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Home builder

It’s not unusual for buyers to want new construction.  Many don’t want to inherit someone else’s carpeting, appliances or handprints in the concrete driveway.  A brand new home is fresh, clean and under warranty.  If that describes you, be sure to read all 6 of our Buying From Builders Tips.

TIP #1     Hire Your Own Agent
Most builders allow you to hire your own Realtor, but you must hire your agent before you begin working with the builder.  It is very important that your Realtor accompany you when you visit the new home sales office.  If you visit the sales office alone the builder may consider you unrepresented and refuse to pay your agent.  It is always best for your agent to introduce you to the builder.

  • Don’t forget who the builders sales agent represents. As an employee of the builder, regardless of what they tell you, they are responsible to represent the interests of their employer, not you.  At times they may use high pressure sales tactics to convince you to sign.  It is easy to succumb to the pressure and fall prey to their sense of urgency, real or imagined.  The builder’s agents are generally on a salary with incentives to sell houses; they only get paid when you sign on the dotted line.
  • Having a Realtor that knows the market and is familiar with the entire new home inventory that meets your needs is essential. The builder’s rep won’t tell you that there is another community down the street with similar homes or with better pricing, your Realtor will.  Your Realtor works for you
  • You Realtor has a fiduciary duty to represent you. They are required to disclose the positives and negatives about the transactions.  The builders representatives do not have the same obligation.
  • If your new home contract is contingent on selling your existing home, hire your own agent to list the house. It is in your best interest to clearly understand the value of the home you are selling before you decide to purchase.  It is also very wise to sell your existing home before you buy.                                       

TIP #2     Don’t Automatically Use the Builder’s Lender

  • Builders’ like to be fully informed of all aspects of the sale, from construction to the buyers lending so using the builder’s lender allows the builder to be fully informed. However, the terms of the builder’s lender may not be the best terms for you.
  • Shop for your lender. You may find that most lenders offer you similar terms however, similarity in terms may be the only thing that they have in common.  You need to be able to trust your lender and be comfortable working with them on your home purchase.  Procuring a home loan can be an arduous task and having a great relationship with your loan officer is essential.
  • Ask your Realtor to recommend several lenders that they have worked with and found to be exceptional.
  • Be proactive in the purchase process and obtain your own credit report before you start shopping. You can obtain a free credit report from
  • Don’t sign a purchase contract without first seeing a Good Faith Estimate (GFE) from the lender. It is required by law that the lender provides you with this documentation.  The GFE lists basic information about the terms of the mortgage loan that you have applied for.

TIP #3     Obtain Legal Advice Before Buying a New Home

  • The majority of builders require that you use the purchase contracts created by their attorney. As a result builder contracts offer the builders protection but don’t necessarily contain language that protects you, the buyer.
  • Ask lots of questions. Be sure that you understand contractual contingencies and your right to cancel the contract.  It is very difficult to get out of a builder contract and have your deposit returned to you.  Make certain that you fully understand your options and all terms discussed are included in the contract.  In a court of law, if it’s not in the contract, it doesn’t exist.

TIP #4     Verify Option and Upgrade Pricing

  • Options and upgrades hold a high profit margin for the builder. Make sure you understand what is standard and what upgrades in the home you are purchasing are.   Some builder pricing includes a significant amount of upgrades while others sell “bare bones”. Builders using the “bare bones” approach know that the typical buyer will add lots of upgrades which increases their profitability.
  • Find out if your lender will lend on all the upgrades/options you have chosen. If not, you may be required to pay for your upgrades and options in cash.
  • Make sure that you make all selections within the timetable dictated by the builder. Some builders may make selections for you if you fail to submit your requests when required.
  • Think before you upgrade. In some cases it may be less expensive for you to make upgrades after your close then at builder prices.

TIP #5     Check out the Builder

  • Bad news travels fast so a bad experiences with a builder are pretty easy to discover.
  • Consider walking the community and asking prospective neighbors about their experience with the builder.
  • Check public records online to determine if there have been or are lawsuits pending against the builder.
  • Find out if the builder sells to investors. Some builders require that the buyer occupy the property while others will sell multiple homes to investors at a lower margin.  Typically tenants do not maintain properties in the same way that homeowners do so knowing if your neighbors are likely to be owners or tenants may be important.

TIP #6     Hire a Home Inspector

  • ALWAYS, always, always have your home inspected before closing. Hire an inspector licensed by the Texas Real Estate Commission to perform the inspection.  The inspector has a list of required items that they are required to examine and will provide you will a comprehensive written report of their findings that includes pictures of all deficiencies.  Unfortunately, mistakes happen during construction and the time to identify the defiencies is before closing, when you still have leverage.
  • Have repairs completed before closing.  Builders will have contractors return for touch up and small things that may have been missed after closing.  However, it is never wise to close without having all structural, mechanical, electrical and plumbing concerns resolved before paying in full.

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