One of the biggest mistakes new home buyers make is assuming everything in their home will work perfectly because it’s brand new.
The company has offices across New York and South Florida, says Diane Saatchi, senior vice president at real estate firm The Corcoran Group’s East Hampton, N.Y..
“Problems happen all the time,” she says, “even though all the items on the builder’s breakout list (the list of all the things a builder must complete before closing) have been resolved. before closing.”
However, new problems weren’t on the problem-solving list, and new homebuyers ended their relationships with builders, a big mistake that frustrated homeowners now regret. . For example, the owner discovered that the house’s hot water tank was insufficient and could not provide enough hot water for three people to bathe at the same time. Or the circuit breaker tripped when too many devices were used at the same time because the manufacturer was too cheap in wiring. And that’s just the tip of the dialect iceberg, says Saatchi.
Solution? Formulate a clause in the contract to correct unspecified issues.
New homebuyers should prepare for all contingencies by having their attorney include a clause in their contract that states that unspecified matters arising after closing must be resolved. decide. “Standard new-build warranties or insurance policies rarely cover these issues,” warns Saatchi.
And even if issues are resolved, never end a relationship with a builder, advises Saatchi. “Always maintain a good relationship because it is unpredictable what problems will suddenly arise years after buying a home.”
“Money pit” in real life
Unfortunately, new homebuyers don’t get to live in their home before buying. Practically speaking, they don’t invest the time to do their homework, seek professional advice, or hire an attorney who specializes in real estate law. They blindly trust fate and assume that the builders they work with are ethical and adhere to construction best practices.
Patrick Conlee, an independent pharmacist, prides himself on making a wise investment. But he admits he made every mistake in the book when he bought his new home in Albany, N.Y., a suburb of North Greenbush in 1995.
Conlee, 43, was convinced she’d hit the deal of the century when she found a one-piece timber-framed house beautifully set on a half-acre site. The house has five rooms, a large basement, a two-car garage and a concrete floor above the garage.
Conlee’s father, a bricklayer, warned him that the house needed work, but his son didn’t heed the veteran craftsman’s good advice. All Conlee saw was a bargain $79,000. He’s forgotten the time-tested adage “You get what you pay for”.
“I knew I had to put money into the house, but I reasoned that in the long run it would be worth it because I just wanted to increase the value of the house,” he said.
He was right about that amount, but he didn’t know the level of work required and the dollar signs in front of it. He soon found out. More than 13 years later, he’s still pouring money into the house.
The first big mistake Conlee made was not hiring an inspector to inspect the house. For a very reasonable $200, he will know that his house needs thousands of dollars in work.
Conlee’s first major job was to upgrade the house’s electrical system. “The house is not wired enough,” he said. In fact, all 30 stores of the house, excluding the basement, had to be replaced.
The tab: $5,000.
Then there’s the roof. Conlee giggled, “I never bothered to climb up on the roof and check it out. It’s fine from the ground, so I don’t think it’s a problem.”
The builder cut corners expertly throughout the construction. When it came to the roof, he used cheap roofing and didn’t build in the vents and gutters, which are essential for moving water and allowing the roof to expand and contract in response to the weather. humidity, heat and humidity. When it rains or snows, water flows indiscriminately everywhere – outside pouring down on all sides and inside at selected favorite locations like the bedroom, right above Conlee’s double bed and the dining room, right in the middle Antique dining table is brought out. to him by his grandmother.
Cost of a new home: $10,000.
And there are also major problems with the deck. In keeping with the builder’s track record of ice skating work, the deck has no angles to let water or snow flow into strategically located gutters. So Conlee was faced with huge puddles of water when it rained or large mounds of snow in the winter, which opened up more leaks.
The deck has been repaired once, but Conlee says it still needs work and, well, he doesn’t want to talk about it – especially the price – as the subject pushes his blood pressure to abnormal levels. .
So how does this once-calm, easygoing professional deal with the continued anger and frustration of new home ownership? “To say I am angry is an understatement,” he said. “But the rage got me nowhere. And it’s definitely not good for my health. ”
What saved Conlee was a sense of humour. “At first, I felt like a real idiot who should have known better,” he said. “And constantly hearing my dad say, ‘I warned you,’ doesn’t do me any good either. But then I gave up on myself to deal with the situation and try to get through it all.”
Conlee likened the first eight months of living in the house to scenes from the hilarious 1986 film “Money Pit,” starring Tom Hanks and Shelley Long. “Talking about identity,” Conlee laughed. When he recalled scenes from the movie, he said, “every time a craftsman told me a job would take two weeks, I added three more weeks.”
Will Conlee do it all again? “Yes,” he said, “but I would do it differently. I’m doing my homework and before I sign the dotted line, I’ll have an inspector come to the house with a grooming comb. Then I would have a contract that makes the builder responsible and responsible for all repairs whenever they do. And that’s for the beginners. ”
While he may joke about his “Money Pit” purchase, this Albany pharmacist admits he’s “wrong.” “Over all, I have a home that is worth significantly more than I paid for it.”
However, Conlee admits that he paid a heavy price to get there.
Six mistakes new house you should avoid
“New buyers should do their homework and learn as much as possible about the buying process,” advises Sid Davis, president of Sid Davis and Associates, a real estate brokerage firm in Farmington, Utah. Here are the top six mistakes home buyers often make, along with Davis’ tips for avoiding them.
Commit the property before getting pre-approval from the lender. So many people go home hunting and fall in love with a new model home without knowing what mortgage they have. “They found themselves at the whim of a salesman for a construction company who promised to provide financing,” says Davis. “This has been an ongoing problem for the past half-decade. Many homebuyers accept toxic mortgages, which means they’re all wrong for the buyer. ”
According to Davis, when buyers let their emotions get better, they often make serious mistakes. Model homes are dangerous because they attract potential buyers, he said. “The rooms are beautifully decorated and look perfect,” he said. The sentiment is obvious, warns this real estate veteran. “They are meticulously laid out and furnished to make all the right buttons for potential new homebuyers.”
So naive buyers agree to buy the home without knowing what monthly payments they can afford. As a result, they often make bad deals and get more than they can afford.
The first thing a new home buyer should do is find the right mortgage lender (be it a bank, builder/developer, or credit union) before committing to buying a property. Talk to at least three lenders. Find someone with excellent credentials and, most importantly, financially viable programs.
No honest estimates are available. Buyers know they’re getting the best financing when they struggle to get an honest estimate, as required by the federal government’s Truth in Lending Act. Simply put, the law requires mortgage lenders to provide buyers with reasonable estimates within three days of presentation of the loan. The document breaks the loan down into its component costs. Most importantly, the buyer’s annual percentage rate, or APR, is clearly stated at the end of the contract.
Here’s how loans compare. “The APR tells new homebuyers exactly how much a loan will cost, including closing fees,” says Davis. “They can shop on the market and compare interest rates from different lenders. It’s the key, telling lenders which are the best loans.”
For example, if new homebuyers visit three different lenders and receive three authentic estimates, they’ll compare each APR and choose the cheapest, Davis said. Better yet, it also provides buyers with bargaining leverage – such as the right to ask lenders to cut closing costs.
Reluctance to negotiate terms. Surprisingly, most new homebuyers are non-negotiable, says Davis. Reason? “They stress about confrontation or disagreement.” But the negotiations are not necessarily hostile. After all, buyers are negotiating the most important purchase of their lives. “If done professionally and fairly, negotiations are always beneficial to the buyer,” Davis adds. “And lenders and builders expect buyers to negotiate. It’s all part of the game. ”
With an official line of credit (honest estimate), new homebuyers can step into new business developments knowing exactly what they can afford to spend, says Davis. “They must be happy to know that they have squared the numbers. Now, salespeople can say that if a buyer uses their lender, they will offer the buyer from 2,500. $5,000 to $5,000 to upgrade.” Davis advises this is a very common tactic and should be taken seriously. “If buyers feel it’s a good deal, they should ask for an authentic estimate and then compare it with the estimates they’ve received. Buyers can now say, “If you match this good faith estimate, I’ll go with your company,” he says.
By wielding power, new homebuyers can skillfully negotiate and get the best new home deal they can afford. “Buyers can walk away with not only the best price, but thousands of dollars in upgrades,” says Davis. “Now the buyer is no longer a victim; they are setting the rules. ”
Don’t ask your neighbors about a builder’s reputation. Before new homebuyers sign the dash, they should talk to a few of their potential neighbors to get their opinions on the builders involved. Ask important questions like: Do they have a problem? If so, what are they? How long did it take the builder to get the breakout list? If builders are slow to solve problems or have a bad reputation, it’s time to find out, says Davis.
New home should not be inspected by an independent professional. “This one really raises eyebrows, because major design flaws are often discovered,” says Davis. Amazingly, most new home buyers don’t bother to have their home inspected. “They mistakenly thought that because it was new, it was perfect,” he said. He advises new home buyers to bring their own tester. It only costs about $300 on average and is worth every penny. ”
“Inspectors find the problem 50 percent of the time,” says Davis. Home inspectors are easy to find. Visit the National Association of Home Inspectors website to find an inspector near you.
Skip asking for a “punch list” before closing. The punch list is a list of problems that must be fixed. Good, trusted builders do this automatically. But don’t assume it will be done, Davis said. Some items on the list are easy to fix, such as nails or screws in drywall. However, some are not so simple. The builder red flags them and then asks the workers to fix each one. After they were fixed, Davis said another punch list instruction was needed to ensure that all punched list entries were fixed. Warning: Many builders will pressure buyers to close before breakout listings are processed so they can move on to their next work. Davis advises: “Never close the door before the house is finished.