More on new construction
My entry about “buyer agents” who were getting incentives from builders led to a conversation about new construction. I am with LL when she wrote “New construction? That exists around here?”
I have worked with new construction a few times, but my bailiwick is old houses. Because of this, I don’t have a comprehensive outline on all the things that I check up on. (When I am working with new buildings, I dig out the hard copy of the coursework and get to it.) I frequently house-hunt for new construction and find that the buyers choose already built. I am more likely to see a new construction on its first resale, about five years later.
Therefore, I wrote to my network at MABA and found out that Jane Becker in Holden has an outline of the process on her web page. There are a few agents who were builders before entering real estate sales like Ron Berquist in Shrewsbury. He likes the National Association of Home Builders site.
A few things that I have learned about new construction from my limited experience:
1. New is not 100% trouble-free. Houses settle early in life. New homes are made of younger wood, which is not as rot resistant as the old stuff. Make sure that your builder is well established and you can find him/her to honor the builders warrantee.
2. New is not expense-free. You will spend money “nesting” even if you have everything done, even custom painting.
3. New is more energy efficient.
4. New is new. Lots of people like it. Around here, they pay for it.
5. Land is scarce here. Therefore, builders work to get every penny out of the land they buy. If the town will allow townhouses, and townhouses will yield more profit, then that's what you'll see. Otherwise, you'll see the biggest house that could sell in that spot.
6. Because land is rare, buyers looking at new construction close to the city get a tour of railroad tracks, busy streets, and rocky ledges. That's why they give up, in my experience.
Barry Nystedt in Newton had these guidelines:
1. Deal only with a reputable builder.
2. Do not assume you cannot negotiate the asking price.
3. Make sure you have time to be on hand and can follow-up with every stage of the process – visit the site regularly and verify the progress.
4. Hire a home inspector that has a comprehensive program for new construction inspections.
5. Involve the home inspector early and often including review of the plans and appropriately timed site visits at critical stages.
6. Document the plans and specifications in the Purchase & Sale agreement.
7. Negotiate, manage, and document all details involving any change orders during construction.
8. Don’t forget the landscaping.
9. Don’t hand over any money’s to the contractor until closing or any after closing escrows until construction is fully complete and you are satisfied.
10. Consult Home Buyer’s Workbook for New Construction by Marion Zygadio.
I am not the new construction guru. However, two former builders who are experienced buyer's agents will answer your specific questions. Write me, and I will send your questions out to them.
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one thing to add...
Expect to extend your closing date. Construction is rarely completed on time.
Good post. Just wanted to note one thing:
3. New is more energy efficient.
That applies to new homes, which is what you're talking about, but, surprisingly, not new windows used as replacements in old houses. Old windows, made of old wood, properly maintained with correct storm windows, are just as efficient as new windows, and last longer. The supposed energy savings have a much longer payback period than the vinyl guy is likely to tell you.
With new construction, ask if a paved driveway is included.. often times the paved drive is not included in the price.
I noticed a new construction development that straddles the Lancaster/Sterling line called Runaway Brook. Don't know what the price ranges are but some of the lots are very nice.
Purchasing a home in a new development that includes more than one town may raise additional questions that affect your family. Here’s a few:
1. Is one town more desirable than the other and if so, why?
2. Does the new development benefit one town over the other and if so, why?
3. Which schools are available to children?
4. Is your new home only accessible through another town’s street?
5. Could some of your land be located in the other town?
6. Are the towns property taxes similar?
Land is not actually scarce in Mass, each town sets up its own arcane rules around conservation land set asides, wetland sanctuaries, etc. These zoning rules are not actually tied to any real ecology purpose but tied to "preserving the rural character of the town". They try to minimize the work a town would need to do to actually build new schools or hire more fireman, police. The basic philosophy is that stagnation is easier to manage than growth.
The result of this is that these towns grow greyer year by year as kids who grow up leave the state or young grads choose that living in old outdated housing is not worth the high asking prices (still stuck in bubble pricing , down about 6% from the peak after a run up of 150% from average).
This practice of limiting development is bascially slamming the door in the face of young married couples who want to raise kids in a good neighborhood. It is mean spirited and bad for our state as a whole.
Some things I've encountered as a buyer agent dealing with new construction:
- buyers don't really understand builder's allowances and always want appliances, countertops, etc that will raise the price over the agreed amount, and overages are often paid separately
- there are always delays, so be prepared for a delayed closing
- it is very difficult to make (big) changes while construction is underway (like moving a planned 1st floor laundry to the 2nd floor), and any changes that are made will come with an increased cost in dollars and time.
- be very clear what landscaping is included
- if you have an oversized vehicle, measure the garage and driveway -don't assume it will fit easily
- get a copy of the neighborhood covenants (if applicable), and read them carefully. Ask your attorney about anything you don't understand because this will be on your deed.
- DOCUMENT AND KEEP A COPY OF ALL CORRESPONDENCE WITH DATE AND TIME STAMPS (email works well, so follow up all phone calls with an email that verifies the conversation)
- bring patience to the transaction
I went to an open house for new house this weekend down here is Annapolis. The builder tore down a house and put up 2 in its place. The houses looked great but I for 1.4 Million it should be. My question is why don’t more builders try to do this? If he just paid 680,000 for the house that's huge profit even if you don't use illegal workers.
I have seen new constructions selling as rentals. Its bad for builders they should use a flat fee mls like http://www.mlsflatfeefsbo.com so that they can try and save some overhead. There are a bunch right here in Boston.
Older homes, up to late 1970s, were made with old growth wood, usually from 100-200 year old trees. Todays home's are built mostly with sapwood, which is from 30-60 year old trees. It is lighter in color, and half as dense (about half the weight per 2x4). If you ever saw a cross section of a tree that is cut down, the outer rings are lighter in color and that is the sapwood. The darker wood near the core is the old growth; it takes many decades for the old sapwood to die off and become more dense.
Ants love new lumber. It is a real hassle to tunnel through the old growth stuff unless its water saturated. When rennovating my 1970s ranch in Framingham, I found not one single stud in the entire home with ant damage except a tiny little piece that was near an upstairs shower, where that shower was leaking. Thats how far they were willing to travel to find softer wood, and proof positive that they avoid the old growth stuff. Wwith a new home, its easy nesting. If you have a new/newer home... and this isnt just in New England... be prepared to spend a lot more on insect control.
Expect delays and usually developers will not pay any concessions to the buyers (storage fees, housing etc). Also if the developers do not allow holdbacks for unfisihed items at closing make sure the buyers understand! Very imp.
Buyer Brokers only inflate the New COnstruction Market, BUYERS should "BUY DIRECT".
This blogger might want to review your comment before posting it.
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