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Tips on Buying a House You Can Love for the Long Term
When Heart and Head Agree
By Janice Booth

It was a gray Saturday morning in early spring. I was driving home after a walk and breakfast at the City Dock. A bundle of bouncing balloons and an "Open House" sign in front of a cluster of new homes caught my eye. Over the last months, I'd watched these basements being excavated and the walls framed in. Now the small subdivision was nearly finished and my curiosity was piqued. Why not check it out? I had time.

I stepped through the front door of the pretty colonial and into a grand hall lighted by a sparkling chandelier suspended from the lofty ceiling. Past the foyer, a fire glowed in the family-room fireplace and the aroma of coffee welcomed me. The hardwood floors glistened as I wandered through the new house. The kitchen was perfect: appliances pristine, countertops sparkling, light and space abundant. I could imagine myself gathering ingredients from the sweet little pantry to bake cookies, while the cats and hubby napped on the fireside couch.

Upstairs, in the spacious bedrooms with glistening, generous windows, I found myself positioning furniture and choosing wallpaper and color schemes. And, oh yes, those perfect bathrooms with the latest fixtures, flattering lighting, well-placed mirrors and generous tubs-I could settle in very nicely! Where do I sign?

And so it is, in some cases, that we choose a new home-a serendipitous confluence of location, availability, and feasibility. Buying a "new home" is always an exciting, stress-inducing, momentous decision. There are so many choices you must make.

Arguably the most important, and usually the first, decision concerns location-where to live. Once we've decided where, then we grapple with how we wish to live: single family, condo, or townhouse? Previously owned or new construction? For you is a new home a house that is new to you or one that has never been occupied?

If you're leaning toward that stunning new house you keep driving by in one of those communities like Bar Harbour, Monticello, or the Vineyards of Annapolis, let's consider the advantages of purchasing that perfect, new home in a subdivision or planned community rather than buying a lot and building that custom dream house for yourself.

There are three paramount reasons for buying from a builder's development: financial, financial, and financial-in order of importance.

Let's call the first the "Wal-Mart advantage." Buying new construction in a subdivided community, rather than buying a newly built home in an established community or a custom-built home in any location, saves you money. When the builder plans and finances the construction of a group of homes on a plot of land, a subdivision of some kind, a good builder uses the most cost-effective methods of getting the job done and the community built. Now, don't jump to conclusions. "Cost-effective" does not necessarily mean "cheap." The builder's savings usually translate into a more competitive price for the property you may want to buy. The builder's reputation and future sales depend on satisfied homeowners; if buyers can get sound homes at savings, they'll buy. If they buy, the builder recoups the investment, makes a profit, and begins another project. Everyone wins.

Most subdivisions are built by fewer than ten nationally based builders. They have vast resources and investment power. They can purchase materials and supplies in huge quantities. Instead of buying roofing for one house, Pulte Homes may negotiate a price on 2000 roofs nationwide. The price for shingles comes down. Winchester Homes may order thousands of windows for hundreds of homes every month, so the window manufacturer's bid on the cost for each window can be lower. The ability of builders to construct ten or fifteen houses on one parcel of land at one time, with variations-on-a-theme customization, means crews can work simultaneously on different houses, cutting labor and transportation costs. Savings are passed on, in part, to the home buyers.

Building a custom home, like buying a custom boat or car, means everything is bought and installed for that one job. Additional expenses, not savings, usually accrue with custom-built homes. And too often, the finished home fails to meet the buyer's expectations and budget limits.

The second advantage to buying your new home in a subdivision is the possibility of negotiated mortgage rates. Generally, when you buy you check with various lending companies and banks to find the lowest mortgage rate and closing costs. For some new developments, builders negotiate mortgage packages with lenders that become part of the sales plan for their subdivision. These financing packages usually benefit everyone involved-the lending institution, the builder, and the buyer. As the potential buyer, you may be offered a financing package with savings in closing costs, customization bonuses, or other incentives to encourage you to finance your new home with the builder's partnering lender. All three parties win. The lender knows the value of the property that is collateral on the mortgage and has a borrower prequalified by the builder's sales team. The builder has a means to motivate buyers and expedite sales. he buyer has the option of accepting the mortgage package, usually an attractive one, and taking advantage of all the associated benefits the builder may tack on. In addition, if some issue that arises during construction creates a delay or additional costs, such as adding a custom deck or whirlpool, the builder can work with the lender to postpone your closing. Instead of your losing the mortgage you were counting on, the builder can help you get both your whirlpool and your mortgage.

Custom homes are often subject to delays due to problems with permits and construction or changes in the plans. These delays can be very costly and discouraging. There is no buffer between the lender and the buyer. The builder is not motivated to facilitate your financing of the property. The investment and financial burden are all yours.

Third is the "future feature." While you're thinking about the pleasure you'll soon enjoy as owner of the new home you've chosen, you might also look ahead to a time when you may no longer want to own this property. A well built and maintained home in a planned community resells easily. The features that drew you to this subdivision will still be in place when you are ready to sell: the convenient location, the attractive architecture, the arrangement of streets, and that clubhouse with community pool. Potential buyers won't be in for surprises, and that may make your marketing job a great deal easier.

Custom homes are perfect for the family they were built for. However, when it comes time to sell the house, finding a buyer who shares your enthusiasm for a sunken dining room or the laundry room next to the foyer may be tough. Profiting from the sale of a custom home is more iffy than from that of a home in a development.

>New construction more generally

Financial issues aside (I can't believe I'm saying that), there are other advantages when buying new construction in a subdivision or planned community. Let's consider three of these: energy efficiency, ease of maintenance (a form of energy conservation, you might say), and customization.

New construction allows, and in some cases requires, the builder to use energy-efficient materials and install energy conserving appliances and systems. Knowing the latest innovations in energy efficiency is part of the job for smart builders. New types of insulation, siding and roofing materials, heating and cooling equipment, thermostats, thermal windows, and indigenous landscaping trees and plants are selected and installed for their energy-saving characteristics. For example, your new home may have zoned, programmable heating and cooling that allow you to place portions of the house in "hibernation" so energy is not wasted. State-of-the-art energy efficiency is a selling point for successful builders and developers.

Energy of every type is conserved in a well-designed, newly built home. The new home you're purchasing probably has siding and window frames that require no painting. Double and triple insulated windows, wood or vinyl provide, on -average, 30 percent savings on heating and cooling costs. In new construction attic insulation may be close to an R-50 rating, indicating high heat retention. Landscaping is designed for minimum care. Walls and floors are newly finished; it will be years before you'll have to worry about repainting walls or replacing carpeting. New appliances make cooking and cleaning less work. Many builders provide a fact sheet listing the energy efficiency ratings for the home. With energy costs climbing, wise energy conservation could mean a clear savings in your monthly expenses.

And, if you choose wisely from the custom features offered by your builder, you can significantly reduce your own labor and worry. When you buy new construction, often there are choices you can make in paint and carpet colors and lighting fixtures. Equally important, you may be offered customization upgrades in appliances and fixtures that add to the purchase price but may save you money. For example, "builder's grade" carpeting could be fairly thin or light, 20 ounces per square foot. Upgrading the carpeting to 24ounces might cost 11 percent more, but you could add 20 percent to the life of the carpet, a worthwhile saving. If you love to cook, you may decide to upgrade the stove and cabinetry. Or you may elect to have the builder add a deck or install an extra half bath in the basement.

These custom upgrades are rolled into your mortgage. While your monthly mortgage payment may increase, you won't have to replace that dishwasher or recarpet the family room prematurely. The cost for having a contractor come in later to add on a deck might prove prohibitive. You're balancing immediate costs with long-term savings.

But buying into a new community involves more than a ledger of credits and debits. In a community where everyone is new, all the homeowners have purchased homes with similar expectations. You and your neighbors are facing the same anxieties and challenges. There is a common ground that can build a strong community identity. For example, everyone may have been promised certain community amenities by the builder, such as a community clubhouse or pool, walking paths, or green space. Should a problem arise, the influence of thirty families applied to the problem can be very persuasive. The power of a united community is a real asset, not just for getting the community pool repaired but for any issue that threatens the value of your property or your quality of life.

Issues for all home buyers

And, beyond the issues and decisions specific to buying a new house in a new community, other home-buying issues can affect your quality of life. These are not unique to new construction, custom or preexisting homes, condos or townhouses. All home buyers may need to consider these questions.

We often think of location as the neighborhood and its convenience to work, school, and shopping-all important factors, no question. But before you sign that sales agreement, here are a few more issues regarding location to consider. How is the air quality? Is there a factory or other commercial venture upwind? Is that convenient, major thoroughfare going to pump exhaust fumes into your bedroom window night after night? You love the tranquility of the neighborhood? Check with the county's zoning board to be sure there are no pending permit applications for a pizza shop or a putt-putt golf course to be built in that pretty meadow behind your house.

If you have children, you'll probably select your dream home in part because of the excellent reputation of the local schools. Be sure you inquire about future plans for the schools' boundaries and expansions. If you're buying into a new community, what will fifteen or thirty additional homes and families mean to class sizes and bus service?

Speaking of buses, access to public transportation may be something you want to ask the sales staff about or check out for yourself. When your fuel costs threaten to exceed your monthly car payment, efficient bus service to the Metro may be more important than that two-car garage. Also inquire about road construction and expansion plans. Are there any plans on the drawing board to "improve" that two-lane road rambling past your community into a five-lane major artery?

Talk to people: the neighbors, the mail carrier, the folks at the local grocery. You'll learn something about your comfort with the community after you start to see the neighborhood through the eyes of the folks who already live there, even if they only moved in a month or two ago.

And, finally, talk to the professionals who have experience in the complexities of real estate:

Listen to the real estate agent who shows you the property. Ask questions and when things don't make sense, ask again. Remember, the real estate agent must disclose any problems of which he or she is aware, so ask about basement flooding and the age of the furnace.

Hire a home inspector to tour the house with you and prepare a report on the quality of construction and areas that indicate potential problems before you close on the purchase. You might want to make your purchase contract contingent on the results of the home inspection. The cost will be repaid in peace of mind.

Pay a real estate attorney to review the sales agreement and any other documents you're being asked to sign. Having a lawyer go over the contract with you could avoid headaches in the months and years ahead.

You followed your heart in choosing a home you want to own. Follow your head as you navigate the process of buying that dream -come true. Relying on experienced, reputable professionals and keeping your priorities clear will protect you from having that dream spiral into a nightmare.

Janice Booth is a freelance writer and adjunct professor at Anne Arundel Community College, teaching public speaking and journalism.

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