By Marianne Howell Wright
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New Construction~be a detective
Protect your investment
If you are thinking about buying a lot and building a home in a new home neighborhood something to keep in mind and investigate carefully is the financial strength of the developer and the builders in the neighborhood. Especially in a down real estate market you have to be careful to protect your investment. A new home and neighborhood have wonderful possibilities but you need to be a bit of a detective.
There are some clues that things may not be going so well for the development.
For example:
When you drive in the neighborhood is the entry planted with seasonal flowers and well kept? If the entry looks tired that’s a bad sign.
Are the shoulders of the roads seeded with grass and mowed?
Take a look at the construction going on in the neighborhood. There should be evidence of recent work. If you see weeds growing in the soil around the foundations beware!
The air should be filled with the sounds of backhoes beeping, hammers, and saws.
Even a little mud on the street can be a good sign. You want to see activity.
Are the amenities completed? That’s important because if the developer goes out of business the promises made may never be kept.
Also pay attention to how the development is phased. You want like homes to be clustered together because if something should happen and the current developer and builders are replaced the new product may not be up to the quality level of those existing homes.
Find out the sales trend in the neighborhood for the past year and don’t go by the red dots on the developers map! This information is available from your buyers agent and in the public records or sometimes in the MLS.
Your buyers agent
A buyers agent familiar with new construction can be helpful in knowing the buzz about the neighborhood, developer and builder. If buyers have had issues with homes being delivered on time, a lot of sub contractor switching going on and liens being filed there is a good chance your agent will have heard.
Something I usually do is knock on the doors of neighbors or ask people out walking about what is going on in the neighborhood and if they are happy with their builder.
Read my post about why you need a buyers agent for new construction.
You may be in competition with the builder when you sell
Also keep in mind that if you need to sell before the neighborhood is built out you will be in competition with the other builders for sales. If the developer is also the builder they may have the ability to really cut prices if things get tough because they have the lot profit they can cut as well as construction costs.
Buying a home in a new neighborhood isn’t that different than buying in a resale neighborhood you just have to use your imagination a little more because you are buying a dream. You might want to take a look at my post about the advantages of buying a resale. (I’m not pushing for one or another. I LOVE new homes, I just want to give you all of the pros and cons.)
