https://www.youtube.com/watch?v=RRHjjZbwQlc&list=WL&index=66
So you're buying a new construction home. Today we're going to be talking about what I talk about with my clients when they're buying a new construction home. So for anyone new to the channel, I'm licensed in 48 states and when I'm talking about new construction, I'm talking about working with a builder who the builder owns the land, they're going to build the house, and then your loan's going to close. I'm not talking about construction loans.
Researching Builders: Okay, so the first thing I always tell people when they're like, "I want new construction," I'm like, "Great, the first thing you need to do is Google the builders you're looking at and the word lawsuit." Mhm, yeah, look it up. It's very interesting. I think I said in a prior video, I spend a lot of time on Reddit, probably too much, but what I'll see is someone that's showing a builder nightmare, and they're like, "Look at this, there's mold, there's this or that." Then you go on a different channel and someone's like, "Hey, has anyone ever heard about this builder?" It's the same one, and you're like, "Wow, a quick Google search literally will show you guys everything you need to see to make an educated decision."
Understanding Builder Lawsuits: Now, to be fair, the biggest builders in the country, do most of them have lawsuits? Yeah, they budget for it. They budget for the lawsuits. So if you're looking at a bigger builder, what I've seen is that it's really market by market. There may be a certain part of the country where they're really good, and that's tied into who's managing the construction, who the actual workers are, and then there's other parts of the country where it's a train wreck. And I think, once again, that goes down to who the workers are and who's managing them. As someone who's dealt with two remodels, I can tell you it is all based on who's managing them and who the workers are.
Materials and Construction Quality: Now the other thing is materials. Okay, so you want to make sure that when you're doing your research, you're going to Google the builder's name, the word lawsuit, you're going to dig in, you know, really spend some time. Most people are good at doing this, but sometimes they're like, "Well, I don't really care." You should care. You should care because some of the stuff you'll see, you'll be like, "Hell no, uh-uh, not doing it, not doing it." And I'll talk to specific real estate agents where they're like, "Yeah, I won't even show that builder." Nope, I don't want the problems down the line because they know that it's put together like crap. I hate to say that, but it's true. There's some new construction because people assume it's new, it's beautiful, it's going to be better than something someone else already has lived in. No, guys, it could be put together really, really poorly. You know, sloppy construction is a real issue across the United States, so you really want to be making sure you're paying attention.
Homeowner Feedback: So, number one, lawsuits. Number two, I would always say if the development's already in place, I would try to get on the homeowner's Facebook group. There's always a local Facebook group or something. I would be trying to get all the dirt, you know, and sometimes you'll go on there and everyone's happy and there's barbecues and you're like, "I can't wait to move here." And sometimes you'll go on there and you'll see that they're all plotting to do a construction defect lawsuit because they're having issues or they'll be saying, "Oh yeah, they haven't gotten back to me about the warranty." That's the other thing. People are like, "Oh, but it has a warranty." Guys, a warranty is only good if someone actually honors it. And when you start digging into a lot of this, like spend some time on Reddit, you'll see that sometimes certain builders try to sweat people out, and what that means is they try to push it past the timeline or they just don't respond at all. Yeah, it's like a real thing.
Importance of Home Inspections: So I think that if you're doing new construction, it can be a great experience, but I do think you need to go into it doing your research. And a lot of people buy new construction without ever doing a home inspection, which I understand why because everyone's like, "Well, it's new, it's perfect." No, it's not. It's not, guys. And that's the thing. So if I was personally buying new construction, I would have a home inspector go out there before I closed, 100%. And if they wouldn't allow a home inspector in, no way would I buy that place in a zillion years. What are they trying to hide? Why are they scared of a home inspector if everything's going to be new and perfect? They should be fine with me choosing a home inspector to look at the property, period. Make sure if you're negotiating upfront that you're saying, "Hey, I'm going to want a home inspection. I'm going to want to pick the home inspector. I want this in the contract."
Red Flags and Financing: Because I went down an Instagram rabbit hole recently. I'm on social media a lot, guys. I'm here for you, I'm researching. And this inspector was doing this whole series about a big builder that wouldn't let him on properties. And I've seen his videos, like the stuff he shows, like yeah, if I was the builder, I'd be embarrassed. But the fact that they're banning him tells me they're not looking at the videos saying, "Yeah, we should do a better job." They're saying, "Hey, you're a troublemaker. This is how we do stuff." Okay, so definitely get a home inspection. And I would say look, before that home warranty is up, get another home inspection so you know everything that's wrong so you can try to take advantage of that warranty.
Preferred Lenders and Builder Incentives: Now in terms of financing, most builders are going to have a preferred lender and they're going to be like, "Oh, if you use our lender, we're going to give you so much money." I have videos on this. Look, sometimes you get a killer deal. If you're getting a killer deal, it's usually because they can't sell the house any other way. It's that simple. You know, people are like, "Oh, but Jen, they're doing a 5% rate." Guys, they're doing that because they can't sell the house at 6 or 7, which tells you the house isn't actually worth what you're paying for it. I know that's very disappointing for people to hear, but that's the reality. 2020, 2021, 2022, when the market was hopping, builders weren't giving away below-market rates. You know, they weren't giving out $60,000 in concessions.
Builder Pricing Strategies: You have to understand that what a builder is always trying to do is they're trying to keep the list price as high as possible. The reason they want the list price as high as possible is because they have other houses they have to sell. So let's say this one's $450,000. If they sell this one for $430,000, all these other houses are now at $430,000, right? Whereas if they sell this one at $450,000 and they give you $20,000 worth of curtain upgrades, who the heck knows, right? Then when these other houses, if they can get people in at $450,000 and they don't have to give them anything or maybe they do, they have this comparable sale at $450,000. Is it really $450,000? I mean, they had to bribe you with $20,000 of stuff, so I would argue no, but that's the way comparable sales work.
Navigating Builder Offers: So I know it seems like I'm being very negative. I'm not. It's just, you know, there's so much like I'll see such a distortion of it, especially on social media. Like I'll see some of the new home sales agents and they're like, "We just do all of this because we care." And it's like, "Barbara, I saw you two years ago. Like, people were coming to try to buy a house and you slammed the door in their face because you had too many buyers. Like, this isn't your vibe, girl. Like, I'm not buying it." So as a buyer, you just want to know what you're getting into. Like, you don't want to end up in some mold nightmare where they don't honor the warranty, they won't let your home inspector come. You know, Barbara said she's going to give you $20,000 towards all these different things, but now you just found out it's for a shower curtain that Barbara picked up at Walmart on her way to work. So you really want to be proactive with all of this.
Consulting on Builder Loans: So, you know, the builder lender, we're always happy to look at their loan estimates for you guys and tell you, like, "Yeah, that's great," or "Yeah, you can do better." You know, there is a lot of gamesmanship with them. So look, I am here to help you guys. That is the stuff that I would suggest over what I've seen the last few years. Do I close, meaning do I do loans on a lot of new home construction? Absolutely, yes, I do. But I'm also making sure that my buyers have their eyes wide open because the last thing I ever want is someone to get into a house and be miserable. I've done that. You know, I've bought that property that was a disaster. It's horrible.
Conclusion: So I hope this video has been helpful. Do some of that research, and if it all comes back good, you can be confident in what you're buying. And if it doesn't, well, you may have saved yourself a headache. Thanks for watching.
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