The assumption that a new home or spec home does not have any problems is a very dangerous one. The transaction is basically a private sale and doesn't fall under typical real estate regulations. There are some serious red flags that you should be aware of. Please note: These items are only red flags. They are not necessarily problems in themselves, but should trigger a little more research. Late Payment Interest – If you don't pay on time, builders sometimes charge unethical interest rates until full payment is made. Everything is negotiable. Additional Fees – Sometimes the builder will charge extra fees even if delays are their fault. Discouraged from Using a Realtor® – If you have nothing to hide…. Discouraged from Getting a Home Inspection – No one builds a perfect home. No Pre-Possession Walk Through Scheduled – This is the time to point out deficiencies. Speculative Pricing – In or just after a hot market, some builders price homes based on what they think the property will be worth in 6-12 months. Sold Out Phases – It may just be that builder who is sold out. Shop around. Paid Legal and Mortgage Fees – They will usually require you to use their people who are likely more interested in keeping the builder happy, than you. Future Development Plans – What is being built around me? Utility Right of Ways – Is there any place on my lot I cannot build on? New Home Warranty – How long and what are the terms? GST – Is it included or not, and am I get my entitled to the rebate? Late Exterior Additions – If you ask to have a deck put on late in the process, then do you have an RPR or permit saying that it is properly located and built? Verbal Promises – MEAN NOTHING. If it is important, get it in writing. Non-Standard Upgrades – If it is unique, they may not stand behind the work. Marketing Material Specs – This information may be exaggerated (check the square footage). Alteration Clauses – Ensure that you know exactly what the builder can and cannot change on your home without your permission. Seller's Conditions – The builder may have a clause saying that they can increase the cost, or ask for more money down at a later date. Ambiguous Buyer's Conditions – If a condition says for the buyer to simply “get approved for financing”, then regardless of the interest rate or terms, you would have fulfilled your condition. If a condition is for you the buyer, then add the following words to the end: “….. to the Buyer's satisfaction.” A Realtor® that understands new homes can be your biggest asset. Most good builders are happy for you to have a professional oversee the transaction. This is a must. Contact us for more information about buying new construction in Calgary. |