Buying new? Don't go it alone

If you're thinking about buying a new home, get ready to spend Sunday afternoons visiting model homes at new neighborhoods.

For some prospective home buyers, only a brand new home where no one has lived before will do. For others, the price, amenities or location of a new community may make a developer's product more attractive than a resale home.

Buying a new home from a builder is similar to getting a new car: What you want may be in stock -- in the form of a "spec house," or part of the builder's inventory of homes -- or you can choose from a number of available floor plans and wait for delivery.

Builders have salespeople at the model homes who offer ready-to-sign contracts and can refer buyers who need to arrange a mortgage. But remember, they're working for the developer. Some buyers take their own real estate agent with them when they visit new communities.

"Everyone working on the site is working for the builder," said Robyn Burdett, an agent with Re/Max Allegiance in the metro Washington, D.C. area.

"If you're the buyer, take someone with you who's working for you."

Jerry Grubb, broker-in-charge at the new 117-home Red Cedar Place in Bluffton Park, says the presence of a buyers agent can be helpful.

About 50 percent of buyers he's worked with over the last 10 years used a buyer's agent, Grubb said.

"Agents can find out what their buyers really want before they bring them in, and do some work to pre-qualify them so they look at what they can afford," Grubb said. He added that buyers' agents also can help explain the features which will be included in the buyer's home.

Grubb previously sold new homes for Del Webb and KB Home, and he said that first-time buyers, especially, may misunderstand what their home will look like after walking through a model home that includes many upgrades.

Real estate experts say that if buyers want their agent to receive a commission, they need to indicate this early in the home buying process.

Typically, new communities have customer registration forms where buyers indicate their agent's name and real estate company affiliation. Grubb said it's important to let the on site sales staff know as soon as possible if you want your own agent included in the deal -- preferably on the initial registration card, but definitely before the purchase agreement is drawn up, he said.

MAKE YOUR AGENT DO THE HARD WORK FOR YOU

Now, as the economy falters and the housing market is experiencing a slowdown, builders have slashed prices to reduce inventory. Many are offering incentives such as paying buyer's closing costs and offering free upgrades. An agent working for you can guide you in negotiating price and extras. Unlike many home buyers, real estate agents aren't afraid to haggle.

GET THE BEST DEAL ON A HOME LOAN

Some builders have their own mortgage company and encourage buyers to use it. It's a good idea to shop around for a mortgage instead of quickly settling on the builder's lender.

"What you have to tell the builder is 'I'll use your lender if you will match the best offer,' " said Savannah mortgage lender Max Simon.

At Heritage at New Riverside, another new community in greater Bluffton, broker-in-charge Ed Underhill said the community's developer doesn't have an in-house mortgage company but has an agreement with Countrywide Home Loans. The developer pays $3,000 of the buyer's closing costs on the home loan, if the buyer uses this preferred lender. He said "about 95 percent" of the buyers he's worked with at Heritage at New Riverside have chosen Countrywide as their lender.

CALL MY ATTORNEY

Another way buyers can protect their interests is to get a real estate lawyer to review the purchase contract and to add consumer-friendly clauses.

James "Beau" Brincefield, a real estate lawyer in the Washington, D.C., area, said it can't hurt a prospective buyer to hire a lawyer to scrutinize the builder's contract.

"Some builders' contracts take away from the purchaser rights and remedies the homeowner would want to have," he said.

If a salesperson makes a promise, such as saving an existing tree when a home site is developed or a completion date for the home, he said, get it in writing.

"If it's not in writing, it's not enforceable," Brincefield said.

Underhill said that of the 40 buyers he's worked with in the last year at Heritage at New Riverside, none has taken their purchase contract to a real estate attorney for review. The community has been selling homes for a year, and at build out will have 900 homes.

When it comes to deposits, Brincefield said, whenever possible, put them in an escrow account outside the builder's control in case the company runs into financial difficulties. Troubled builders have been known to use the deposits without delivering the home.

GET IT INSPECTED

Home inspectors say that many buyers mistakenly assume that because a house is new, it doesn't need an inspection. New homes may be more flawed than ones for resale, because many problems in existing homes have already been addressed.

Some real estate professionals recommended three inspections: one right after the foundation is installed, another before the drywall goes up and a final one. Some local builders, including Centex Homes and Craftbuilt Homes, do "walk-throughs" with the home buyer. This is not the same as getting a professional inspector to complete a report about anything not done or done incorrectly in the home during the different phases of construction.

DO YOUR HOMEWORK

To make the most of a new-home purchase, shoppers should come armed with knowledge. That might mean reading up on a builder in business publications. Is he solvent? Are his homes sound? Does he back his product? Ask about warranties that come with the home, and what they cover. If possible, visit other communities the developer has completed to see if you like their look and feel.

Washington Post staff writer Allan Lengel contributed to this report.