While older homes have charm, history and stately old trees, many prefer the pristine nature of a new home. New builds allow buyers to choose their own finishes and layout, and enjoy living in a home crafted to their exact taste.
If you’re thinking of buying a new home, the purchase process presents unique challenges. Here are some important considerations:
Contracts: While older homes are sold with a standard contract approved by the Colorado Real Estate Commission, new home contracts are written by the developer, which means protections are skewed toward the seller. Whatever issues arise during the building and purchasing process, rest assured the developer’s lawyer has thought of them—and built in safeguards for the developer. Moral: read every word of the contract before signing!
Earnest money: You’ll be required to put down earnest money when reserving your future home. This money will become non-refundable quickly. Be sure the home is exactly what you want first—and record the date the earnest money becomes non-refundable.
Time element: Usually, builders provide a window of 1-2 years to deliver the home, even longer if events outside of their control cause delays. If it takes longer than expected, you’re still obligated to buy the home. Prepare a contingency plan, should you need an interim place to live.
Appraisal: Banks require an appraisal for a loan. If the appraisal comes in lower than the purchase price, you’ll be responsible for the difference. Consult with a real estate agent to ensure the home is priced reasonably.
Loan: If the loan isn’t approved, you may have to forfeit your earnest money and interior upgrades budget. Consider anything that might impact your ability to secure the loan—such as a job loss—before signing a contract.
In Denver’s supply-hungry residential market, new build options stand out for their modern features, attractive floor plans, and updated systems. Enjoy house hunting, but remember that contracts are written to protect builders. It’s important to have a real estate broker watching out for your interests.