Real Estate Tips: What Questions Should You Be Asking Your Builder?

Buying New – Part 1

By Mike LaRuffa
 
Whether you are using the assistance of an experienced Realtor or going it alone, there are some questions that you need to ask before you sign on the dotted line when buying new construction. Location typically plays a large role in the decision making process, so let’s explore questions you would want to ask if you are considering a development. First things first, make sure to find out who owns the development. Do not assume that the builder on the sign owns the development because often times the land is owned by a developer who is selling lots to the builder.               In that case you would want to know who the developer is and are they financially sound?  Those great looking entrance features, manicured common areas and community amenities are the responsibility of the developer until the majority of the development is completed. If the amenities and common areas do not look vibrant and well maintained, that could be the sign of a financially troubled developer. Your section may look good because the builder is subsidizing the maintenance in the section they are building but what happens when that builder is gone? Another question to ask is if amenities are planned. If amenities are planned but are not yet completed, be sure to ask when they will be finished. In these economic times, developers may not have the money to complete amenities until a certain number of homes are occupied. This is not uncommon today, but I would suggest trying to get a firm answer regarding a completion date. In some cases developers are required to post a completion bond on planned amenities, which is like an insurance policy for the homeowners that insure amenities will be completed if the developer does not have the means to do so. Ask to see a copy of the Covenants, Conditions and Restrictions or CCR’s. These are the “laws” of the community that dictate everything from changing the color of your home and putting up a fence, to parking certain types of vehicles on your property. A violation of the CCR’s may subject the offender to fines or even liens against the property. These restrictions are seldom changed to accommodate your situation so read them thoroughly and ask questions. Last but not least, make sure that you understand the financial condition of the HOA. Ask the sales rep for a current copy of the financial statement. The law requires builders to provide this to you when you are ready to sign a contract. But there is no sense in getting that far down the road, ask for it early in the process. Also check the local government web site to see if there are any liens, lawsuits or judgments filed against the HOA. This is important since you will be a member of the HOA. If any of the above has been filed, your dues can be affected and you can be charged with a special assessment to cover a judgment filed prior to you ever living in the development. Stayed tuned for Part 2

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