In many ways, buying a new home is a lot like buying a new car. There are many different manufacturers and features to choose from and price is always a big factor in your decision. What many people don’t stop to realize is just like a car there are certain times of the year when it’s better to sign a contract.
The general rule is to sign a contract towards the end of the month where a builder may throw in extra incentives to earn your business. This helps them meet their monthly sales goals. However, it is very important for builders to make their annual numbers, especially if the builder is a publicly traded company on the stock exchange. Companies like Toll Brothers and Pulte Homes are publicly traded and have fiscal years that define the beginning and end of a 12-month period where they will measure their performance and report the results to their shareholders. Every company has a fiscal year but they don’t necessarily line up to the calendar year where January is month one and December is month twelve.
So knowing when a company’s fiscal year ends could also help you negotiate a better deal in those months. Below is a small sample of popular builders in Dallas-Fort Worth and their fiscal year end months.
Fiscal Year Ends in December (matches Calendar Year)
Fiscal Year Does Not Correspond with Calendar Year
Most new communities built in the past 10 years are part of a Homeowners Association (HOA). While many people sigh when they hear HOA, it’s not all bad, and the newest communities in Dallas are trying to give you more for your HOA money.
HOAs are designed to share common costs for services that benefit the entire neighborhood. The community pool maintenance and things like the holiday lights and landscaping that you see in many master planned communities are paid for by HOA fees. HOAs also exist to protect the value of everyone’s properties by enforcing rules that are designed to maintain the marketability of the neighborhood based on it’s goals. If the goal of a neighborhood is for everyone to support breast cancer awareness by painting their houses pink, an HOA can actually help make that happen. Many people think that HOAs are designed to make everything cookie cutter and boring, but the creativity and variability of what is allowed is really up to the HOA.
A few communities in the Dallas area are now offering additional amenities for your HOA money. Mustang Lakes in Celina and Windsong Ranch in Prosper are both including front-yard maintenance in their HOA dues. And for an additional fee the contracted company can cut your backyard. This perk eliminates one of the hurdles for people who may not want a single-family home due to yard maintenance. At the very least it saves a couple of hours each month on yard work.
Ideally, we would love for you to use us when purchasing your new home in the Dallas Fort-Worth area, but if you are not purchasing in Texas or choose to go it alone for whatever reason, here are five questions you should ask your builder.
Q: What is the current build time once we sign a contract?
Make sure you understand the time required for permitting, plus the actual construction time of your new home. Average estimates around Dallas are between 6-9 months, but most builders can take over a year are not be in default of their contract.
Q: Do I have to be approved by your lender to buy one of your homes? Are incentives tied to using your lender?
Builders take on a good amount of risk building a house and customizing it to your liking. If the deal falls through because you can’t get funding, they are stuck with a home that they might not be able to easily sell to another buyer. For this reason, many builders want you to use their lender. Their lender’s sole priority is being absolutely sure you can qualify for the loan – double and triple checking. Even if you can use your own lender, some may not give you certain upgrades or incentives. Furthermore, you may still have to prequalify with them even if you go with another lender, so be sure to ask these questions.
Q: Do you have a published option price list?
It’s easy to be wow’d by all the features in the model home which may be heavily upgraded. It may be easier to have a list in hand if you can get it, on how much certain options costs.
Q: Can I use my own home inspector? What happens if he/she finds things?
Most builders have their own inspection process. Nonetheless, spending an extra $500 on a $500,000 home may not be a bad idea if you want a second opinion. The bigger question is whether the builder will fix the things your inspector finds. You should expect your inspector to find some things – and you should expect your builder to not fix every single item. Building codes and construction processes are unfortunately like getting an opinion from two NASA engineers, you sometimes get three answers on the best way to do something.
Q: What is your home warranty?
Builders will often have warranties on various components of the home that last 1, 2, or 10 years. Almost everything is covered in the first year, with things more likely to get wear and tear to fall out of warranty after the first year. Ask about the roof especially; North Texas gets tornadoes and baseball size hail. Are they using shingles that will last? What happens if you get roof damage 6 months after you close on the house from a hail storm?
The best home builders welcome your questions and welcome you having a Realtor. It helps them set expectations and deliver on what they said.
In an on-demand world, having a custom home or even production home built from the ground up requires a lot of patience. As of July 2017, it takes a typical builder in North Texas at least 7 months to complete a new construction home. The reason for this is labor shortage and material shortages. In places like Texas, there is a boom of people relocating to the Lone Star state. Builders are having a hard time keeping up with demand and so trades are spread thin across many homes being built at the same time.
What many consumers don’t realize is that when you sign a contract to have your new home built, you will never get a specific closing date on the day you put your earnest deposit down. This is the exact opposite to resale homes where the contract states a closing date on or before a certain day. Sellers will even favor certain buyers who can close early. This is not the case with building a new home. There are too many variables for a builder to predict the exact date (or even week) your home will be finished regardless of how much you’re paying.
Many buyers are not dissuaded by this, as the excitement of getting their perfect abode outweighs the details of a closing date. A buyer who is living with family or maybe has a month-to-month lease has the added benefit of not having the financial pressure to move on a specific date. But if you’re the buyer having to sell an existing home or paying steep fees to break a rental contract, not having a guaranteed closing date can be a nightmare.
Did you know some builders can take up to 2 years to build your new home?
The bigger surprise that most consumers don’t realize until month 7 has passed is that a builder may go into month 8, 9, 10 and all the way past one year before your house is complete. In fact, some contracts state that the builder may have up to 24 months to complete your home. The builder wants to mitigate all risks of labor shortages, material backlogs, and even natural disasters like hurricanes and tornadoes in Texas. So this long build time allows them to not be in default of the contract if anything comes up during construction.
What can a prospective home buyer do?
There is not too many things a buyer can negotiate in a contract with a production builder and this is one of them. The best thing to do is go in with eyes wide open and understand your backup plan if things don’t finish in 7 months. What is your plan in month 8, 9, or 10? Also, think about the time of year. Would it be easier for you to handle a delay in the summer? If so, then you’d want to sign a contract 6-7 months prior to May or June. If you know it rains a lot a certain time of year, then plan 12 months ahead so that your home is not being built in the rainy season. Nothing is guaranteed, but you can make a proactive effort to try and mitigate risk on your end just as the builder does it on their end.
I relocated to Texas back in the late 90’s and it was a bit of a culture shock having grew up in the Bronx, NY and going to a place called Texas City, TX. Texans are proud people and I guess the good people of Texas City wanted to make damn sure people knew they were in the state of Texas. All joking aside, the experience was good – I got to learn the second meaning of barbecue, took several trips down to the Gulf Coast, and eventually moved to Houston, which is probably the most non-Texan major city of all the Texas metros. It’s not to say that Houstonians won’t put on their boots and hat every now and then, but the little known fact is that many people living in Houston are not from Houston and this trend will only continue in other major cities like Dallas and Austin.
One of my all-time favorite articles from TIME magazine was published in October 2013. The cover story was “The United States of Texas – Why the Lone Star State is America’s future” Today in January 2017, the story is just as relevant as ever. If you are relocating to Texas any time soon, I encourage you to read this article.
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The blog for everything about buying new home construction in Texas (and a little about resale homes too). Brought to you by the founder of RebateMyHome.