Sunday May 3, 2009
When purchasing a new home, prospective buyers are very adept in educating themselves on the quality of the construction and the overall reputation of the builder. In today’s changing economy, it is most important to further that search beyond the branding, and to scratch below the surface to make sure the builder will get the buyer to settlement, and most of all through the warranty period of the new home.
There are a few simple steps that can be taken prior to depositing on a new home:
- Make sure the deposit money will be placed in a 3rd party escrow account set up in the buyer’s name.
- Stop some of the subcontractors working on the site, and ask if the builder is paying the invoices on time.
- Ask the builder for a list of their contractors or jot down the names and phone numbers on the trucks, such as the frame supplier, plumber, electrician, roofer and siding contractors, kitchen suppliers, flooring, etc. Call the contractors and suppliers to ask if the builder is current on payment.
- Place a title search to insure there are no mechanics liens. If the builder has sites in other locations, those sites should be searched, too.
- Find out which bank has the construction loans, and make sure the builder is current on construction loans.
- Observe the site construction – check to see if there are houses under construction that have stopped moving forward in construction. For example, if a house is stopped at drywall and flooring, the kitchen cabinet supplier may be waiting for a payment before delivering the next set of cabinets. This could hold up a buyer’s settlement.
- If there is a Homeowner’s Association make sure the upfront reserve money is held in a 3rd party escrow account.
- Investigate how much staff the builder has on site to build the house, and finalize the post-settlement warranty list.
- Don’t hesitate to knock on doors, or stop by the site when school buses are due to arrive and chat with the parents at the bus stop. Find out how responsive the builder was to their punch list and warranty items.
Buyer’s agents and prospective buyers typically focus on getting the “best deal”. Lately, they are unknowingly pitting a financially stable builder with minimal concessions against a builder who is financially unstable and offering excessive discounts to get the sale to try to stay afloat. That puts the buyer through an unfair and unnecessary negotiation where the emphasis is on the concession, and not the long term value of the new home, the builder, and the fulfillment of the warranty.
Purchasing a new home is very exciting for prospective buyers. By doing a little homework and using this simple checklist, buyers will insure that they will get to settlement on time in a new home in a neighborhood that will be built out, dedicated and a great place to call home. It’s time to start focusing on the long term value, for the “best deal” or “biggest concession” may not get to the settlement table.
Sal Lapio Homes prides itself on the financial stability of the company, and the ability to deliver quality built homes on time, and the staffing and future to fulfill the warranty on the homes.