Tips can protect buyers of new homes

If you're one of the few Americans who is looking to buy a home despite the credit crunch and are in the market for a new home, specifically, RISMedia offers these crucial tips for your transaction:

1. Choose a Realtor with new home sales experience

Even if your Realtor's fee isn't covered by the seller, you can probably add it to the sales price and having an agent negotiating on your behalf can save you thousands more than what you’ll pay in commission. No matter what they say, the builder's sales agents are paid to represent the builder and may use high pressure to get the sale.

Use an agent to sell your existing home, as well, as hard bargaining is nonexistent when you've already left your home emotionally.

2. Carefully evaluate the seller's lender before committing

While using the builder’s lender ensures the builder that you are paying your mortgage, that lender may not offer you the best deal, especially if the builder owns the lending company. Builders will offer huge incentives to get you into your new home – up to 15 percent of the value of the home – but they may require that you use their lender to take advantage of the incentive. Doing so may result in higher rates and higher closing costs, among other risks.

To make sure you’re getting the best rates, ask to see a copy of your credit report and FICO scores, or order your own free credit report before home shopping. Insist that your lender guarantee its Good Faith Estimate. If the lender balks or makes excuses, go elsewhere. Reputable lenders will honor that request, even though it’s not required by law.

3. Check out the builder’s reputation

Fairly and accurately assessing builders’ history is the appropriate path to making sure they build solid homes. Check public records for lawsuits or complaints and evaluate their resolutions. Talk to the neighbors and scrutinize the construction quality of surrounding homes to see if the builder consistently builds same-sized or larger-than-existing properties, or if are homes shrinking in size, which could reduce neighborhood value.

Learn if the builder limits investor purchases – this ensures that the neighborhood doesn’t turn into a "rental" neighborhood, which may appear less well-maintained and reduce property value.

4. Hire a home inspector

Many construction flaws don’t surface until well after the 12-month "bumper to bumper" warranty expires, so have the home inspected before moving in. If the inspector calls for further inspection by another professional contractor, find out if the inspector has found what could be a serious issue or if the inspector isn’t licensed to address that issue.

An inspection provides education about the property, and offers the validation of a trained, independent third-party assessment of the structure and systems.

5. Obtain legal advice before buying a brand new home

Standard purchase agreements are supposed to keep everybody out of court, but they don’t necessarily contain language that protects the buyer. Hire a real estate lawyer and ask questions about removal of contingencies and your cancellation rights. Make sure you understand your liability and commitments.

If your contract contains a warning about materials used in construction that may cause health issues, it's probably because it's a valid concern and other buyers have gone to court over it.