Thursday, June 3, 2010

Tips for Buying a New Home in New Jersey

New home construction in New Jersey communities of Mercer County and surrounding areas is finally vibrant again, and offering new home buyers good choices.  New homes are now more affordable, and builders aggressively pushing their inventories.

You need a Realtor representing you who is knowledgeable in new construction, the reputation of the local builders in Mercer, Burlington, Middlesex, and Monmouth Counties, and can help you find good financing.  That would be me ( ).  But also, make sure you consider these steps on your way to making an offer on a new home.

1.  Use your own Realtor.  The builder’s sales agents are paid to represent the builder, regardless of what they may tell you. Some might use high pressure tactics to persuade you to sign a contract. Due to the high-volume nature of brand new home sales, lots of builder’s agents are paid less than a traditional commission; some earn a salary plus incentives, so turnover is important to their livelihood.  Your own agent (me) will represent you, act as your fiduciary and disclose the positives as well as the negatives about the transaction. Builder’s agents don’t discuss drawbacks.

2.  If you have to sell to buy, use a Realtor for the sale.  If your contract contains a contingency to sell your existing home before buying, hire your own seller’s agent to list your home. Be aware that buying before selling is not always in your best interest, as hard bargaining goes out the window once you’ve emotionally left your home.

3.  Evaluate the costs and integrity of more than one lender.  Builders often prefer their own lender because the builder will be kept fully informed of your personal progress; it’s one-stop shopping for a builder. However, a builder’s lender might not offer you the best deal. This is particularly true if the builder actually owns the lending company (the case in some of the largest construction companies).  Builders will offer huge incentives to get you into your new home; sometimes up to 15% of the value of the home. However, they will often put one big stipulation on those incentives – that you use their lender.   You want to shop rates and closing costs before you commit.

4.  Do your personal homework.  Get a copy of your credit report.  Know your FICO score and any past due payments that might show.  Have this in hand before you start shopping.  Once you have decided on a lender, it is mandatory you are given a Good Faith Estimate of costs.  If the lender balks or makes excuses, go elsewhere. Reputable lenders will honor that request, even though it’s not required by law.

5.  Do homework on the builder.  This is one area where a Realtor (me) representing you (the Buyer) will be invaluable.  If a buyer has a bad experience with a builder, word spreads rapidly throughout a community. However, accurately and fairly assessing a builder’s history is always appropriate.  Check public records for lawsuits or complaints and evaluate their resolutions; this is all easily accessible now online.  I've been in New Jersey new home construction for more than 20 years, and know the reputations of all the local builders.

5.  Step back and look closely at the neighborhood.  Scrutinize the construction quality of homes surrounding the lot you've chosen. Is the builder consistently building same-sized or larger than existing properties, or are homes shrinking in size, which could reduce neighborhood value?  Does the builder limit investor purchases, or require owner occupants?  These stipulations ensure that the neighborhood won’t turn into a “rental” area, which may appear less well-maintained and reduce property value.  Often, the owner-occupant requirement could be only for an initial time frame, before they are allowed to rent.  Check the fine print.

6.  You need a home inspector even on new construction.  Most new homes come with a one year “bumper to bumper” warranty that includes everything, and many home buyers feel that they can find out if there are any construction flaws during those 12 months. The problem is that many problems won’t surface until well after the 12-month warranty has expired.  An inspection provides you with education about the property, and offers the validation of a trained, independent third party assessment of the structure and systems.  If the inspector suggests further inspection, be sure you understand if the issue is a serious problem or he/she just isn't licensed to investigate that particular phase of construction.

7.  Use an attorney.  New Jersey real estate contracts require Attorney Review.  Be sure you go over the contract with your Realtor (me) and make sure the language and contingencies protect you.  Make sure you understand your cancellation rights, your liabilities, and your commitments.

8.  Consider the environment.  Find out if the materials used by the builder contain chemicals that are hazardous to your health. If your contract contains a warning about health issues, it’s probably because it’s a valid concern and other buyers have gone to court over it.

You are probably thinking that buying a new home is a lot of hassle and could be a lot of trouble.  Just call or email me - let's talk about it.  I have the experience and local expertise to guide you through buying any new home in New Jersey.

Joe Giancarli, Sales Associate

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