Nov. 21, 2017
1). ASK TO SEE THE SOIL SURVEY and/or THE ENGINEERING REPORT for the lot!
- This is a test that the builders are required to conduct, to determine to what extent expansive soils (bentonite clay) are present on the lot. The engineering report with rate the content of expansive soils on a scale ranging from: Minimal, Moderate, to Severe.
- Any lot rated as minimal, is suitable for a slab-on-grade foundation.
- However, any lot rated as “moderate” should have a raised/elevated slab system at the minimum, or preferably pier and beam.
- Any lot rated as “severe” should have a pier and beam foundation, without exception.
- If the builder is pouring a “slab on grade” foundation on a lot with moderate expansive soil content, the home could be at a greater risk of basement heaving and/or settling in the future.
- Because new homes can potentially settle for up to the first 10 years after completion, they buying one can be slightly riskier than purchasing an existing home that has already done its settling. Knowing that the results of the soil survey can help you choose the most stable lot available, mitigating some of that risk.
2). How much is the lot premium, on the lot selected? Large lots, lots that can accommodate a walk-out/garden-level basement, and lots with a premium view, will always be the most expensive. However, these lots will tend to appreciate the most rapidly, hold their value best in economic down-turns, and be the easiest to re-sell in the future.
3). Is the lot slated to have a basement? If so:
- Is the topography of the lot suitable for a premium basement style such as a walk-out or garden level?
- Or will it only accommodate a standard, below-grade basement?
4). Which floorplans, elevations, and exterior paint colors are available for this lot? *If an adjacent neighboring home has already chosen the same model, elevation, or color choice as yours, many builders will not allow another identical one to be built next to it.
5). Is the lot on a street that serves as a main entrance or exit to the subdivision? If so, there could be excessive traffic around the home, making it noisier and less suitable for children.
6). Which direction is the lot oriented? *In colder climates, north facing driveways are less desirable because snow and ice may be extremely slow to melt, due to less direct sun exposure. West facing rear patios and master bedrooms may have mountain and sunset views, but homes oriented with large windows on the west side of the home may be far costlier to cool in the Summer. The sunlight entering the home is at its most intense in the late afternoon as setting, and beaming into the home’s west-facing windows.
7). Will the lot back to another house? Or is it a premium lot that backs to open space, a green belt, park, golf course, mountain view, or waterfront?
8). How will the proposed homes around the lot, be positioned in relation to the lot?
- Will they block or affect any views the lot may have before the surrounding homes are built?
- If it backs up to another house, will that house sit on higher ground, looking down and jeopardizing the privacy of the back yard?
9). Where is the lot located in the neighborhood? Is it in the interior of the neighborhood, or on the perimeter of the neighborhood where it backs to potentially loud, busy streets? (Homes backing to noisy main roads are less desirable, appreciate slower, and can be harder to sell)
10). Is the lot near a railroad track? (Homes backing to noisy train tracks are less desirable, appreciate slower, and can be harder to sell)
11). Will the lot have any oil derricks, fracking rigs, or Oil/Gas storage tanks near, or within its view? (The can be an obvious detriment to resale value, and health and safety, due to the possible emission of volatile organic compounds into the soil, air, and water).
12). Does the lot back to a stream, creek, river, drainage culvert, lake, or pond? If so:
- Does the FEMA map show the lot in a flood plain?
- If so, how does the FEMA map categorize the flood plain?
- Does the builder have a written estimate on the required flood insurance to get a mortgage there?
13). How is this lot’s topography, with regard to proper drainage? Is there a hill, high ground, or a retaining wall behind it, that could cause water to drain towards the home’s foundation? *Any of these could potentially create a situation that channels water towards the home’s foundation, causing settling, heaving, cracking, or wash-out of the home’s backfill dirt.
14). If the lot is on a golf course, where is it in relation to the tee box? Homes backing to a golf course can potentially be pelted by golf balls, which damages roofs, siding and windows. This is always worst for lots that are approximately 150 yards from the tee box, and located to the right of the fairway, because statistically this is where most golfers tend to “slice”. The left side of the course at 150 yards from the tee box is almost as bad, because it will catch the drives that “hook”. However, strong golfers can drive up to 300 yards or more, so no course lot along a fairway is completely immune to this. Lots just behind the tee box are the safest.
15). If the lot is on a golf course, where is it in relation to any man-made ponds? There have been lawsuits against developers of golf-course communities, because the water table in those communities had been raised to a problematic level, by the constant watering of the course. There are also similar cases where the water also table rises, because the man-made ponds on the courses were inadequately lined. Both issues can cause water intrusion issues in basements and crawlspaces, in these lots. If you must live on a golf course, its best to choose a lot that sits on the highest ground possible.
16). What optional structural features are shown in the model home, that will not be included in the base version of the home? Model homes commonly showcase every structural option the builder offers. *Make sure to clarify exactly what structural features the base version of the home comes with, and what is optional! Your finished home will most likely look FAR different from the model!
Model homes are generally packed with every imaginable option, such as:
· Kick-outs or Sun-rooms (room expansions on exterior walls, that increase room size)
· Coffered ceilings or other ornate drywall features
· Vaulted ceilings, that peak upwards following the angle of the roof trusses
· Raised ceilings (9ft-13ft high vs. the standard 8ft ceilings)
· Art niches, or In-wall recesses for televisions and A/V gear
· Floor to ceiling fireplaces or upgraded fireplace mantles
· Built-in shelving or additional cabinets
· Covered exterior patios
· Oversized concrete patios
· Oversized garage bays, tandem garages, or 3-car and 4-Car garages
17). Which elevation is included in the base price, and what are the cost increases for the premium elevations?
- Each model the builder offers, will usually be offered in 3-4 different exterior variations, referred to as “elevations”.
- Each elevation may be offered with a different siding material such as brick, stone, tile, stucco, or a lap-sided exterior.
- The different options often offer versions with or without a covered front porch.
- Variations can also include architectural touches like dormers, shutters, or additional decorative windows, etc.
18). Clarify which elevation can still built on the lot you are interested in. Do the available elevations for the lot you’ve chosen come at a premium cost, above the price of the standard elevation?
19) What material is the home to be sided with? Modern homes are typically sided with one (or a combination of) the following:
· Brick or Brick facade
· Stucco (concrete based texture that is either sprayed, or hand-troweled over a wire mesh base onto the home’s exterior)
· Synthetic EIFS stucco (a Styrofoam sheet and moisture barriers, sprayed with thinner layer concrete based texture. Looks great, but requires more maintenance than real stucco and diligent upkeep of the caulked perimeters, to prevent water from intruding behind it and causing mold growth)
· Concrete lap siding (Often referred to as James Hardy siding, or Hardy Board).
· Vinyl Siding (often used by entry-level builders, but less common in recent years. Low maintenance and no painting required, but it becomes brittle and starts cracking and/or chipping apart usually around the 10yr mark)
· Aluminum Siding (Also used by entry-level builders, but less common recently as well. Tends to bend and dent as it ages, so it ages poorly. However, it doesn’t require painting)
· Masonite lap siding (steam-pressed wood fiber. Any builder still using Masonite siding should be avoided, as it decays rapidly if not painted regularly).
· T-111 Concrete fiber sheet siding (used most commonly on modular homes and storage sheds. A tough and affordable material, but far less visually appealing than other options)
· Quarter round log siding (typically only on mountain homes)
20) What roofing materials does the builder use?
· Spanish Tiles- Extremely durable, extremely attractive, but also very expensive to install and/or replace. This style roof is normally found on only on custom homes and very upscale tract homes. They are duty-rated for a 50yr-100yr life expectancy, and are very resistant to hail and high winds. However, great care must be exercised when walking on the roof to perform repairs, maintenance, etc., because they can be easily cracked if improperly walked on. *Homeowners with tiled roofs, should only hire bonded and insured contractors for any repairs requiring roof access, to make sure the contractor can (and will) pay to repair any damage they may do while walking on the tiled roof!
· Steel Pro-Panel- Most common on mountain homes, barns, beach homes, and steel out-buildings. Very resistant to high snow-load, and high winds. Relatively inexpensive, easy to install, and durable. However, they are considered by some to be “utilitarian.” Meaning, they are very practical, but not as attractive to some people. They are also noisy when hit with rain, sleet, etc. Therefore rarely used by tract home builders in suburban neighborhoods.
· Composition shingles- The most common type of roofing shingle used by tract builders. The most affordable type of roof to install, and can be easily spot-repaired if needed. However, they are the most susceptible to wind and hail damage.
21). How many years of warranty coverage are on the composition roofing shingles or tiles? Standard asphalt shingles come in 3 main categories:
· 3-Tab Composition (20yr, 25yr, or 30yr Warranty),
· Laminate/Dimensional Shingles (30yr, 40yr. or 50yr Warranty),
· Premium Laminate (50yr to Lifetime warranty).
· *Worth noting, it has been our personal observation that most of these shingles have an actual useful life-span of only 1/2 to 2/3 of the manufacturers claimed service life. Their warranty coverage are usually pro-rated, and only cover materials, but not the labor required to remove and re-install them.
22). If the builder includes solar energy panels, are those panels sold outright with the home, or are they leased to you?
- If leased, are they at a flat monthly rate, or charged by kilowatt hour of energy utilized?
- If the system produces more energy than the home uses, does the overage sold back to the grid go to the homeowner, or the company leasing you the panels?
- If leased, how many years is the lease?
- If you sell the home, what is required to transfer the lease to the new owner?
- Whose responsibility is it to remove and re-install the solar panels, in the event the roof needs a repair?
23). To what extent will the garage interior be finished?
- Will it be fully insulated and dry-walled?
- Will in only be insulated and dry-walled on the interior walls that adjoin the inside of the home?
- If the it will be completely dry-walled, will it also be textured… or simply “taped and bedded”?
24). Will there be an access door on the side of the garage, to easily wheel out a lawn mower or trash cans?
- If so, will the builder provide a sidewalk leading from that side door, around to the front of the home?
- Or, will it be left as landscaping rock or grass?
25). Will the kitchen feature a “Gourmet Kitchen” with a wall oven and cooktop set-up, or a more basic freestanding (or slide-in) stove? The base price of most tract homes revolves around the standard kitchen with a stove. Make sure you are very clear on all the itemized charges required to upgrade to the “gourmet kitchen”. Because wall ovens require a different cabinet configuration, and cooktops will require additional wiring and/or gas plumbing, there are often as many as 3 separate charges to upgrade to a kitchen with wall ovens. A separate charge for the wiring and plumbing, a charge for the change to the cabinets, and a charge for the upgraded appliances themselves. It is typical that the Gourmet Kitchen package can easily total $15,000 in additional charges, over the standard stove-based kitchen.
26). Does the home come standard with a full basement, a ¾ basement, or a ½ Basement? (A full basement is excavated to mirror the shape and 100% of the square footage of the home’s ground floor. A ¾ Basement has only 75% of the ground floor’s square footage, and a ½ Basement has 50% of the ground floor’s square footage). *Homes with less than a full basement are less functional if finished, and can be harder to sell in the future, with lower resale value.
27). If the home will not come with a full basement, what is the builder’s upcharge for excavating a ¾, or full basement?
28). How deep will the basement be excavated? Standard 8ft ceilings, or taller 9ft-12ft ceilings? Basements with standard 8-foot ceilings are sufficient when finished, but they will only be 7ft tall in places where the HVAC ducting is routed. Paying extra for the 9ft-12ft basement excavation, is money well-spent, if you intend to eventually finish the basement. The deeper excavation will give the rooms in the finished basement higher ceilings, making it feel far more spacious, and more like the upstairs.
29). What is the builder’s upcharge to excavate the basement deeper to 9ft-12ft, if the standard basement is only an 8ft excavation?
30). Which of the following 3 types of basement will the home be built with?
· Standard basement: 100% below-grade (below ground), with window wells that keep water and soil from entering the basement windows. Egress ladders must be placed in these window wells, so that the basement is escapable in a fire. *Once finished, below grade basements add value to a home, but typically only about ¼ the value of the price per square foot of the home’s above grade main living floors.
· Garden Level basement: Partially below above-grade (above ground). Excavated in such a manner that the basement windows are positioned to look out above ground level, but not quite enough to place a door in the basement that can be walked out of. This type of basement typically places the home’s back door 2-3 feet above ground, therefore necessitating an elevated deck off the back door, and a short staircase leading down from the deck. *Once finished, Garden level basements add greater value per square foot to the home, than a standard below-grade basement, but are still less valuable per square foot, than the above grade portion of the home.
· Walk-Out Basement: Fully above-grade (above ground). The home’s lot is typically dug into a hillside, so that the back of the home is completely above ground, and only the sides of the home are underground. Therefore, the basement can have a rear door, that can be walked out of. This type of basement typically places the home’s back door 8-10 feet above ground, therefore necessitating an elevated deck off the back door, and a full staircase leading down from the deck. *Once finished, a walkout will add additional value to the home, that is almost on-par with the price per square foot of the home’s main living floors.
31). If the basement has window wells, are they corrugated steel, or concrete? Window wells made of corrugated and steel, can eventually develop rust and require replacement. Therefore, concrete window wells are considered far superior. However, only high-end tract builders typically opt for concrete window wells. *While concrete wells are certainly preferable, corrugated steel wells should not disqualify a home from consideration for purchase. The going rate in 2017 to remove and replace a rusted steel window well is around $1,500, in the Denver market.
33). Does the builder automatically install an active or passive Radon mitigation system? If not, will the reimburse you after closing for the installation of a radon mitigation system if the home tests above 4.0pCi/L? *Most builders will reimburse 50%-100%of the cost of a system, if a radon test detects levels present above 4.0pCi/L. The average 2017 cost to install a radon mitigation system in Denver is currently averaging around $950. Places like Denver have high Uranium content in the soil and rocks, so high radon levels are found in approximately 50% of homes. Fortunately, it is easy to mitigate it to 100% safe levels. *If the builder will not install a mitigation system, (and the home tests high), this should be done IMMEDIATELY after closing by the homeowner! (Radon gas in homes is the 2nd leading cause of lung cancer, in the U.S., behind tobacco.)
34). Does the builder automatically install a sump-pump, into the home’s sump pit? *If not, this should be done IMMEDIATELY after closing by the homeowner! Failure to install a sump pump, leads to almost all the severe cases of basement floor/foundation damage, and basement flooding we see. The sump pit and sump pump, function to evacuate ground water away from the home’s foundation and to minimize the swelling of expansive soils under the foundation. It is typically no more than $600-$1000 to have a pump installed and properly plumbed. This is the best $600-$1000 you will ever spend on the home! We see countless homes yearly, with $50,000-$100,000 worth of foundation damage, that most likely could have been prevented with a properly installed sump pump.
35). Does the builder automatically finish the basement, or leave it unfinished?
- If it isn't standard, is it an option to have the builder finish it?
- If the builder does have the ability to finish it, what is their charge to do so?
- *The going rate to have a basement finished after closing, is around $45-$50 per square foot, with basic builder-grade materials. The builders can often offer it at a cost far below this, due to their economies of scale. If the builder finishes it, you can also roll the cost into your mortgage payment for less money per month, that taking out a home equity loan to do it later. Opting for the builder to finish the basement often makes good financial sense, if you can afford it.
36). If the builder leaves the basement unfinished, do they provide the following infrastructure to make it practical to finish it in the future:
- Adequate electrical service, or ideally a sub-panel in the basement with enough open breakers in the panel to wire the basement?
- Rough-in plumbing drains for a bathroom, with a toilet and shower?
- Rough-in plumbing drains for a wet-bar and/or a Mother-in-Law kitchen?
- Are the water heater and furnace ("mechanicals") placed intelligently in a corner, or by a side wall? Or does the builder plan to cut corners, and place them directly in the center of the basement? *If the builder indicates that the mechanicals will be placed in the center of the basement, contest this fiercely! Basements with mechanicals in the center of the room, can never be finished with the desirable "open floor-plan" that most buyers want. This will diminish the usefulness, and re-sale value of the home's basement!
37). Is the HVAC ducting sufficient to finish the basement, or will it need to be expanded on later to comply with building code?
38). Will the basement floor be constructed with an elevated wooden Sub-floor and crawl-space (pier and beam foundation), or a concrete slab (slab on grade foundation)? A slab on grade foundation should only be utilized if the lot’s engineering soil-survey had results in the excellent to good range. If the soil survey shows moderate to high content of expansive soils, then the builder should ideally be utilizing either a pier and beam foundation, or an elevated slab design such as the one shown at: https://www.youtube.com/watch?time_continue=1&v=oPPSUm-PWX0
*Most builders will typically construct homes with a slab-on-grade foundation, even when the soil survey shows “Moderate” levels of expansive soils. This is allowable per building code in most areas. Great care should be taken to always make sure the sump pump in these homes is functioning properly, and that the soil around the homes perimeter has a sufficient slope, channeling water away from the home’s foundation!
39). What is the builder’s warranty coverage on the concrete basement floor, and/or the garage floor, if heaving or settling occurs? How many years is the coverage, and how many inches (or centimeters) of movement must occur before they will remedy it under warranty?
40). Do the bedrooms come standard with wiring for a ceiling fixture with a wall switch, or is this an option?
- If it is included, is it rated to mount a ceiling fan?
- Or is a fan-rated fixture mounting an additional cost?
- *Nothing in a home is more annoying than a bedroom without a light fixture on the ceiling. Many builders will "nickel and dime you" for even the most basic wiring. If code doesn't require it, they usually don't include it as a standard option.
41). Do the bedrooms include switched outlets, for conveniently switching off nightstand lamps, and oscillating fans, etc?
42). Will the laundry room be wired with a 30amp, 220v outlet to power an electric dryer?
- Or, is it only wired with a 120v outlet and a gas line for a gas dryer?
- Does the builder include a Ground Fault Circuit Interrupt (GFCI) outlet in the laundry room? (*Code requires it, but we see many builders get away with leaving one out.)
43). Will the garage have a 220v outlet, for running large tools such as welders?
44). Does the home have the proper 220v exterior wiring in place for a central A/C compressor?
- Or, is the home only wired for a central A/C if you have the builder install central air?
- If you do not have the builder install central air, what is the charge to have them pre-wire for it, if you choose to install it at a later date?
- *Homes without central air-conditioning are at a serious disadvantage from a re-sale perspective.
45). Which recessed can lights shown in the ceiling of the model home are standard, and which ones shown are optional?
46). Will the kitchen have a 50-Amp 220v outlet for a stove? Or is it set up for a gas stove only, with a 120v outlet and a gas line instead?
- If it only has a 120v outlet, what it the up-charge to install a 220v outlet, in case a future owner prefers an electric stove?
- If the home is upgraded to a "Gourmet kitchen" with a wall oven and cook-top, what are the additional wiring charges?
- Is the vent-hood, or microwave hood over the stove actually vented to the exterior, or simply set up to recirculate the heat and cooking odors back into the home?
47). Does the builder pre-wire the home for internet access, in all of the rooms where you will want to place a wireless router, or have a computer plugged directly into a wired signal?
- If so, do they wire the home with Cat5e, Cat6, or Cat6a Ethernet cable?
- While Cat5e cable will be sufficient for basic internet access, the advent of new streaming technologies means that Cat5 is rapidly becoming obsolete. Therefore, we always advise clients to opt for the highest capacity Cat6a cable available, to future-proof the home as much as possible.
- Read a technical article on the exact differences in Ethernet cables here.
48). Does the builder wire the home for landline telephones, in all of the locations you will want a land-line?
- If not, what is the charge per location to add additional phone jacks?
49). Does the builder wire the home with coaxial cable for Satellite and Cable TV service, in all of the locations you will want a television?
- If not, what is the charge per location to add additional cable outlets?
50). Do the home-security providers in the area still require pre-wiring for their current security systems?
- *Many builders will encourage you to pay for the "Security Pre-wire" on their homes, even though most of the major home-security providers (such as ADP) have now gone to completely wireless systems. Many of their latest systems no longer require pre-wiring of the home!
51). Does the builder automatically install in-wall, or in-ceiling speakers for whole house music, or home-theater surround sound?
- If the home will be wired for home theater surround sound, is it arranged in a 5-channel, 7-channel, 9-channel, or 11-channel configuration?
- Many of the newest AV Receivers are designed for surround sound formats such as 9 or 11-Channel Dolby Atmos, etc.
52). If the home includes wood flooring, is it solid ¾ inch solid hardwood flooring, engineered wood flooring, or a synthetic laminate flooring product?
- If engineered or laminate is the base material, how much of an up-charge is it to upgrade to genuine ¾ Hardwood?
Definitions of available commonly used wood flooring materials:
- ¾ Inch Solid Hardwood Flooring- This is the most expensive, and the most desirable version of hardwood flooring. Because it is solid hardwood all the way through, it can easily be sanded and re-finished in the future. Solid hardwood can be re-finished several times, and should last the lifetime of the home. * ¾ Hardwood is sold in two primary types. “Finish in place” that is installed rough, then sanded and coated with a polyurethane or oil based finish after it is installed. Finish in place is preferred by most tract builders, because it is less expensive than factory finished hardwoods.
- Factory Finished hardwoods are the most modern, and desirable material available today. They have an aluminum oxide coating that is baked on at the factory. The factory applied aluminum oxide finish is far tougher, thicker, and more durable than the “applied in place” poly or oil finishes. Expensive, high-end brands such as Bella, Bruce, and Armstrong, typically utilize a factory applied aluminum oxide finish. All ¾ hardwood is typically nailed down during installation, providing the most “solid” feeling floor under-foot.
· Engineered Hardwood Flooring- Engineered wood flooring is a mid-grade product, that has a thin 1/8th inch veneer of genuine wood that is factory adhered to a particle board (MDF) or plywood, tongue and groove backing. It is designed to be quickly (and cheaply) installed, by “clicking” the planks together on top of a thin foam sheet applied between the planks, and the sub-floor. It is typically referred to as a “floating floor,” and tends to feel slightly thin and hollow under-foot, compared to a solid hardwood floor. Once installed, it looks like a genuine hardwood floor, and it is finished with a tough aluminum oxide finish, just like high-end hardwood. *Some new-home sales people try to convince buyers that this type of floor is superior to genuine ¾ inch hardwood. This couldn’t be farther from the truth! Because engineered hardwood only has a thin 1/8th - 1/4 inch veneer of wood, it can never be sanded and re-finished! Unlike a genuine ¾ inch hardwood floor, engineered flooring must be removed and completely replaced, once it becomes scratched up and/or worn. Replacement is approximately 6x-10x the cost of refinishing!
· Laminate flooring- Constructed and installed just like engineered flooring, except that it has a fully synthetic (plastic or vinyl) surface material that is designed with faux wood grain texture and markings on its surface, instead of a real wood veneer. The high-end versions of it (name-brand Pergo, etc.) are generally very tough, and often carry a long warranty from 15yrs up to Limited Lifetime. This option is popular with owners of large-breed dogs, because it is less susceptible to scratching by their claws. However, it is generally considered by most to be an inferior material to genuine hardwood, and will not provide the re-sale value of real ¾ inch hardwood floors.
53). If the home includes tiled flooring, is it ceramic, porcelain, natural stone, or linoleum?
· Porcelain- Porcelain tile is a manmade tile, and is the highest grade of ceramic. The kaolin clay it is fired from contains fewer impurities than the clay used to make less expensive ceramic tiles. It is formed of quartz, clay, and feldspar that is fired at temperatures ranging from 2350°-2500° degrees F. The primary difference is that porcelain has that 0.5% or less water absorption rate. It is also denser, and harder, which make it the most durable of all tiles.
· Ceramic- Also a man-made tile, ceramic tiles fired from slightly less refined clays than porcelain tiles. The are also fired at a slightly lower temperature range, averaging between 1832° - 2282° F. They are very durable in general, but their slightly lower density means they may be somewhat easier to crack or chip than the costlier porcelain tiles
· Natural Stone- As the name implies, natural stone tiles are natural material that is quarried, and machined into tiles. Natural stone is the most expensive material, and it is prized for its beauty and naturally occurring patterns. However, it tends to be softer and more porous than manmade materials. Therefore, it is much easier to crack and chip. The porous nature also means that it must be chemically sealed periodically, or it can begin to appear “grungy” as foot traffic grinds dirt, etc., into the pores.
· Linoleum- A synthetic man-made flooring material made of vinyl on a canvas backing. It is either sold in rolls like carpet, or individual cut tiles that have an adhesive backing. If is the least expensive form of tile, but also the least attractive and least durable due to its soft consistency.
Builder Incentives/Mortgage Lending:
54). Are the builder's incentives contingent upon using their lender and/or title company?
- Many builders will require you to use their "preferred lender" and/or title company in order to qualify for their advertised incentives. *With a re-sale transaction this would violate "steering laws," but the laws in states such as Colorado, allow builders to tie incentives to the use of a particular lender or title company.
55). If the builder's lender cannot get you approved, will they still honor the incentives if another lender of your choosing can get you approved?
56). If interest rates increase to a point that you no longer qualify to close, does the builder's contract define this as a situation were you would forfeit your deposit? Or does this situation qualify as a valid reason to have them refund it?
- The Builder's contract should specify the latest date that you can terminate due to loan disqualification, without penalty.
- Interest rates on mortgage loans, typically cannot be cost-effectively “locked-in” more than 60-90 days in advance of the closing date. Therefore, if the interest rates start to make substantial hikes during the year it takes them to build your home, the payment may end up being substantially higher than what you initially planned for. In worst cases, a large enough rate-hike may alter your debt-to-income ratio to the point that you no longer qualify for the payment on the loan. Imagine waiting 11 months for the home, only to have the lender tell you that you no longer qualify to close on the home loan. Fortunately, this isn’t a common occurrence, but nevertheless it is a very real possibility.
57). What is the mil-rate that property taxes will be calculated with, once the county re-assesses the property taxes to include the actual home structure?
- Are there any similar completed homes in the neighborhood that have already had an assessment for the structure yet?
- This is a crucial question, because the initial assessed rate for property taxes typically only factors in the value of the vacant lot prior to the home being built. The county will always re-assess the property taxes after the first year you live in the home, to include the newly completed home/structure.
- Understanding the amount, the taxes will increase after the first year, will prevent any nasty surprises when the final assessment increases your property taxes!
58). What dates are all of the major contractual deadlines, outlining your opportunities to cancel the purchase contract without forfeiting your deposit money?
- While the builder's sales rep may know these dates and be able to recite them, its always best to thoroughly read the contract in advance of the day you sit down to sign it. Builder reps will often "gloss over" or "downplay" the importance of these deadlines.
- Don't take the salespersons word for anything that they cannot point out in writing!!!
- If any of the contractual verbiage is unclear, or confusing, consult an attorney (or a Realtor experienced in builder contracts) to explain it to you!
59). How long is the entire home covered with a full, comprehensive warranty of all mechanical, structural, electrical, low-voltage, and exterior components ?
60). How long is the home's structural warranty that covers against settling or heaving in the foundation?
- How many inches or centimeters of foundation movement does the builder consider normal and within tolerance? How bad does the movement need to be, to justify a warranty claim?
- Does the structural warranty also cover the flat-work such as concrete driveways, sidewalks, patios, porches, and garage floors? Or are these excluded, or covered under separate terms?
- Does the warranty cover poorly installed or diseased landscaping, tress, shrubs, lawns, and sprinklers?
61). If a mechanical component such as a furnace, water heater, or appliance fails, does the builder replace it themselves, or do they expect you to pursue the manufacturer's warranty?
Earnest Money/Deposit Policies:
62). Does the builder's contract provide an initial rescission period, allowing the buyer to cancel the contract without penalty or loss of the deposit?
63). If there is no rescission period, what circumstances does the contract outline that do qualify you to terminate without forfeiture of the deposit? The following items are common, but still vary from contract to contract:
- The lender cannot get you approved for financing, or the underwriter declines your loan due to circumstances outside of your control.
- The builder fails to complete your home during the allowed time-frame.
- The home is destroyed by fire or natural disaster, etc, before it is delivered.