New home in Tampa, FL?
Many people are considering new construction in Tampa FL in 2023; let’s update you on how that’s been looking recently.
Some great opportunities out there, but some things to bear in mind and know about in today’s market.
We’ve been in a rising market, with solid home appreciation and low-interest rates for a long time. That’s changed from last year into this year. In new construction, we’re seeing some communities, selling out of lots again as soon as they release them. Then those graduated price increases with each release.
Many out-of-state buyers are interested in Tampa Bay, creating interest and pricing pressure. In the last few years, there’s been less intense focus on the details of the contract by many buyers- yet parts of the contract are currently still the most important thing in 2023!
Pre-contract documents and then contract documents.
There’s a bunch of information in the contract. Often 20 or 30 pages about things like what landscaping you’re going to get with the property and that the title company they’re going to use is one that the builder owns. These are the things that we talked about in last year’s video about new construction.
It will disclose whether there are additional taxes because of a CDD, as part of living in the community. You’ll find information on that, plus community and homeowners associations, deed restrictions that you’ll abide by and more. If you are building from a vacant lot, then property taxes will be artificially low that first year- be ready.
Increasingly important, to read those deed restrictions before you sign the contract because if there’s anything in there that you can’t agree to, then you don’t need to sign any of the rest of the documents.
Flood insurance and New Construction Homes
We’ve seen a lot of changes in insurance in the Tampa Bay market and Florida. Understand that flood determination is set by FEMA. Flood maps sometimes take years to get updated when there’s new construction. People told they were in a no-flood zone needing to pay for flood insurance for a couple of years till FEMA adjusted the flood determination.
New construction structural options
Do you want to flip the house the other way around? Do you want to change bathroom layouts, and heights of doors, do you want to add tray ceilings? All those things will be determined when going to contract, as they are structural changes to the plan.
We see a shift- buyers are much more cautious and price sensitive to the options they’re picking and maybe that’s just a normal part of the increase in the house prices.
Design studios- Are they Back in New Construction?
For a while design studios were closed during Covid. Now we’ve seen a lot of Tampa Bay builders reopen a design studio- or a version of it. Some builders in Tampa Bay are staying with offering design packages that they’ve picked out, where they’re grouping together things that blend well.
Second Thoughts- Can I Cancel a New Construction Tampa FL Contract?
Not easily! On a purchase agreement document right at the top it tells you that it is a legally binding contract and that in the event of a dispute, you agree that any dispute between you and the builder be resolved (typically) by binding arbitration. You waive the right to proceed in court with a jury trial. That’s pretty much on every builder contract that we see.
Always, read the contract AND anything that’s in uppercase in the contract. If it’s in bold, it’s there for a reason. Your purchase price, the appraisal, and your deposit, are some of the next things noted. As soon as you’ve signed typically it states:
“Buyer cannot terminate the buyer’s obligations under the agreement without being deemed in default. In the event that an appraisal of the property is less than the total purchase price, the buyer will be obligated to pay the total purchase price or be subject to the paragraph entitled default and remedies”
When this house is under construction – (and right now, we are back to homes being built in about eight months or so) if it doesn’t appraise, you are agreeing that you’re going to pay the difference, the appraisal gap- between the amount you agreed to buy it at and what it appraises at.
If you fail to close, that deposit you put down when you went under contract, which could be as much as 10 or 15% of the home value is at risk. The majority of contracts state that you are not getting that back. And we do see some builders enforcing that and keeping it.
Builders Affiliated Lender?
You’ll typically get approved through the builder’s home lender, their affiliated lender. You aren’t required to close with them because they can’t force you to do that, but there are some advantages; one of them being that if their lender screws up, then they’ve got to accept that. However, if you go with an outside lender and they screw up, that’s on you. Unless the builder is very forgiving- and they aren’t always.
New Construction Builder Concessions
What we were seeing last year was lenders in new construction Tampa Fl, offering 12-month rate locks and things like that. We’re not seeing that now in 2023. We are seeing concessions, for example, with some builders offering money towards buyer’s design center choices, structural options, rate buy-downs or closing costs. We have a buyer under contract and our buyer will get $25,000 towards those things. This varies from model to model and even lot to lot.
Builder requires Conditional Loan Approval
As soon as you’re under contract, you get conditional loan approval within 30 to 45 days. You know, the house isn’t even started yet – and you must know that once you have that conditional loan approval, there is a paragraph in the contract that states something like this:
“Upon termination of the conditional loan approval contingency, buyer will no longer have the right to receive a return of the deposit pursuant to this provision, even if the buyer is subsequently unable to satisfy any conditions necessary to fund the loan or buyer’s unable to obtain final loan approval”
Once you are through that contingency, you’re not getting your deposit back:
- whether or not the house appraises,
- whether or not the interest rate goes down or up,
- and whether or not your employment situation changes for any reason.
And those things do, but the contract still stands now. We’ve just had a huge shift in the mortgage rate this year. And while we don’t know what will happen ahead, many economists predict rates beginning to fall in 2024 to a more moderate amount.
"Buyer cannot terminate the buyer's obligations under the agreement without being deemed in default. In the event that an appraisal of the property is less than the total purchase price, the buyer will be obligated to pay the total purchase price or be subject to the paragraph entitled default and remedies"
Do I need a home inspection- YES!
We recommend that you get an independent home inspection.
There’s usually a section that allows for that, but more, it does typically say that whatever the home inspector finds, it’s not a basis for you to cancel the purchase agreement or delay closing.
Additional Contact Provisions
Next, there’ll be a section about additional provisions in the contract. Typically, that will tell you, for example, that the seller’s agent in the model home only represents the seller. Now we talk about this all the time, they do not represent the buyer at all and don’t take any claims by made by the sales agents as facts if they’re not in writing and signed by everybody, it doesn’t exist. New construction, Tampa FL is thriving!
Most of the time everything goes according to plan and everyone’s happy. And we want that for you too. And we’d love to be part of your journey and reach out if we can help you with anything
