4 Tips for Buying Smart With New Construction

For buyers who want new construction, be sure to educate them about some differences in buying "old" versus "new."

Bankrate.com offers some of the following tips for smart strategies when buying new construction:

1. Choose to escrow if not all changes are completed by closing. If the builder isn’t going to be done with all of the changes by the time of closing, “it’s probably a really good idea to escrow some money,” Ron Phipps, immediate past president of the National Association of REALTORS®, told Bankrate.com. Then builders will have more incentive to complete the work.

2. Try to get custom features added. The builder may be willing to swap out a few things before you move in, says Stephen Melman, director of economic services for the National Association of Home Builders. This is easier to do in a new home because the building materials are already on site, unlike in a previously owned home where you have to negotiate any alterations with the seller.

3. Research additional financing options. Buyers of new homes may have more financing options available since many builders usually work with a bank. Buyers aren’t required to go with the builder’s lender, but they can use it as a point of comparison to what other lenders are offering in shopping around for a best rate.

4. You can still negotiate. While previously owned homes offer plenty of deals nowadays and most likely more square footage for less money, builders are also more willing to negotiate with buyers on new homes. "There is such price pressure on the builder," Melman says. "Prices haven't been this low in years” on new construction. And even though you may be able to get a better deal on a previously owned home, Phipps says some buyers still may be drawn to new construction, despite the higher price tag: “You're starting fresh, its economic life is longer, you get to personalize it, and you don't have to undo what that other person thought was important."

Source: “6 Tips for Buying a Newly Constructed Home,” Bankrate.com (Feb. 8, 2012)