New Homes Guy "Buying New vs. Buying Used" - New Homes Tulsa

One of the most frequently written real estate articles on the internet is about the comparison of buying a new home vs. a pre-owned or used home.  This post is part my opinion, with a greater part being my observations of those buyers I've worked with. 
Every buyer is so different, and has such different criteria for what they want, that I always recommend sitting down and doing a wish/want/need list.  Try to get clear about what it's going to take to make you happy before moving too far into the process.

After 9 years of being in the real estate industry, and having worked with thousands of buyers with Shaw Homes, the largest new home builder in Broken Arrow Oklahoma, here is the short list of why buyers choose new construction over pre-owned:

1. Many have an exact idea of what they want and just can't find it.  This is more common now than ever as the use of rooms changes due to technology, and how space is used.  Bedroom sizes were larger in the 80's as televisions went into every childs bedroom.  Now with the high cost of gaming systems, more homes are going to smaller kids bedrooms and combining that saved space into a Game Room or Media Room, with larger televisions or projector systems.
2. Choice.  If you are having a new home built, you get to choose just about everything in the home.  It's a wonderful thing to have everything in the home be what you want it to be (or at least as nice as your budget allows it to be).  The task of making those choices is easy with some builders, and difficult with others.  Find out how each builder allows you to make selections.  The ideal builder will have a Selections Center or Design Center, where you make an appointment to sit with a designer and make all your interior and exterior selections (brick color, counters, paint colors, carpet, tile, and more).  Having a Design Center is generally another advantage to a large builder.  If a builder you are looking at requires you to go all over town making selections, pause.  If the area you are in doesn't have any builders with Design Centers, obviously you don't have a choice, but make sure you look for one first.  After all the time you spend finding the right floor plan and what you think is the right builder, without a Design Center you are only about 25% of the way home.  It's usually anywhere from 6 to 12 additional appointments or stores that you have to visit:  flooring store, cabinet maker, brick, paint, lighting, and landscaping are just a few. 
3. Repairs are just too expensive, and the average homeowner no longer has the skills to do the work themselves.  Having a new home built means all new everything.  Warranty coverage varies depending on the builder and the make of the items in the home.  In an earlier post I mentioned my opinion of only using Carrier or Trane HVAC systems.  My main reason for that is the longevity of their systems, but also how good their warranty coverage and customer service is.  If the builder is keeping their cost down by using a cheaper HVAC system, where else are they "going cheap" that I can't see? 
4. There are many small factors that come with buying a new construction home in a newer community.  One great fact is that everyone moving into the community is in the same position as you are.  By this I mean that they don't know anyone in the neighborhood and would probably like to meet some new friends (after all, sooner or later we all need to borrow something!).  If there is a community clubhouse or pool, everything is new.  If the community is in a growing area, most likely the stores and ammenities nearby are also growing and being built.  As an area grows, quite often so do new schools.  These types of factors lead to better equity growth, and quite frankly anything that honestly grows equity, find it and get it in a bear hug! 
5. There is just something to be said about being the first person or family to live in a home.  New carpet, new showers/baths, and more.  There is the new car smell, then there is the new home smell.  Both are to be appreciated.
6. TECHNOLOGY and ENERGY EFFICIENCY.  I capitalized these two reasons because they are huge.  It's a rare home that was built even 5 years ago that has BIBB insulation in the exterior walls (I will never own a home without this, ever again!), radiant roof decking, Energy Star rated windows with argon gas, solar attic fans, 90% or greater efficiency HVAC, HDMI wiring, fully wired for security and/or whole home stereo, tankless water heater, and more.  More and more families love the Smart Home technology.  Being able to arm your security system from work, or having your home tell you when your child opens the front door and is home from school, is fantastic.  It's also a huge money saver for the HVAC to adjust itself for times when there is nobody in the home.
7. Newer design trends.  There are several home design changes that have really gained speed over the last 4 years.  One example is the decline of the Dining Room.  Fewer people desire two eating spaces in the home when most plans already include a Breakfast Nook right off of the Kitchen.  It's more convenient when you forget the salt or napkins, and making it a little larger to be able to handle a full size table is usually as easy as making it a Bay Nook.  First floor Game Rooms have always been popular but are requested more now than ever.  It's really just the updated version of the second living space or Living Room, but focused on entertainment.  I quite often see a first level Game Room with a treadmill, a computer hutch, and a big screen TV with the family game console.  Second Master Suites are climbing in demand amazingly fast.  I think this is because of the state of our economy.  Rather than an aging relative/parent going to a senior community or some such living arrangement, they are coming home to live with family like what used to happen, and still happens more commonly in Europe.  A second Master Suite has it's own private bathroom, usually a walk-in closet, and the bedroom is on par with the size of the other Master Bedroom to allow more furniture and a true independent feeling to the space from the rest of the home.  Some will even have a wet bar with a mini-fridge and counter top with coffee maker, small microwave, and more.
8. Garage space.  Quite simply, over 70% of the buyers I've worked with want at least a 2.5 car garage, and most want a 3 car.  The number one request I received while selling was for storage space.  A 1,700 sq. ft. home can look beautiful with the right storage space.  Without it, it looks cluttered and messy.  Beyond just storage space, in some climates it's imperative to be able to always park your vehicle inside (intense heat can dramatically increase the aging of a vehicles interior, thereby also dropping the value of the auto faster).  Using simple logic, with so many looking for a 3 car garage, having a home built with a 3 car garage means your home will appeal to more shoppers when/if you sell it.  That's just smart money!
9. Last but not least is the favorite "Location Location Location"!  Having a home built means you get to decide exactly where.  Do you want a cul-de-sac homesite so your children can play in the courtyard without any passing traffic?  Which way do you want the home to face?  How large of a yard do you want?  Want a pool?  All of the factors of the land are yours to decide when you choose the homesite before the home is built.

I hope this list has been helpful to you, and aids you in your search for your next home.

New Homes Guy "The Contract is Everything" - New Homes Tulsa

The Contract is actually everything!  Before you even decide on a builder, ask for a copy of their sales contract.  As soon as you think they may be one you would consider, request the copy.  The reason for this is clear;  If you start with the contract and making sure it's very clear and concise, the process can go well.  If you end with the contract and have to fight to make sure everything is in writing and clearly spelled out, prices will quite often change, and the relationship will quickly fall apart.  That means that you have to start all over again with another builder.

I can't count the number of buyers I've spoken with that say everything changed after they signed the contract.  What they were told was included wasn't in the finished product.  Details changed.  It's the "unexpected" that can morph the new home experience from Dream Home to a nightmare.  When I say "
unexpected" I don't mean minor changes, I mean serious misrepresentation.  Some items that often occur are:

• Full brick on entire exterior (watch out for siding used in entry ways and covered patios)
• Tyvek house wrap.  Moisture is a house killer.  It it's not Tyvek, I recommend you begin shopping again.
• Is there re-bar in the concrete driveway, patio, and front porch?
• If the home is on a foundation, is the foundation post-tension?
• Exactly what insulation is included, at what R-level, in each area of the home?
• What brand HVAC system is used?  This is a hot one (pardon the pun).  If it's not Carrier or Trane, move on.
• On two story homes, is the second story flooring "Silent flooring"?
• What is the home warranty?  When I was with Shaw Homes, their builder warranty doubled the area builders and came with 2 years of coverage, as well as a 10 year structural warranty!  Find out what they are offering, and get it in writing!

A buyer sat with me and aked if our contract is a "closed ended" contract.  A closed ended contract is one that has a Final Price that can only be changed with the buyers and builders joint permission in writing.  Such changes are things like upgrades after the contract is signed (i.e. change master shower from ceramic tile to cultured marble, change interior paint color, add a light switch prior to electrical, etc...). 

In the conversation, the buyer told me that the last home they had built included unfinished square footage on the second level that he had added to the plan for future completion.  He wanted this unfinished space because he didn't have the money to have it finished now, but planned on doing it himself later to gain some sweat equity, and to keep it out of his mortgage.

One day during construction he shows up to the site to find the second level has been completely drywalled.  Several days later the builder calls him to have a discussion.  The discussion turned out to be a "you owe me an additional $5,000 for the drywall" type of discussion.  Needless to say, the buyer refused to pay because it was made clear up-front that he didn't have the money, and that was why he had it specified as unfinished space to begin with.

At a later date the buyer shows up to the site to find that the entire second level was gutted, and the chunks of drywall were laying in piles.  The builder not only wasted the money on the drywall materials and labor, but out of spite he added additional labor cost to have the demolition work done.

This type of an experience goes way beyond just contract clarity and enters into why using a large reputable builder has advantages most don't ever consider.  In this case, a large builder would have eaten the cost and moved on, knowing that they have a client for life.  When I sold homes for Shaw Homes, the largest custom home builder in Tulsa, the exact same thing occurred with one of my clients.  When I called the buyers to let them know what happened, my exact words to them were "Merry Christmas and Happy Birthday".

Back to contracts.  It's a huge misconception that a long contract is worse than a short one.  Buyers feel like a longer contract is too "complicated" and all about protecting the builder.  Not true.  A longer contract is about the buyer and builder and what both parties expect through the process.  Builders can either have their own contract created, or they can use a generally accepted contract created by a third party, such as the local Home Builders Association.

In my sales days, Shaw Homes used the Tulsa Home Builders Association contract, which is 9 pages long.  In it, the contract clearly spells out the price, as well as what should occur if a building delay comes into the picture due to an act of nature or supply issue.  A supply issue occurred in the past in many US cities when Hurricane Katrina caused a massive supply demand for building materials, as well as skilled labor.  This size of contract even clearly lists the building materials and specifications, any upgrades requested by the buyers at time of contract, contingency purchase options such as "contract contingent upon sale of buyers current home", and much more.

Real estate law is very clear on this topic.  "If not in writing, it doesn't exist" is what Realtors say.  Quite simply, just because the salesperson told you granite counters in the Kitchen and ceramic tile in the Utility Room were included, if it isn't in the contract, the builder doesn't have to put them in.  Of all the complaints I've ever heard, well over half are in this category.  My advice is to demand that the builder give you in writing all that is included, and make sure that it is signed by the builder, not the salesperson or anyone else.

To summarize, the longer the contract the better.  If you are represented by a Realtor, have them look it over prior to signing it.  If you are on your own, read it over yourself to be comfortable.  These types of contracts rarely use the heavy duty legal jargon, and spell the issues out fairly clearly.  Remember that the builder needs to protect themselves as well as you.  This means that some paragraphs are going to clearly protect them, some you, and some both parties.  The most important part is that it all be in writing!  If in doubt, consult a real estate attorney. 

Good luck.  The new home construction process can be an incredibly rewarding one when handled correctly.  My goal is to help you make it what you dreamed it could be.