Prop 5 - Property Tax Transfer Initiative

8 Steps to Follow When Buying a Newly Constructed Home

Buying a newly constructed home can give you more options than a previously owned home. You can choose the cabinets, flooring and possibly the floor plan. And you will be the first family to live this home!

However, buying a new home can also create some challenges: additional expenses, location, unreliable builders, and having the home finished in a timely manner.

Follow these 8 steps before buying a newly constructed home and the process will be smoother.

Get Preapproved First

When buying a previously owned or a newly constructed home, get funding preapproval so you know how much you can spend on a home. Keep in mind the total cost will also include any additional upgrades you want before your home is built.

Consider the Pros and Cons of New Construction

First decide if you want to buy a spec home; a home built as part of a development; or a custom home built to your specifications on your site. Before you decide on a newly built home, consider the following:

·         Will you have a reasonable commute to work or areas you normally spend time in?

·         Are you willing to put in the work for new landscaping and to wait years for trees to mature?

·         Do you mind having a home that has a floor plan and paint scheme similar to your neighbors?

·         Today many developments have homes built closer together with little space between them. Do you mind being that close to your neighbors?

Use Your Own Realtor

Many builders will want you to use their lender and their real estate agents.  Get your own real estate agent! The builder’s team is looking out for the builder’s interest, not yours.

Have your agent introduce you to the builder first.  Don’t go there without having representation.  Some builders will not let you bring in an agent if you’ve gone to them first so contact your agent before looking at new construction.  In addition, many builder’s will pressure you to use their agents if you come in without your own agent.

Research the Builder

Do as much research on the builder as you can.  Are they reputable?  Have they built other developments like the one you’re interested in.  Do they have any complaints or legal action against them?

Check out their websites. Research the internet. Check with the Better Business Bureau. In California, you also can check the Contractor’s State License Board for any complaints against the builder.

Understand the Floor Plan and What Customizations or Upgrades You Can Have

First, look closely at the floor plans and if you have a choice, choose the one that will fit your needs the best. If you don’t understand anything on the floor plan, ask questions.  The builder’s sales rep will assume you understand what is on the plans and that can cause problems later. Ask lots of questions!

Also, understand what customizations or upgrades you can make before building.  Some developments will limit the customizations while others will provide a broader range of items you can customize. Some builders will give you only 2 or 3 options for flooring, while others may have 5 or more options.

Don’t forget to ask the cost. If you want marble counters but the builder was putting in solid surface countertops, it may cost you more. Don’t forget to include all upgrades in the total costs.

Make decisions on customizations and upgrades as soon as possible.  This will save money later. Deciding you want the house wired for a built-in security system after the electrical is finished will result in more work for the builder. This will cost you more and it may delay your closing time. So make all upgrade and customization decisions before construction starts.

Check to see if the development will have a Home Owner’s Association (HOA).  Ask for fees and rules.  Many fees can be very expensive and many HOA’s can fine homeowners for any infractions of the rules.  Make sure you know what is expected and if those rules will fit your lifestyle.  Many will restrict what color you can paint your house, what remodeling you can and can’t do, if you can a vegetable garden or not, and so on.

Don’t forget to ask if there are any amenities included with the purchase.  Will there be a clubhouse, a park, a gated community, a playground, etc.

Get Everything in Writing

Once you’ve decided on the floor plan and upgrades, have all the information put into a contract.  Then have a real estate lawyer review the contract before you sign it.

Make sure there is information about the timeline to complete the home and what happens if it isn’t completed by the agreed upon time. 

Ask About Warranties

Most builders offer warranties on workmanship and materials.  Make sure you understand what is and what isn’t covered by the warranties.  In addition, make sure you know what steps to follow if you need to have something repaired under a warranty.

Get an Independent Home Inspector

New homes can have as many issues as a previously owned one so make sure you have the home inspected by an independent certified home inspector.  Don’t use an inspector the builder recommends. Don’t use your father-in-law or friend.  Certified home inspectors will look at everything: the roof, the electrical and heating systems, the plumbing, the foundation, etc.

Be there for the inspection and ask questions.  You and your family will be living in this home and you should understand as much about it as you can.  If you don’t understand something, ask for clarification.

As the closing time approaches, rely on your team (your real estate agent, your lender, and your lawyer) to help through the last few steps.  Once escrow has closes, you’re ready to be the first family to live in your new home.  Congratulations!

Contact me if you’re interested in a newly constructed home, and I'll guide you through the steps outlined above!

Rental Scammers!

Due to soaring house prices and interest rates, many people are unable to purchase a home and are having to rent instead of buy. Although this may be okay in the short-term, the long-term benefits of home ownership can severely outweigh any positives of renting. The steady increase in renting has the attention of internet scammers, who are using rental properties as a cover to steal your hard-earned money. These are called “Craigslist Rental Scammers,” but they can happen anywhere online. Here are a few ways to help protect you in a search for a rental property: It’s Too Good To Be True If you feel as though a rental is too good to be true, it probably is. Often times, scammers use extremely low prices and overly flexible leases to spark your interest. In the current market, renting is not that simple. Landlord Wants Too Much Before You See Anything If the landlord asks you to wire money or provide your information before you even see the inside, it is a scam. Often time scammers will tell you to drive by the outside, instead of letting you visit the property. This is a huge red flag. No Information If they don’t ask for information from you before prompting for money, this is a scam. Most legitimate landlords need you to fill out an application, legal documents and provide documentation before a deposit is requested. Bad Grammar, Illegitimate Emails & Screening Phone Calls If the potential landlord has error-ridden emails/texts, illegitimate email addresses, or refuses to take phone calls, there is a good chance you are being taken advantage of. Overseas Landlord If the property is being handled by someone for an owner who is “overseas”, be cautious. They will insist they are managing the property for the real owner but disappears with your deposit. Although the housing market is very competitive, our team has experienced professionals that will guide potential home buyers and make them feel at ease. Call us today find out how we can help you or your clients get into a new home. *Information provided courtesy of Summit Funding

Should You Install Solar Panels?

Deciding to install solar panels is a significant decision with many variables.  Should you lease or buy? How should you finance the installation? How much savings will you receive from leasing or buying? How do you find a reputable company?

Determine if Solar is Right for You

The first step is to determine if your home is appropriate for solar.  You don’t need to have sun all the time for solar power but you do need to determine if your property has the right amount of sunlight.

If you want roof mounted panels, look closely at your roof and determine if sunlight is hitting the right spot.  South facing roofs are best but East and West facing roofs work almost as well.  If your roof faces North, don’t mount panels on the roof. Consider a ground mounted system if feasible.  Even in sunny California, you may not get enough sun in the right spot for solar power.

Also determine if there are any obstacles to the sunlight: trees, other homes, hills, etc. You want the spot to receive as much sun as possible.

Calculate Your Savings

The first step is to determine how much your utility company is charging you for each kilowatt-hour (kWh) of electricity you use.  This cost can vary widely depending on where you live.

A solar system is basically a small power plant installed on your roof similar to the large power plant a utility company employs to provide electricity.  Keep in mind that homeowners with higher electricity rates will have greater savings when they switch to solar.

There are several online options for determining how much you will save with a solar system. You can use a search engine by inputting solar system calculator or visit sites likes www.energysage.com. You can also search your local utility company to see if they offer calculators programmed for your area. In San Diego, San Diego Gas & Electric offers such a calculator to it’s customers.

Determine if You Will Lease or Buy

For many years, most homeowners opted to lease their solar systems. However, more homeowners are now buying their systems.

When you lease or enter into a Power Purchasing Agreement (PPA), you do not own the system; you are renting the system from the company. Leasing is very convenient but doesn’t offer the same savings as buying the system would give you.

With leasing, there is little or no upfront money required; you are not responsible for any maintenance; and you may still acquire federal, state and local tax credits if offered. However, your savings will be less; you lose control of your roof since the company can determine where and how many panels to install; buyers may not want a leased system if you try to sell your home; and leasing maintenance plans are not always favorable to the homeowner.

Buying a solar system requires more research and decision making for the homeowner.  It’s recommended that you get several estimates from various companies.  Sometimes the best deal is not with the largest company in your area.  Numerous small companies offer better deals than larger ones. Look closely at what you want and how you’re going to finance the project.

As with other services, check the Better Business Bureau to find a reputable and reliable company.  Don’t forget to ask for recommendations from your friends and family. Also check online reviews but don’t rely solely on one source.  Look at all sources before making a decision on which company to choose. Once you have chosen a company, ask for references and call them.  Buying a solar system is a sizable expense; use all your resources to get the best deal for you.

Buying a system has both pros and cons.  First, buying provides you with flexible financing options. You can pay cash, use a home equity loan or obtain a solar loan. Second, a solar system that is bought and paid for improves the selling value of your home. Finally, as with leasing, you may still acquire federal, state and local tax credits if offered.

On the negative side, buying a system requires a lot of upfront money if you use cash for the purchase.  The return on investment may take anywhere from five to ten years. In addition, the owner is responsible for any maintenance costs.

Don’t forget to contact your insurance company before installing the system. You may need to increase your policy to cover the panels. Also, check with your homeowner’s association before installing and find out if there are any rules or restrictions that need to be considered first.

After you’ve installed the system, stay connected to your utility company.  There may be times when you will need to supplement your electricity in case there’s an emergency; your system may go down; or not produce enough electricity during less sunny seasons.

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