The Four Most Overlooked Considerations when Buying a Newly Constructed Home in San Tan Valley
There are many advantages to choosing a newly built home in San Tan Valley, such as having a choice in kitchen and bathroom fittings, being able to select the type of floor covering you prefer, and if you get in at an early stage you may even be able to request modifications to room layouts and design features.
However, there are several unique challenges that come with buying the new home of your dreams, and they all have financial implications to a greater or lesser degree.
Here are four important ways that new-build homes in San Tan Valley may present an unexpected challenge to buyers.
Once a contract has been agreed between the buyer and seller, closing on a home usually takes between 30 and 60 days. That gives the buyer plenty of time to implement a home inspection, put the financing into place, book the removal company and generally prepare to move in.
With a new-build home, the process is much more complicated and often takes much longer. The builder may not start building until the contract is signed and then all manner of delays may be encountered, from inclement weather to lack of supplies. The time from application to completion can take up to 180 days, which can be expensive and inconvenient if you have already sold your existing home, or are unable to extend the lease on your existing home.
When buying an existing home in San Tan Valley, buyers can often negotiate a low deposit at the time of signing the sales contract. While motivated sellers may accept as little as $500 upfront, builders usually require a much larger deposit. They may stipulate as much as 5-10% of the contact price before starting construction, and bearing in mind the length of time involved, this can be an additional financial burden for buyers on a tight budget.
Lenders also like to remove as much risk as possible and they like to see large cash deposits on new homes which makes any default on behalf of the buyer far less likely.
Going into a contract which may not close for months creates a lot of problems if interest rates rise. When applying for a pre-approved mortgage, make sure you get a rate lock that guarantees the interest is set on the day you apply for your mortgage, not on the day you complete. A lender will typically agree to hold an interest rate for 30-60 days, but after that you may have to pay an extra half-point to hold the rate for up to 180 days.
Wise buyers need rate-lock protection otherwise they may arrive at the closing to find the monthly repayment is far more than they had budgeted for.
Appraisals Can be Tricky
Appraisals are normally done on sales of similar houses within the same subdivision. However, building a one-off home on a new plot generally has no equivalent or comparable. The appraiser may make an initial appraisal based on the plans supplied by the builder. However, when the house is completed and the appraiser makes his final inspection, his final valuation may not be the same as his initial projection, which can create more headaches.
In conclusion, buying a new-build home in San Tan Valley may not be quite as easy as the builder makes out.
If you’re considering buying a newly constructed home, give me a call and we can go over the specifics. If you use Arizona Home Brokerage as your Buyer’s Broker, we will contribute towards your closing costs at close of escrow (call for specific details and restrictions).