Write It In!

September 6, 2018

As a real estate agent your duty is to protect your client during their home buying experience at all times.  While this may seem a bit easier when your client is considering the purchase of a new construction home, beware of what may or may not already be written into a builder’s contract.  Builders often have a preprinted contract, and possibly models that show all standard builder options and upgrades. Commonly, the lender and closing attorney are already selected for new construction buyers as well.  Many buyers and agents do not realize that they can add requests or make changes to these pre-printed contracts if they would like to protect themselves further.  If the parties involved in the transaction agree to change terms, it could reflect additional protection for your client.

What questions or suggestions may arise that a buyer should consider when writing an offer?

  • Standard Features.  Require the list of standard features in writing from the Builder.  Do not make assumptions that any items are “standard” in the newly constructed home.  When walking through a model ask about features, noting what your clients desire and then making sure these standards are written into the contract before signing on the dotted line. “He said/She said” does not go very far when something is missing that the buyer expected.

  • Optional Features Available.  Write in all chosen options and add-ons as part of the contract.  Your buyer may have liked a fancy feature in the model home and assumes that it is standard.  Make sure that they are made aware of each and every option so that there is no disappointment at time of completion.

  • Expected Closing Date.  What if the home is not completed in a timely manner?  Depending on the state that the home is purchased, this may or may not already be in your contract.  Many states give the buyer the opportunity to cancel the purchase if the home is not completed in an agreed upon period of time.  Prior to making the decision to walk away from the purchase, make sure that you and your client use a current market analysis. The possibility of increased value since the time of contract ratification may be worth the wait.

  • Lender Choices.  Many builders will offer closing cost assistance “IF” you work with their lender.  Is this a deal breaker? Ask first. In many instances the builder will still contribute towards closing costs if it means they are selling a home.  Put it in writing, but make sure that you have a pre-approval letter from your buyers lender before requesting this.

  • Closing Attorney or Title Company.  This is typically one of the builders’ prerequisites that is seen in contracts.  If your buyer wants to be represented by their own attorney or title company, it may add extra fees to their closing costs.  Make sure you explain this to your buyer and request it of the builder by writing it into the contract from the beginning of your negotiation.

  • Closing Cost Assistance.  Again, take nothing for granted. Do not assume that a builder is giving assistance with these costs just because you have see other builders do it.  If it isn’t in writing, it is not a builders’ responsibility.

  • Home Warranty.  Is the builder offering a home warranty to your client?  What are the details of the home warranty? Requiring a home warranty be included in the contract not only protects you and your home buyers, but it protects the builder if a construction defect were to occur in the home into the future.  Here are things to consider when asking for the inclusion of a home warranty:

    • Which warranty company is being used?

    • Written expectations of coverage

    • Number of years of coverage and detailed list of what items are covered each year or term

    • Is it renewable?

    • Can the systems coverage be extended?

    • Is it full structural coverage or just the state implied warranty?

    • Is it VA compliant?

    • Who can the buyer call to have warranty expectations/questions answered?

    • How are claims handled if the builder doesn’t handle concerns that may occur?

These are all important questions to ask when preparing to write the offer to purchase a new construction home.  It is the responsibility of the home buyer to do their due diligence when choosing their builder, their community and their real estate agent and all prior to any talk of contracts.  Then as their agent, by making sure all of your buyers’ expectations are in writing, you are protecting all parties involved in the transaction and setting everyone up for a positive, successful sale.