Redmond kirkland new construction 2.19.13

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  • 1. Buying New ConstructionSlide 1 of 33
  • 2. Agenda ● Pros & Cons ● New Construction Types ● Upgrades & Changes ● Negotiating ● Process – new vs. resale ● Preferred Lenders ● Finding New Construction ● FAQ ● Q&ASlide 2 of 33
  • 3. A Little Bit About Who We Are Redfin is a real estate brokerage that has helped over 20,000 people buy or sell a home; 97% would refer us to a friend. ● Customers, not commissions ● Informed decisions ● The right home for the right price No obligation Get back a portion of our commissionSlide 3 of 33
  • 4. Pros & ConsSlide 4 of 33
  • 5. New Construction Pros ● You pick exactly what you want ● You pick the location of your home in a community ● Modern floor plans ● All major systems are new – lower maintenance ● Higher energy efficiency ● Planned community – parks, retail, harmonious architecture ● Warranty – shorter term touch ups & longer term protection ● No fixing some prior owner’s mistakes or problemsSlide 5 of 33
  • 6. New Construction Cons ● Usually the newer the house, the smaller the lot ● HOA may have lots of rules ● Lots of houses look the same ● Landscaping isn’t mature yet ● Living with construction noise ● Process can be more complicated ● Can be more expensive per square foot ● Builders may not be very negotiable ● Can take a long time ● Builder may change the homes they are building in the future – either the plans or the priceSlide 6 of 33
  • 7. New Construction TypesSlide 7 of 33
  • 8. Who is paying during building? ● Builder-financed ● Ordinary mortgage loan ● Lot and the house are a package deal ● Buyer-financed ● Construction or “Take Out” loan ● General contractors and subcontractorsSlide 8 of 33
  • 9. How far along is it? Under • City permits Construction • No changes • Most options for • Add upgrades changes and • Close quickly, like upgrades • Limited changes a resale home • Longest timeline • Pick colors • Timeline varies “Presale” Completed Home “Spec” HomeSlide 9 of 33
  • 10. Is it a Home or Condo? ● Condo ● Single Family ● PUD – “Planned Unit Development” ● Detached Condos What’s the difference? ● The way the property was developed ● Costs for financing may be differentSlide 10 of 33
  • 11. Upgrades & ChangesSlide 11 of 33
  • 12. Everything is an upgrade… If there is a model home, it will probably have a number of upgrades installed. Some upgrades are obvious: ● Upgraded flooring ● Upgraded countertops Some are not: ● Window screens ● Garage door openers ● Landscaping ● Appliances ● BlindsSlide 12 of 33
  • 13. Paying for upgrades Every builder has different rules: ● Roll it into the purchase price ● Upfront deposit ● Some upgrade deposits may be non-refundable ● May be fees for getting quotes or making changes Every builder has a deadline specific to a certain house after which changes cannot be made.Slide 13 of 33
  • 14. Specifications List Every builder should be able to provide: ● A list of what upgrades are present in the model ● A standard list of specifications ● If the lot you are considering has any upgrades pre- selected and included in the price They may or may not have: ● A list of common upgrades ● A price list or master list of options you can choose ● A cost associated with quoting custom finishes ● Limits on changes that they are willing to makeSlide 14 of 33
  • 15. NegotiatingSlide 15 of 33
  • 16. Front End vs. Back End Front End means on the purchase price: ● an offer of $540,000 on a list price of $550,000 Back End means concessions or upgrades: ● an offer of $550,000 on a list price of $550,000 ● asking for the builder to include certain upgrades or credit a certain amount towards closing costs.Slide 16 of 33
  • 17. What works best? Most builders prefer to negotiate on the back end. Why? ● Avoid setting a precedent of discounting for future sales ● Avoid upsetting prior purchasers who paid full price ● May be able to control material and labor costs The best approach varies case by case. Builders often have certain styles. An experienced agent can lay out your options and make a recommendation.Slide 17 of 33
  • 18. Negotiation Factors ● Market demand ● Phase of construction ● Willingness to use a “preferred lender” ● Number of requested upgrades ● Style varies from builder to builderSlide 18 of 33
  • 19. Process – new vs. resaleSlide 19 of 33
  • 20. Builder contracts Builders have a package of documents: ● Builder addendum ● Full builder purchase agreement ● Neighborhood description documents ● Timeline advisories ● Warranty information ● HOA documentation These are non-standard forms that will override standard purchase agreement documents and must be read carefully.Slide 20 of 33
  • 21. Common Provisions Some common clauses in builder contracts are: ● No inspection contingency – inspections are allowed and builder must fix code issues but you can’t walk away ● Builder walk through – “blue tape walk through” to create a “punch list” ● Closing delays – builder may automatically extend closing with no penalty if the process is delayed ● Repairs after closing – builder may be allowed to finish things after closing within a certain timeline ● Earnest money non-refundable – after a certain period your earnest money may go “hard”Slide 21 of 33
  • 22. Sewer Capacity Fees When a home hooks into the sewer system in King County it’s assessed. ● Paid over 15 years ● On top of regular water/sewer bills ● Builder will require you assume it ● Rate locked in at time of construction – currently $53.50 per month ● Can be assumed by the next buyer when you sellSlide 22 of 33
  • 23. Preferred Lenders & PromotionsSlide 23 of 33
  • 24. Preferred Lenders Many builders will have a special relationship with a lender. ● Ownership – may be owned by the same parent company, or may just be an institution the builder likes ● Concessions – certain “specials” may be linked to you agreeing to use the specific lender ● Rates – usually comparable, maybe not the very best deal you can find, may have longer term rate lock products ● Process – may be contractual provisions that are easier if you use the preferred lenderSlide 24 of 33
  • 25. What can you get? ● Specials – some builders may offer certain upgrades for a limited time only – like countertop upgrades for offers made before a certain date ● Allowance – some builders allow a buyer to specify a certain dollar amount in the offer that they can late specify how it will be spent ● Redfin credit – typically the rebate from Redfin must go towards your closing costs – it’s good to keep that in mind during negotiations with the builderSlide 25 of 33
  • 26. Finding new constructionSlide 26 of 33
  • 27. How to locate new listingsSlide 27 of 33
  • 28. Finding new home listings ● Builders may not list every home in a development on the MLS – your agent can inquire about other homes ● A neighborhood may become available in phases – sign up to be on a notification list ● Notice of “Proposed Land Use” sign ● Your agent photo: vintageseattle.orgSlide 28 of 33
  • 29. FAQSlide 29 of 33
  • 30. Common Questions ● Is this builder reputable? ● What does the warranty look like? ● Can I change “_______”? ● When do I have to tell them I am working with an agent? ● The agent in the builder’s model told me they are a buyer’s agent. Are they working in my interest? ● Can I get a better deal by going with the builder’s agent?Slide 30 of 33
  • 31. Questions?Slide 31 of 33
  • 32. After Class… Please fill out the survey. We will also you this slide deck. We’d love to get your feedback so we can improve. To get even more info on the home buying process, check out our home buying guide: Check out our schedule of upcoming classes at 32 of 33
  • 33. Thanks for attending!Slide 33 of 33