This is an old blog that I am reposting with some updates. With the decline in the housing markets, I felt it prudent to add to the list of items to watch for...
Building a home can be a great experience...or a nightmare. As a local real estate agent I often see the long term effects of decisions made by people choosing to build a home. My past also includes 10 years as a new home sales consultant with both local and national builders. With this experience many of my clients build new homes with great success. With that in mind here are a few tips to help you should you decide to build:
Have Representation: Hire an agent to represent you during the building process who has experience with builders. I know what you're thinking, of course I'll say that as an agent. However with 10 years experience I can tell you that the majority of poor decisions were made by people without representation. The easiest way to say it is that you don't know what you don't know. Also a good agent can help you save money through better choices and stronger negotiation positions.
Don't Overbuild: Do your research and be careful not to build a home that you can't resell. Before you build, make sure you know what style of homes, what upgrades, and what price ranges are typical in the area you've chosen. When you know this information make sure the home you're building fits in to this niche. Again your local real estate expert can do the legwork for you.
Prioritze your Choices: When it is time to decide what to put into your house, prioritze your list of selections. Make sure you select the items that cannot be done at a latter time first. For example a garden or deluxe bath often changes the basic structure of the floorplan and cannot be done later, so this selection becomes much more important than flooring that can be done at a later date. Also make sure you can live with your last minute cuts...I've seen too many people cut out the "full basement upgrade" at the very last minute only to regret it later. That extra square feet is often the storage you need when your family grows or the place for that full bathroom and wouldn't cost much up front.
Choose Location Wisely: Location, location, location. Where you build your home matters. The area of town, the neighborhood, the homesite you choose all make a huge difference. The right homesite will allow you to enjoy your home, and will also benefit you by allowing you to sell your home for more money later. Pay particular attention to the school districts in your area. Better school systems almost always correlate to better resale.
Know Community Performance: Before you build in a community you need to consider resale. One thing to look for is how long it will take for the community to be completed by the builder(s). Have your agent research how long they have been selling in the particular community, and how many lots are still available to sell. Pay particular attention to the last year. How many homes are selling in that community now? An easy way to check is to look at the number of homes currently under construction. Remember that if you need to sell before the community is complete, you will be competing directly with the builder. This can cost you some of your equity.
Check Builder's Financial Position: With the downturn in the housing market, it is critical to know whether the builder you choose is financially sound. Check with the Better Business Bureau, Angies List, local Builders Associations, stocks if the builder is nationally traded, etc. Other possible resources are the local contractors. They usually know which builders are paying their contractors. Remember, you are depositing your hard earned money with the builder assuming they will build your home. There are great financially secure builders out there. However, we have had 3 major builders go bankrupt this past 2 years in the Indianapolis Area. Most of the people who had hired these builders lost their down payments with little or no recourse.
Financing: Get approved before you go to a builder. The approval will definitely help your negotiating position as well as help you know and understand your options. Builders will often pay your closing costs if you choose their lender but the rates are often much higher. Plus you may be giving up some of your much needed seperation.
Have Proper Expectations: No home is perfect. If you choose to build you need to understand that mistakes will be made and there will be some material defects. Good builders understand this and have systems in place to address and correct these issues as they arise. Everything in a home can be fixed if addressed in a timely fashion. We would be happy to recomend you to a great builder with these systems in place.
Buying from a builder and building a home can be a great experience. Hiring an experienced agent can provide you with needed representation, helps make the building process more smooth and predictable, and can save you money in both the short and long term. If you're considering building a home in the Indianapolis area, contact the Matt Borushko Team and put our experience to work for you!