Pros And Cons Of Buying Home From Builders

Buying Home From Builder

Benefits Of Buying Home From Builder

There are benefits of buying home from builder than buying home that has been built. One of the greatest benefits of buying home from builder is that the home is brand new. Nobody has lived in it and you will be the first homeowner to occupy the home. Everything from the flooring, walls, fixtures, windows, appliances, mechanical systems, and millwork is brand new. The new house smell is like the new car smell. Everything from the interior of the home to the exterior of the home is brand new.

Customizing New Home

Another great benefit of buying home from builder is that you can choose the color of carpeting, style of floors, layout, appliances, and other features to your liking and taste. There are stock features that come with the home, however, the new home buyer can select basics such as colors. Be careful when it comes to builder upgrades. Many salespeople who work for a home builder receive hefty commissions by doing a bait and switch where they try to sell you upgrades. For example, instead of a standard bathtub, they might try to upgrade your to a jacuzzi tub with all the bells and whistles. The issue is that most home builders will charge an arm and a leg for upgrades. A jacuzzi tub may only cost $500 but a home builder may charge you a $3,000 premium for the upgrade from a standard bathtub to a jacuzzi tub. Most home buyers are so excited about the thought of buying a brand new home that they get suckered in to upgrading it. Most salespeople will not even mention how much the upgrade costs and will try to sell you in $30,000 in upgrades and tell you that the monthly payments will only be an extra $100 more per month. New home buyers need to think twice about upgrades. It is wise to price out the upgrades and just purchase the home stock and upgrade it yourself after you close on your home.

Negatives In Buying Home From Builder

As with all benefits, there are always negatives that comes with positives. One of the negatives in buying home from builder is that most builders build the homes on raw undeveloped land. Landscaping will be an issue. When real estate developers plant trees and other landscaping, it may take many years for trees to mature. With older homes, the landscape is set and you can see many 40 plus ft. trees. Other negatives in buying home from builder is that most new construction homes are on smaller lots because the premium of land. You can easily find homes that sit on half plus acres with older homes, however, most newer homes sit on a quarter acre or less. Neighborhoods with newer developed areas are less homely than developed areas, especially if you are a homeowner that moves in the earlier stages of the home developers development stage.

Be Careful When New Home Builder Forces Their Preferred Lenders

New home buyers need to be extra cautious when being approached by new home builders to use their preferred mortgage lenders. Anti-Steering laws are implemented by the Consumer Financial Protection Bureau, CFPB, and any entity, whether they are real estate developers and/or real estate agents, that steer a home buyer to a specific mortgage lender is totally illegal, immoral, and a total violation of mortgage regulations and can be fined or can have their businesses shut down or can even get jail time. Stay away from home builders that will give you an incentive if and only if you use their preferred lender and the incentive does not apply if you choose your own mortgage lender. This practice is so illegal and a home builder can be shut down and can get a huge penalty by the CFPB. What this home builder is doing is steering you to a so called preferred mortgage lender because they have worked out a kickback scheme with the mortgage lender. This practice is so illegal and not fair to the new home buyer. Many home buyers, especially first time home buyers, will fall into this trick where they will just go with the home builder’s preferred lender because of a $5,000 incentive and shopping for a mortgage with another mortgage lender will be off the table.

2 thoughts on “Buying Home From Builder”

  1. Builders that tell you that you have to use a certain lender in order to receive cash or other incentives are committing a crime. That are “steering.” This is also a RESPA violation.

    1. Home builders are aware that this is a RESPA Violation but they continue on doing it because the CFPB has not cracked down on them. Once the CFPB targets these home builders and start fining one or two millions of dollars, I can guarantee you this practice will stop immediately. This practice by home builders in giving home buyers incentives only if they go to their preferred lenders hurts home buyers from shopping for the best mortgage rates and mortgage terms.

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