housing Administration, Loans. Using an FHA loan to buy a new home that costs $600,000.00 would require a minimal down payment of 3.5% which would equal the new home buyer using an FHA loan needing $21,000.00 down payment.

    Do new homes have mello roos taxes? Yes, some do. Mello Roos are taxes that are paid on top of the normal property taxes. They pay for things like schools, streets, lighting and emergency services for the new home community. Some of the mello roos amounts are incredibly high. They also count against you when it comes to qualifying. You will qualify for less when buying a new home with mello roos than one without. Some mello roos will be paid off soon, depending on the new home builder and the age of the community. Some mello roos at new homes will continue far into the future. Some mello roos can increase in amount from time to time. That is why your negotiator is so important. They will ask these questions directly to the new home builders agent and make sure their responses are in writing for your welfare.

    Is buying a new home better than buying a used one? New is nice, as the saying goes. However, it’s going to depend on what you want and which you like better. New homes come with warranties on construction and with the manufactures warranties on the appliances and HVAC (air conditioning and heating) because they are all new. Some new home builders also offer extended warranties on their homes going out 10 years which include everything, because of their confidence in their product. However, new homes are more expensive, depending on location versus resale homes. Also, most new home communities do not appear visibly mature with regard to foliage and infrastructure. In most cases, your dollar is going to stretch further with resale homes. But, new is nice, as the saying goes. It’s a very personal decision to be certain.

    Should I buy upgrades from the new home builder? I tell my clients to limit themselves to things that cannot be added later which will continue to cause the home to increase value in the future. My example of one of these builder upgrade options would be arched interior doors. To add these later, would be very expensive. To get them from the upgrade center as an option would be worth it related to future value. Also, coffered ceilings and high ceiling layouts, if these are builder options, they will definitely earn their cost during your time spend in equity build mode. To add them later would be cost prohibitive. California Rooms – the back porches that are built as part of the home is also something that maybe cost prohibitive to add later. The builder takes advantage of the fact you can add the upgrades to your financing of the new home, so don’t overdo it! For flooring, I tell my new home buyers that can be done later, unless you are not going to be able to save the money or get financing to do it later, and will be less expensive than having the builder do it. These are thoughts and I will guide you when we get to this step of the new buying process.

    If you are in Southern California, I will show you new homes in any city you desire. I will ask the questions of the builder’s representative and negotiate hard for you. If you are out of the state of California, reach out to me and I will find you a qualified new home negotiator to be of great assistance as I would if I were your local new home resource. I have been representing our home buyers with new homes and construction since 1998. I have sold new homes in the Santa Clarita Valley, Simi Valley, Oxnard, Northridge, Studio City, Encino, Sylmar, Ventura, Lake Elsinore, San Diego, Escondido, Riverside and in most areas in-between.

    I have personally negotiated KB Homes, Shea Homes, S & S Homes, DR Horton, Pardee Homes, Lenox Homes, CrestWood, and other smaller builders.

    Connor and Paris MacIvor

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    When Paris and I first bought our home in Santa Clarita Valley, our agent steered us away from new homes. He did so because they were not paying a commission to him. Today, the new home builders know that they sell more homes by paying commissions to new home buyers negotiators(agents). I’m here for you and yours. Be safe and please when you are ready to buy a new home, new construction or visit and tour new home communities and model homes – contact me.


    Connor and Paris MacIvor

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