Buying a New Construction Home in Florida
Buying a new construction home has become an even more popular option among homebuyers because resale inventory is so limited these days. We just helped a client decide on new construction vs resale in Starkey Ranch. It reminded us that there are some specific tips that homebuyers considering this option should know.
Thinking about Buying a
New Construction Home in Florida?
Our clients closed on new construction in Starkey Ranch a few weeks ago and as we were going through the process, it dawned on me that there are some things you’ll need to know that maybe you haven’t heard in a while. Here are four major things that you’re going to need to know if you’re considering buying new construction. In fact, it’s helpful for you to know some of the basic pros and cons of Florida living before choosing a house at all!
The Builders Agent Does NOT represent YOU
This is probably the most important thing that you need to know. Please write it in your journal, say it out loud, repeat after me, but please, please please know: The sales agent- that’s on duty at the builder’s office or the builder’s model home- they are not there for you. They do not have your best interest in mind.
That is not their priority. Their loyalty is to the builder. Anything they say, anything that they do- is always going to be in the best interest of the builder. Always, always go with YOUR agent, so you have representation for yourself on your very FIRST visit.
People ask me all the time, “Do I need a realtor to buy a new construction home, that sales agent is there and they’re going to put most of the contract together, which is, you know, a to create a contract for me?” No, if it does work for you, that’s nice, but no, you need your own realtor to represent your best interest. Again, the sales agent is not there to represent you. I hope I’m not unclear on this!
Your Ernst money/Deposit IS usually at risk or non-refundable
Number two: You’ll be required to submit some kind of deposit earnest money down on signing the contract with the builder.
Some builders will charge a flat fee like five or $10,000. There are some builders who are going to charge you a percentage of your purchase price- like 15% of the purchase price (without the design center changes) And they charge that upfront. So you it’s important that, you know, you will have to put down some sort of deposit and that will go towards your closing costs.
What if I want to Cancel?
But what I really want to say about that is sometimes a lot of the time, actually the sales agents, aren’t very forthright about the grace period. When you’re buying a resale, there’s a period called a due diligence period, anywhere between like three and 10 days. And in that period, you can cancel your contract for any reason and get your earnest money back.
Many buyers assume it’s the same thing here, but it’s not- with a resale there’s a period in which, you know, you can get that money back, if for any reason, something isn’t right with the house.
Buyer’s Remorse when Buying a New Construction Home in Florida
In new construction, if something doesn’t sit well with you and it’s with a builder you went under contract with, it’s a little different than a resale.
When you sign that contract, in their mind, they’re thinking, okay, now we’ve got the money to start getting the house built, (or they say they needed it to start building). But they’re not generally forthright about how many days that you’ve got before you can cancel, because they don’t want you to cancel for one thing.
It’s definitely something you need to know. And a lot of people leave not knowing that.
If three, four days in, you’ve got maybe buyer’s remorse, or a change of heart, or you find something else and you go to get your money back. They often say well, sorry, we don’t give deposits back after 24 hours- or at all. But that was never something they stated up front.
And maybe your question, wasn’t something that you worded just right for them to give you a definite answer.
Remember- The typical new construction residential purchase agreement Florida is written to protect the BUILDER
Choose an Agent That Understands the New Home Business
So if you’re thinking of heading out to a new community like Starkey Ranch, or Del Webb Bexley, or any of the other up and coming communities make sure that you’ve got your agent there to represent you going with you right from your very, very, very first visit to that model center. You need somebody there to represent your best interest.
Video index
0:00 Intro
0:49 Role of the Sales Agent at the builder.
1:30 Why You need representation when buying a new construction home.
1:59 Escrow deposit at the builders- house lot, structural upgrades.
2:23 Grace period for refund of escrow deposit.
2:50 Escrow – resale vs buying new construction.
4:00 Go with your agent on FIRST visit to builder.
4:30 Understanding the builder contract.
5:50 Construction delays- your rights.
Choose an Agent That Understands the New Home Business
Make sure that you’ve got your agent there to represent you going with you right from your very, very, very first visit to that model center. You need somebody there to represent your best interest.
The New Construction Contracts are Different to Resale Contracts
Number three, when you buy a new construction home in Florida, the sales agent on duty, they’re the ones that will be populating the contract. And these contracts are contracts that were created by the builder or by the builder’s legal team.
They’re not generally the state traditional forms that we would use elsewhere. So here in Florida, it would be the Far-Bar form from the Florida Association of Realtors and the Florida Bar. Builder’s doesn’t use those forms. They use their own forms that are created by their own attorneys. So having said that there are things in there that you are not going to know exist.
What do you think is going to be in the contract? It’s going to be things to safeguard the builder.
Common Contingencies
The typical builders contract will state things like:
- There isn’t an appraisal contingency. If the house doesn’t appraise, you pay the difference- did you know that?
- It will often say you can’t do a home inspection? Did you know that?
Everything in there, unless you’ve got a knowledgeable agent representing you, there’s a risk that you might not know any of the the implications of what’s there.
You’re going to ask questions, but again, if you don’t word that just right, you might not get the answer that you were trying to get to.
Having that unemotional agent there with you can help make sure that those questions get pulled out and answered.
When Construction Delays Happen
So final thing, know that delays happen all the time.
We know what’s been going on in the market- material delays, labor issues, closings, get pushed out all the time. You’ve got very little say in what happens about that, and it might be sprung on you at the last minute. You might need to be out of a rental or, or you’ve got a time limit on leaving the place that you’re moving out of, and now there’s no Plan B. Always have a plan B!
The closing gets delayed by a week or two and all your deadlines start getting a bit squirly. You’re trying to get everything figured out at times like that. It can be really, really valuable to have an agent on your team that’s out there looking out for you. The sales agent that you met 10 months ago might have moved on. Now you’re not in relationship with anyone except the GC who’s telling you it’s not happening.
Get Representation!
I hope these tips for buying a new construction home in Florida are helpful – make sure that you’ve got representation, and get as prepared as you can together before you even start the car to go and look at ho
