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Congratulations you’ve decided to buy new construction in Prince William County Virginia. Watching your new home go from an empty lot to dream home can be an exciting process.


Congratulations you’ve decided to buy new construction in Prince William County Virginia. Watching your new home go from an empty lot to dream home can be an exciting process. It also means that you need to be prepared for a process that can take from 4-6 months for a “stock” built home and a year or longer if you are building a totally custom home. During that time period you are going to have a lot of decisions to make and certainly you will second guess your decisions along the way. Just as with buying any home you should have a firm idea in your mind what you want to spend and where you want to live. In today’s market in Prince William County there are a number of new home communities going up in Bristow, Dumfries, Manassas, Woodbridge and everywhere in between. You may be tempted to jump in your car on a Sunday afternoon and view all the model homes you can.

First you need to talk to an independent lender to get pre-qualified. By independent I mean a lender who is not associated with any builder you might visit. You can go to any of the major lenders in your area or if you belong to a credit union talk to them. Have that pre-qualification letter in hand so you know what they are offering you in the way of an interest rate, loan fees and Wait Don’t projected closing costs. They lender should provide you with what is known as a “Good Faith Estimate” (GFE). Now armed with a pre-qualification letter and a GFE you might think Leave you are ready to go.

Home Yet

The next and most important step is to find a buyer’s agent who has experience working with new construction in Prince William County. The builder’s representative works for the builder. Just as the listing agent is working for the seller on a re-sale home. You may be under the impression that you can’t have your own representation when you buy a new home but that is not true. The cost of sale to the builder already accounts for an agent’s commission. You won’t get any more of a deal without an agent and having an agent with you might save you thousands of dollars in your home purchase. How do I know this? I have been representing both buyers and builders on new construction projects in Prince William County during both the boom and bust of our real estate market. In 2009 I’ve closed nine new construction deals and have 4 more under contract. Now armed with a pre-qualification letter and an agent experienced with new construction in Prince William County you are ready to take a tour of your first new construction project. Remember your agent must be with you when you step in the builder’s door or they will consider you fair game.

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What to look for as you Tour the Model Home

This section of the guide helps you understand what you want to look for when you tour the model home. As you arrive at the construction site you and your agent should drive through the neighborhood and take a look at the layout of the community. Note any lot markers and lots that you find interesting based on the location in the neighborhood. Now you can head to the model to take a look around.

Be prepared to say WOW. Let’s face it builders hire interior designers for a reason, to make sure you are impressed. The builder’s representative will ask you to register, your agent will handle this for you and the representative will give you a brief overview of the community. Then it is time to walk-through the model (s). As you are looking you will start to see small tell tale signs that begin to give you a hint of what you see is not what you get….at least as standard.

For example granite counters, stainless steel appliances, wine coolers, hardwood floors, coved ceilings, whirlpool tubs are small examples of what are generally not standard. Finished basements, media rooms, extra bathrooms and sunrooms are most likely not standard. Pay attention to rooms with doors off of them, if the door was there to open would it hit a piece of furniture? Now this may sound like it is getting picky but it is so easy to get distracted by the decorating and forget that you are going to live in the home for many years to come.

Wait Don’t Pull Out Your Checkbook Yet

Now it’s time to ask the price. The builder’s representative is going to tell you the base price of the different models they are offering. You’re thrilled. The home is brand new and it is within your budget. The price you were just quoted is the base price of the home. It is not the price of the home you just walked through. The home you just walk through is full of upgrades and the price tag will be much higher than what you just heard. On a tour this week on a “moderately priced” new home in Prince William County the base model price was $450,000. The home we walked through was $495,000 and that price differential can make a huge difference to you as a buyer and might crush your new home hopes.

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Lot Premiums, Options and Upgrades

In this section of the New Construction Buyer’s Guide we are going to look at lot premiums, builder options and upgrades all of which add to the cost of the home you are considering buying. As you first drove through the neighborhood you took note of lots in the neighborhood that caught your attention. Was it the ones that backed to the pond, woods or perhaps the community playground? Now let’s look at the builder’s site plan.

As you will notice a number of the lots have premiums associated with them. Premiums vary between builders and neighborhoods but in this example we see lot premiums that run between $5000 and $25,000. There are

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some lots with no premiums. Are those lots really less desirable? Are you going to see the pond all year round? When the trees around the pond grow to maturity will you be able to see it? What about safety? If you have young children will you need to fence your yard, which will block your view of the pond? How much will the lot premium cost you over the life of a 30 year mortgage? All of these are questions you need to ask yourself before you add the cost of a lot premium to your mortgage. When you toured the model home you noticed all of the little signs that suggested that the upgraded appliances, tile, granite and many other items are not standard. Did you know that builders have at least a 25% markup on those items over what you would pay for them retail? When you select an upgrade to be installed from the builder you are paying for convenience, which isn’t always a bad thing on big ticket items but on others the cost can escalate quickly. Some of the biggest markups come on appliances, granite and hardwood floors. Take the option sheet and prices that the builder gives you and make a few calls or look on line at local stores. With free delivery, free installation and discounts you could save yourself thousands of dollars by passing on the builder upgrade and having them installed yourself. I know you want a house that knocks your socks off the minute you get the keys. But remember how much will those options cost your over the life of a 30 year mortgage? The final thing a builder wants you to consider is options. When we talk about options these are the bigger ticket items such as brick fronts, porches, decks, finished basements and extra bathrooms. These are items that are harder to handle after market and are more difficult to price due to the difference in what contractors charge. One builder I recently visited was offering a finished basement with recreation room, den and full bath for a total cost of $17,000 which wasn’t unreasonable for the amount of finished space and the quality of the finished they were offering. This may be the time to elect to builder option and have the recreation room completed as part of the contract. Now we have an idea of what you should consider before we sit down with the builder representative to discuss and offer.

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Builder Contracts, Financing and Incentives

This is a simple fact. A builder’s contract is not the same as a standard Virginia Regional Sales contract. In fact it doesn’t resemble one at all. A builder’s contract is designed to protect the builder and not the buyer. For example you’ve toured the model home and are excited that you can move into your home by the end of the year. The builder has quoted you a 4 month build time, yet in the contract they state they have 24 months from the time of contract to complete your home. What happens after 4, 5, 6 or 12 months and it isn’t done? You probably don’t have any recourse to get out of the contract without losing your earnest money deposit, mostly likely 5% of the total cost of the home you selected. Builders Contract Paragraph 1 (Example from local builder contract) 1. Settlement. The Purchaser understands that the settlement attorney has been retained by Seller unless Purchaser elects to make settlement at an attorney or agent of his choice. Declarant shall give notice to Purchaser specifying a date on which settlement shall take place. Declarant shall complete the Home and Settlement shall occur, within twenty-four (24) months after the date Purchaser signs this Agreement. Settlement shall take place on the date and at the time and place specified in the notice or such other date, time and place as the parties may agree upon in writing. Builders Contract Paragraph 3 (Example from local builder contract) 3. Miscellaneous. Subject to the provisions hereof, when this Agreement becomes effective, it shall bind and inure to the benefit of the parties hereto and their heirs, personal representatives, successors and assigns. The invalidity of any provision of this Agreement shall not affect the validity or enforceability of any other provision of this Agreement. Notwithstanding anything to the contrary herein, acceptance of the deed at settlement shall constitute Purchaser's acknowledgment of full compliance by Declarant with the terms of this Agreement. The laws of the Commonwealth of Virginia shall govern this Agreement.

Builders contracts are full of these little loop holes and others that you might not think much of in your excitement to have them start on your new home. Remember this as you read through a contract with your agent. You need to make sure you understand the significance of each and every paragraph before you sign a contract. If you recall in the first installment of Buying New Construction in Prince William County I suggested you needed to be pre-qualified by an “independent” lender. This is where that Good Faith Estimate (GFE) comes into play. The builder is going to try and entice you with incentives that are tied to THEIR LENDER and THEIR TITLE COMPANY. In order to know whether those incentives are truly a deal or not you have to be able to compare the costs associated with your loan and settlement. Recently I visited a site where the builder was offering $10,000 in closing cost assistance and $10,000 in upgrades if you used their preferred lender and title company. Two things were glaring apparent. The first was that a lot premium or an upgraded kitchen (to include stainless appliances & granite counters) took up all of the upgrade incentive. The basement upgrade at this site was $22,000 so it would only cover half. The second was when we

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compared Good Faith Estimates between our lender and theirs we found loan origination fees, underwriting fees, processing fees, “handling” fees and attorney fees (among others) that were $4500 more than the fees from our lender. So the $10,000 being offered as an incentive was only $5500. That doesn’t mean that the $5500 is something to reject immediately but it does mean that you need to make sure that you understand that the fees associated with getting the “incentive” the builder is offering can cut the value in half. Don’t hesitate to ask to take the builder’s contract to your own attorney for review. We are talking about a big financial decision and not something you should feel forced to sign or you will lose the house of your dreams.

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Change Orders and Inspections

Congratulations! You have made it through a number of tough hurdles on your way to seeing your dream home completed. As you see your home starting to grow from a pile of dirt you begin to second guess some of your decisions about finishes. Do I really want a shower in the master bedroom or wouldn’t a spa tub be better? We would have a few more feet of space in the guest bedroom if we added the bay window. And you know I’ve always wanted a gas grill in the kitchen. So back to the builders design center you go to discuss the changes you want. Each change you want will cost you money. Every builder will have a different set of criteria regarding change order but if construction has already started and you come in with a change there will be a charge. It could be as low as $1500 but if it is a structural change it could be far more. Most builders will ask you for all of the money or 50% of the money towards a change order up front. This is another time where you need to be sure that what you are asking for is what you really want.

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As your new home is going up it is a good time to schedule an independent home inspector to take a look at your home. I recommend to my clients that they consider three separate inspections; pre-drywall, post drywall and final. Why three? It is amazing the number of things you see before the drywall goes up. Did you order extra electric outlets? Is the wiring there for them? The new spa tub your order requires extra bracing on the floor is it there? Is the gas line stubbed in for the new grill? Once drywall is up is up your new home should be weather tight. How does the quality of the work look? Did the items you pointed out to them on the pre-drywall stage get taken care of? Does the inspector see any glaring problems that if caught now will save you aggravation later? The final inspection is to make sure everything is in working order. The builder will also do a walk-through with you and create a “punch” list. However, they won’t do as through a job as your own home inspector. Your own inspector is going to pull the cover off the electric panel to make sure the wiring is right, they are going up into the attic to look at the vents, soffits and insulation; they are going to test every electric outlet and more. Chances are their list will be more extensive than the builder’s punch list and the builder will be responsible for repairing those items as well as any others that you note on your punch list that may be more cosmetic. Builders will try and discourage the use of your own inspector but remember this is part of why you have a buyer’s agent working for you. They can make sure right up front that as part of your contract you have the right for an independent inspection. This is your dream home after all and you don’t want your dream to become a nightmare after settlement.

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What to Expect at Settlement Your new home is ready and today is the day you’ve been waiting for…settlement! A quick reminder on how you finally got to this spot you can review: Hiring a Buyer's Agent What to look for as you Tour the Model Home Lot Premiums, Options and Upgrades Builder Contracts, Incentives and Financing Change Orders and Inspections

Settlement on a new home in Prince William County isn’t any different than settling on any other home. The settlement process is actually quite simple but loaded with paperwork. As the buyer the majority of the paperwork is yours. The most important document that the seller has to sign is the deed transferring the title of the property to you. On the other hand you will be signing and reviewing: HUD-1 Property Deed (accepting the property) Final Loan Papers Deed of Trust Title Insurance Survey Termite Report Tax Documents

The settlement agent we will choose is experienced at answering all your questions and despite the mound of paperwork the process itself usually only takes around an hour. Once you have finished the settlement company will send the lender back all of the signed loan documents and take the deed and deed of trust to the appropriate county courthouse to be filed. Our last installment of Buying New construction in Prince William County will cover punch list repairs and builder warranties. In the meantime you've got a chance to unload the moving truck and celebrate with the bottle of your favorite chilled beverage!

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The Final Chapter

Throughout this guide the goal has been to help educate you on the important things to consider as you go through the process of buying a new home in Prince William County from a builder. Parts of the process are exactly the same as buying a resale home and others are very different. When you buy new construction settlement is not the end of your “buying” process. In fact you have two more steps to put on your calendar.

Step One-Thirty Day Walk-Through During your final home inspection and your punch list inspection with the builder you came up with a list of items that the builder need to fix, repair or replace. It is up to you to track the progress of getting the list completed. If you the work isn’t being scheduled you will need to be the one on the phone with customer service to make sure it is completed. You will also have an opportunity in the first 30 days you own the home to create a second punch item list to present to the builder. Often times it isn’t until you start living in the home and using the systems that you figure out that the dishwasher makes an incredible racket during the rinse cycle or that the shower leaks after you run the water for 10 minutes. These are the types of items that may get added to the punch list for the builder to fix.

Step Two-Twenty-Three Month Walk-Through Many builders provide a two year interior warranty and a 10 year structural warranty on the home. At 23 months you will now be looking for cracking around crown molding, corner joints, cracked tiles caused by subfloor issues and other similar problems. This is really the last chance you will have to get interior fixes taken care of. Should you have a problem with your roof, sidewalks or other exterior structure those may be covered for up to ten years. Buying new construction doesn’t have to be difficult if you work with an agent who is experienced in new home construction and remember a few simple tips. Shop for the best deal on a mortgage, don’t go overboard with upgrades that will drive up your sales price and negotiate wisely.

Good luck and enjoy your new home for many years come. ©Cindy Jones All Rights Reserved

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New Home Construction Buying Guide  

Considering buying new construction in Prince William County (VA)? Then read through this short guide on things to consider before you head...

New Home Construction Buying Guide  

Considering buying new construction in Prince William County (VA)? Then read through this short guide on things to consider before you head...