New construction buyer process

NEW -> Contingent Buyer Assistance Program
Z

zlo

New member
Hi fellow TI'ers,

We think we will be settling for a new construction in Irvine and pay higher mello roos! Before we go through with the process are there any tips that we should know about the process?
We had a call from an agent we met at an open house and they mentioned they are able to negotiate the price for new constructions and sometimes get credit on upgrades. We thought all of this wasn't possible and it was just a way for them to sell themselves... Is what he said true?
Also do we have to get my mortgage with the preferred lender or can we shop around for a better rate? Any other information for a first time buyer is highly appreciated.

Thanks!!!
 
Definitely sign with an agent. USCTrojan on this board is a great option. Read here: http://www.talkirvine.com/index.php/topic,2700.0.html.

An Agent can help you answer all of your questions, but here's some answers from a new home buyer in 2012:

- Negotiate Price? Depends. I did.
- Get credit on upgrades? Depends. I did.
- Mortgage: Most builders require that you pre-qualify with the preferred lender. Some give you a credit for financing with the preferred lender. Most waive any late closing penalties if you do (I closed 12 days late and would have been penalized $350/day if I hadn't use the preferred lender). But you can certainly shop around. I shopped around and got the preferred lender to match the deal I found.
 
Go with a trusted agent that will offer you a rebate as well as negotiate for you. Get it in writing before you go see the models. Some agents will act surprised or offended if you mention rebate. They will give you the, "you're taking money out of my pocket / thats a kickback and thats illegal / or flat out, no, I won't do that but I will try and get you some credits".  Normally if the builder is selling at a normal pace, i doubt the agent will be able to get credits from design center. If they seem to be struggling a little then they may work with you. As far as preferred lender, if the house is almost done and its new construction, usually the preferred lender or in house lender who has worked with the builder is able to move quicker than some mom and pop shop that has a good rate. Just beware of the penalty if the loan is not funded in time. Last but not least, always hire a 3rd party inspector, a few hundred dollars goes a long way. There are a couple of inspectors recommended her on TI. I would check out Steve from Built-Rite. Worth every penny. Even if its a new house, its still construction and that comes with flaws, nothing is perfect.
 
wow thanks - didn't know a lot of this, especially never thought about hiring a separate home inspection for a new construction.
 
Another word of advice, if you're buying an IP home, they may not let you bring in your inspector. They have tight rules about that. They claim that all the homes are well built and no need for an inspector or that the inspectors are usually too nitpicky. They will disclose that certain items will not be repaired. So when you do your walk through with the builder, its usually just a few cosmetic items that a normal buyer can spot since most people won't know if certain items were built to code or not.
 
OC troll said:
Another word of advice, if you're buying an IP home, they may not let you bring in your inspector. They have tight rules about that. They claim that all the homes are well built and no need for an inspector or that the inspectors are usually too nitpicky. They will disclose that certain items will not be repaired. So when you do your walk through with the builder, its usually just a few cosmetic items that a normal buyer can spot since most people won't know if certain items were built to code or not.
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Two words: RED FLAG.

Iran also keeps 3rd party inspectors out of their nuclear facilities, because it's all on the "up and up"... jk
 
Currently, generally speaking builders are not negotiable when it comes to discount or credits as new homes are selling well.  There are some builders will provide some kind of discounts for homes that are almost build (aka "standing inventory" or "quick move-in homes").  Some builders will offer a credit towards closing costs if you use their preferred lender.  I HIGHLY recommend getting an inspector, just because it's a new home doesn't mean it's perfect.  My new home buyers sometimes had more repair items for their new home than buyers who bought resale homes.  You are spending top dollar on a brand new home, you have every right to hire an inspector to ensure that the home was built properly.  Also, there are upgrades that you want to get through the builders (lighting, wiring, upgraded cabinets, foundation upgrades like conservatory rooms, etc) and there are other upgrades that you want to get through an outside contractor after you close (flooring, window coverings, ceiling fans, crown moldings, baseboards, etc).  Feel free to PM or email me if I can be of assistance. 
 
OC troll said:
Another word of advice, if you're buying an IP home, they may not let you bring in your inspector. They have tight rules about that. They claim that all the homes are well built and no need for an inspector or that the inspectors are usually too nitpicky. They will disclose that certain items will not be repaired. So when you do your walk through with the builder, its usually just a few cosmetic items that a normal buyer can spot since most people won't know if certain items were built to code or not.
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Just want to clarify regarding to bring your own 3rd party home inspector for the IP home.

IP does allow home owner to bring their own home inspector on the final walk through. However the inspection is only allow during the time frame of the final walk through, something like 9-12 am, which is very limited.

IP does not do pre-drywall walk through anymore and does not allow home owner to bring in a home inspector prior to the final walk through.  IP does allow home owner to visit the house during construction but home owner can't bring an inspector with them at these visits.  And actually, pre-drywall inspection is more relevant because once the drywall is up, it really cover up a lot of things. 

 
irvinehomeowner said:
I wonder if that is legal, to disallow 3rd party inspection pre-drywall.

It just screams Slim Shady to me.
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Given the property is owned by the builder up until the time of closing it wouldn't surprise me that they have the legal right to control who they allow onto their property. But is is definitely an issue of ethics. The builder is protecting its own rights/profits during the building process and city inspectors are representing the needs of the city. The buyer has the most skin in the game on a new home construction and should be entitled to ensure they have access to people who can represent their own interests. I can have a lawyer to review all mortgage documents before I sign I should have the right to have a qualified building inspector present before the dry wall goes up and hides a whole bunch of potential issues. If a builder does not want me to have that right I am not sure I would want to make the biggest financial decision of my life with such a builder. Thankfully I now have at least one more question I need to ask before selecting my new dream home.
 
Ive also heard of companies trying to scam you out of some cash with very high closing costs.  For example, Ive heard buyers being asked to pay for both buyer and sellers title insurance.  Also heard of very high escrow fees charged by escrow companies.  Can anyone attest to this?
 
what are typical closing costs?  I know this may depend on price of home, but it would be nice if someone could break down main components of closing costs such as title insurance, escrow fees, lending fees, etc, etc
 
Closing costs for new homes tend to be lower than resale homes.  The buyer does pay for owner's title insurance (but lower than sellers pay for resale homes because there's less risk to the title company) and county transfer tax.  If you exclude lender costs, you are looking at around 0.50% to 0.75% for buyer closing costs for new home (the range is based upon actual property tax and HOA prorations).  I've reviewed dozens of new home estimated closing statements and fund them to all be reasonable. 
 
Yes - When I enquired  (IP) about bringing an inspector during one of the two final walkthroughs I was told it wasn't allowed. I hadn't realized they had changed their policy. They did say I could bring the inspector at another time after the walk through, but not during. I asked to be put in touch the the rep who will be doing the walk through so I will confirm once I hear back.
 
Here's some of the things I've noticed on IP built homes. Certain parts of the house that should have insulation, does not. Certain parts of the garage that should have fire resistant caulking does not. Certain parts of the house where there should be a fire block between studs does not. Certain parts of the house where the plumbing should be more secure is not. Unfortunately, IP builds most of the homes in Irvine. And the ones that aren't IP seem to be at a higher price point beyond my budget.

 
I know for a fact you can negotiate credit at the design center...  I assume it would depend on builder, but it CAN be done.
 
IP home does get fair amount of post regarding to their build issue on TI than any other builders.  Even for KB homes, we rarely read any post from KB home buyer about their home issues. 

And interestingly, significantly number of IP homes were subcontract out to be build by the New Home Company and we never hear any build issue with Trevi, Amelia and homes in Lambert Ranch.

FYI, Mendocino in Stonegate and majority of IP home in Orchard hill were build by the New Home Company.
New Home Co. also has a deal with Newport
Beach-based Irvine Company to build
more than 800 homes at Orchard Hills and
other projects under a fee-building arrangement
for the developer?s in-house builder,
Irvine Pacific.
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http://thenewhomecompany.com/sites/default/files/pdfs/3.24.14 OCBJ Next For New Home Co.pdf

 
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