PURCHASING A NEW HOME

 THE PROCESS

As the new home buyer, you will be involved in each phase of the new home purchasing process to varying degrees. Typically the stages in the process are as follows:

 1. PRINT THE CASH BONUS COUPON

• The first step in the new home buying process is to print a Cash Bonus Coupon from the Just New Homes website for each community you plan to visit BEFORE you have any contact with the new home builder. The source of the 1% credit toward your closing costs comes from the commission we receive from the builder so we have to document that we were the initial source you went to in order to find your new home AND we have to properly register you with the builder prior to your first visit to each community, or before the builder has any record of contact from you, including any phone or internet communication from their website.
   

•  By printing the Cash Bonus Coupon, you authorize Just New Homes to be your real estate agent which entitles us to earn a commission from the builder if we register you properly at a community.
   

• All fees are paid by the new home builder…nothing from you!

2. VISIT THE COMMUNITY

• The model homes are open to the general public on the days and hours indicated on the Just New Homes website so it is not necessary to make an appointment unless it is so indicated for that new home community.
   

• When you print the Cash Bonus Coupon we automatically send a fax to the community registering you as a Just New Homes client.
   

• When you go to the community, take the Registration Certificate part of the Coupon with you. There you can see all renderings of the various models with floor plans and elevations that the builder is constructing at that new home community. They will also have a plot plan for the community indicating which lots are still available for sale. A sales representative is available to answer any questions you may have about the houses such as pricing, features, the school system, the surrounding area or any other questions you may want to ask.
   

• After you tour the model homes at your leisure, go back to the sales office which is usually located at the first model you went to, and give the coupon to the sales representative.
   

• Tell them that you are being represented by Just New Homes as your Realtor.
   

• They may ask you to sign a Guest Registration or Marketing Survey Form while you are there. It is VERY IMPORTANT to put in Just New Homes on that form where they ask: “How did you hear about the community?”…if there is a box for “Realtor,” check that box and fill in Just New Homes.
   

• This completes the process of properly registering you at that community.

3. PUT DOWN A DEPOSIT

• If you like what you see at the community and think you may want to buy a new home there; you can usually put down a small deposit to hold the lot you select. Generally the builder will hold a lot for you for a short time (10 – 20 days) while you gather funds to make a down payment. Each builder has their own policy on the amount and time for the lot hold deposit.
   

• During this time period, you may ask the sales representative to fax a copy of their blank agreement of sale to Just New Homes so we can review it for you. As your real estate agent, we represent your interests in the transaction so we want to make sure it is a standard builder’s contract. We will send you an email with our comments on the contract after we review it…usually within 24 hours.

 4. SIGN AN AGREEMENT TO PURCHASE

•  At the expiration of the lot hold time frame, you will go back to the builder’s sales office and sign a contract to purchase your new home.
   

  • The purchase and sale agreement and the addenda comprise the legal contract between the builder and you regarding your new home. The buyers and the sellers must sign and/or initial all forms and attachments for the purchase and sale agreement to become binding.
     

  • A copy of the standard features and specifications for your home are included in your contract as well as the obligations of both the buyer and seller.
     

• When you sign your contract, you should receive a copy of any deed restrictions on your property. These restrictions exist to protect you and preserve the integrity of your home and community. In addition, some communities have homeowners' associations, which will have their own set of covenants, restrictions and by-laws. You must be given copies of these documents by law.
   

• At this time you are expected to put down a substantial deposit to show good faith on your impending purchase. Depending on the builder’s policy, the amount of the deposit could be as much as 5% - 20%, but the builder may have special provisions for a low down payment…ask the sales representative at the time you put down your lot deposit what their requirements for a down payment deposit will be.

 5. MORTGAGES

• Your contract will generally include two very important provisions for getting a mortgage:

• You will have a short time frame (usually 7 – 10 days) in which to go out and make an application for a mortgage. The builder wants to move the process along so they don’t want you to sit around and not look for financing. You should attempt to obtain the funds to complete the purchase as quickly as possible.

• The second time period in the contract is to actually obtain a mortgage commitment from a lending institution (usually 30 – 60 days). If you are unable to obtain a commitment, the builder may have a provision in the purchase agreement to get one for you, but the terms for this are spelled out in your contract so pay particular attention before you sign as you will be bound by those mortgage terms.

• If you already have a lender with a pre-approval letter, or have a preferred mortgage lender, you've eliminated the first step in the process, but you will still have to actually secure a mortgage commitment in order to satisfy the second step.

 6. MAKING YOUR SELECTIONS

• At the time you sign your contract, you will make an appointment to come back in a few weeks and select the customizing details for your new home, including colors, flooring, light fixtures, and cable, phone and light fixture locations. To keep your home on schedule, you must make these selections before construction begins.
   

• Be aware, however, that these upgrades and extras will increase the final sales price of your home, sometimes as much as 10% - 15%. The cost for any structural changes will be proportionally higher because they disrupt the flow of builder’s production cycle and have to be factored in separately. Some builders will ask for additional deposits at this time…ask what their policy is when you schedule your contract signing appointment…don’t be surprised later!
   

• Ideally, you will make all your selections before construction begins, but that's not always the case. As your home starts to take form, you may decide to make a change to the design. The builder will be happy to make the changes you would like, but all requests must follow a change order procedure. Generally the builder requires 100 percent of the price of the change to be paid upon signing the change order. Change orders are the source of numerous disagreements and problems in new home projects around the country so the builder wants to be assured that they are not caught with a change to the home that they may be stuck with in case the deal does not close for any reason. Change orders are incorporated into your agreement as an Addendum to the contract.

 7. CONSTRUCTION SCHEDULE

• When you obtain your mortgage commitment, the builder will put the building of your new home on their construction schedule. One of the factors that may delay the start of construction is obtaining the building permit from the local city or township offices. It all depends on the attitude of the local officials…some are builder friendly, some are not!
   

• During the planning and construction of your new home, regulatory officials will review and inspect your home. These inspections ensure that your home meets or exceeds all local building regulations and industry standards. Being government officials, the inspectors do not adhere to the home builder’s construction schedule. They try to time their inspections according to the builder’s schedules, but it doesn't always work out, so inspections may cause delays during construction.
   

• While the builder will make every effort to adhere to the initial construction schedule, they may encounter delays during construction. After all, to build your home, they contract with more than 70 craftsmen who assemble several thousand pieces, in the outdoors, over the course of several months.
   

• Delays tend to accumulate. If one subcontractor can't complete their job on time, the next subcontractors have to rearrange their schedules to accommodate the delay. This may result in your home sitting "quiet" for several days. The builder hasn't forgotten your home. They are just as determined as you are to finish your home on schedule. Here is a short list of some common construction delays:

  • Weather
     

  • Subcontractor delays
     

  • Materials supply
     

  • Inspections
     

• From time to time, the builder may substitute materials or construction methods used in your home. Any substitutions they make will be of equal or better quality than the specified material or method. Builders always reserve the right to make these substitutions because the material may not be available when they are ready to put it into the home.
   

• Overall, the time from contract signing to settlement could be as much as 6 months or longer depending on the builder’s construction schedule.

8. SITE VISITS

• You should understand that a construction site is a dangerous place. At any time there may be open holes, loose boards, stray nails, etc. Whenever you visit the site, please take every precaution when walking around. Your safety is of utmost importance.
   

  • For your safety, builders do not allow home buyers to visit construction sites without one of their representatives along. If you are on the site without one of their representatives and are involved in an accident, they cannot be held responsible.
     

  • Children must be under direct supervision at all times.
     

  • The key times to schedule site visits are:
     

    1. when the foundation has been dug
        

    2.  after framing has been completed
        

    3.  during the rough electrical installation and, just before dry wall is installed
        

  • For your safety, you should wear a hard-hat on site.
     

• My suggestion is to schedule an inspection just prior to dry wall installation. Bring a camera and take a picture of where all the pipes and electrical wiring is so you will have a record of where everything is located behind each wall just in case you have a problem at a later time.

9. GETTING READY FOR THE CLOSING

• About three weeks before the completion of construction on your new home, the builder should give you an exact closing date. With the date in hand, you have a lot to do to get ready:

  • You will need to contact all the utility companies to ensure that you will have service when you move in. Three weeks before closing, call all the utility companies, and ask them to switch the service over to your name on the closing day. And don't forget to ask them to stop the services to your current home. It's a good idea to call them up again a couple of days beforehand and remind them.

  • You will need to schedule a pre-closing inspection of your home or the builder will schedule one so they may familiarize you with its operation; and you need to prepare for the closing.

  • Two to three days prior to your closing, you should conduct a pre-closing inspection of your home with you and the builder. Make sure you set aside at least two-to three hours for the inspection, because it can be a tedious process.

10. PRE-CLOSING INSPECTION

• If the builder has made a mistake on any of the specifications, this is your opportunity to tell them so they can fix it before closing. The builder will want you to feel comfortable about the condition of your home, but occasionally something will slip past the construction crew, so as you walk around the house, look for defects in workmanship or materials that the builder may have overlooked.
   

• There is a “Punch-List” of any defect items that the builder is obligated to correct prior to or shortly after closing. If they are not noted on the Punch-List, they become your responsibility after closing unless there is a major structural defect, in which case the builder or the home warranty will cover those corrections.

11. CLOSING

• The Closing or “Settlement” is usually held in the offices of the title company or an attorney. When the home is nearing completion of construction, the builder will notify you of the exact day and time for closing. What You Need to Bring:
   

  • Cashier's or certified check for the exact cost of your home., less any monies you have already put in
     

  • Homeowner's insurance certificate.

NOTE - The 1% credit toward your closing costs will be given to you at this time out of the Just New Homes commission.

Closing Documents

You may never again sign as many documents in one place as you will during the closing. You will review and sign your loan, sale, and title documents. There may be as many as three or four dozen separate documents and many of them require several signatures. Bring an extra pen.

Loan Documents:

• Mortgage

• Promissory Note

• Affidavits

• Truth-in-Lending Statements

• Estimates of Closing Costs

• Escrow Statement

• Title Insurance

Sale and Title Documents:

• The Deed

• Bill of Sale

• Affidavit of Title

• Builder's Limited Warranty

• Certificate of Occupancy

• Survey of Your Property

• RESPA HUD-1

Statement At the Closing Table:

• The closing table can get pretty crowded. At a typical closing, there will be you…the buyer, the settlement agent, and there may be a representative from the mortgage company and the builder.
   

• The settlement agent (title company representative or attorney) is in charge of the process, and they work for you…you are paying for them so don’t hesitate to ask questions if you don’t understand something. Everybody will spend most of the meeting signing or watching others sign documents.
   

• You may want to read every document before you sign it. If you do, I recommend that you ask your settlement agent to give you copies of all the forms prior to the signing. They are all standard documents, and they are all very long. If you were to read them all at the closing, the process would take forever. If you choose not to fully read the documents, you won't be signing blind.
   

• Before you sign each document, the settlement agent can tell you its general purpose. Closings typically take about one hour, although they may last longer.
   

• All monies in the transaction will be put on a schedule record called a “Settlement Sheet”; also known as a HUD-1 Schedule. It shows all the money that came into the transaction, where it came from, and all the disbursement of monies and where it went. There is a Seller’s side and a Buyer’s side like in a ledger. Your 1% cash bonus should appear on your side as a credit from the seller as Just New Homes will ask the builder to reduce our commission and give that amount to you at closing as a contribution toward either your closing costs of the price of the new home.

Once everyone has signed the documents, the settlement agent will disburse the funds and hand you the keys…

CONGRATULATIONS, YOU ARE NOW A HOMEOWNER!