Buying new home takes research, planning, patience MORE SPACE MORE OPTIONS

THE BALTIMORE SUN

The biggest thrill for a homebuyer may be to buy land from a builder and watch a home rise on it.

But getting to that point is not always simple -- taking weeks of legwork, hard decisions and lots of waiting.

In an attempt to simplify the process, here's a step-by-step guide to buying a new home:

* Step 1. Set priorities.

Before you start looking for a builder, buyer advocates suggest, decide what features you want in a house, lot and community. Every family member should pitch in ideas.

Visit a lender or do your own figuring to calculate how much house you can afford to buy. Study your wish lists and decide what is realistic based on your finances.

* Step 2. Research communities.

Bruce Hahn, president of American Homeowner's Foundation in Arlington, Va., says buyers should do as much research as possible on the growth potential of communities they like. "We're beyond the decade of rapid home appreciation," said Mr. Hahn, whose nonprofit organization works to educate homeowners and prospective homeowners. "You can still do well, but only if you buy in a growing area. Make sure you are looking in a neighborhood that has a better than average chance of appreciation."

Use the newspaper to read about new home developments and to map trends in prices. Call the school district to find out how well schools in different areas perform. Call local government offices to find out how lively communities are, and what kind of residential and commercial development is expected in the next several years.

"If you're a first-timer, you may want to consider hiring [a real estate agent] who represents buyers," Mr. Hahn said. "They are on your side and know local market conditions, and know how much you can talk down the new home prices.

"The broker can also be your guide in research, help make sure you buy in the path of prosperity. Buying a house is a huge investment. It's worth doing right."

Jim Turner, broker with Chesapeake Bay Realty in Perry Hall, said buyers of new homes don't often come to him looking for representation in their purchase. But he is seeing more of them. He said he typically charges about 3.5 percent -- half the 7 percent standard commission -- to help a buyer negotiate and settle a sales contract with a builder.

Bo Hickey, sales manager with Brierhill Estates in Bel Air, a Universal Homes Corp. community, said most buyers he sees are well educated about buying.

"They shop the papers for new communities, some use Realtors and a lot of them do it on their own," Mr. Hickey said. "They come through at the start to look at house types. Then, if they see anything that interests them, they begin to look at the layout of the community."

* Step 3. Research builders.

Find a builder who has a good history and can give you references from other homeowners, said Chip Lundy, chief executive of Williamsburg Builders in Columbia.

"You don't see many new builders now, not only because it's a difficult market, but because people are looking for stability," Mr. Lundy said. "The people who are buying . . . are checking the reputation of the builder, making sure they are going to be able to complete their home and stand behind their products."

Ask where you can see the builder's other communities. Drive through those neighborhoods and ask homeowners how responsive the builder has been since they moved in.

* Step 4. Select house design and negotiate a deal.

Once you've narrowed down the search to a specific development, you can tour the builder's models to get an idea of how your house might look. Mr. Hickey said some people select land first. Most buyers, however, choose a house design first.

Now you will be asked to put down an earnest money deposit and the builder will hold your selected lot. How much of a deposit you give the builder is negotiable. Some builders insist that a 5 percent deposit is standard for $100,000 and $500,000 homes.

Williamsburg Builders, for instance, with homes ranging from $285,000 to $800,000, requests 1 percent when the buyer selects a lot and the remaining 4 percent before construction begins. Williamsburg's Mr. Lundy said the amount of the deposit isn't usually negotiable. But how and when buyers pay it may be open for discussion.

But Mr. Hahn emphasized buyers may negotiate all the terms of a new home purchase, including the deposit. The price of the home is negotiable, too. "It really is a function of supply and demand, but you can negotiate a better deal," Mr. Hahn said. "Get them to buy down the mortgage a little bit," with an extra feature thrown in. Or ask for cash toward closing.

"As a buyer, you are in the driver's seat," he added. "The smaller and more independent builders are more flexible than the big guys, but it never hurts to make an offer. They can counter your offer or not, and in this market, they are likely . . . to offer you an incentive to buy."

Builders have their own sales contracts, but buyers do not have to use them, Mr. Hahn added. American Homeowners Foundation has sample sales contracts specifically written for buyers of new homes. A six-page sales contract costs $7.95. Call (800) 489-7776 for a copy.

Once you and the builder are satisfied with the contract, you'll apply for a loan through a lender referred by the builder or through one of your own choosing. Loan approval takes roughly 30 days, depending on the lender.

* Step 5. Choose features.

Unless you are having a custom house built, you will be restricted to the house designs the builder offers. Mr. Hickey said most production builders have designed their floor plans to be flexible. They often can expand rooms by one or two feet, move walls and add windows.

"We might build one model but offer eight house types," he said. "The model just reflects the materials the builder uses."

To help buyers chose from all their options and visualize what their house might look like, Ryland Homes directs its new home buyers who have applied for loans to a Ryland Design Center. The company staffs design centers in Columbia and Lutherville.

"We have professionals who work with the mortgage company and help buyers customize their home, according to what will fit in their budget," said Ryland spokeswoman Ann Madison. "They select design options and upgrades for cabinetry, plumbing, windows, lighting, appliances, whatever meets their lifestyle and budget."

On their own, buyers may buy computer software programs to help them "design" their house. Several programs allow users to create, decorate and walk through images of their dream homes. The expense, as well as the amount of computer literacy required, vary widely. Artifice's DesignWorkshop, a complex 3-D program, costs $459 by mail-order. Abracadata's Design Your Own Home series of 2-D programs costs $49.

* Step 6. Watch the house being built.

From the time the sales contract is signed until the deal is settled and the house is ready to move in may take from three to eight months, Mr. Hickey said.

Once the buyer's loan is approved by the lender, the builder applies for a building permit from the local jurisdiction. That can take anywhere from three days to three weeks, he said, depending on the permitting agency. Construction begins only when the builder has a permit.

"Once you get the hole dug, it's on track," Mr. Hickey said. "But we may not be able to put the hole in for 60 days because the buyer has to get his mortgage approved, or the site plan has to be approved by the county."

Buyers often request changes in design after construction has begun.

For a custom builder, changes aren't usually much of a problem. Not so for a production builder. Mr. Hickey said buyers do themselves a big favor by carefully considering their options before the foundation is poured.

After waiting for so many weeks, buyers become especially antsy once the house frame takes shape, Mr. Hickey said. But patience is still important at that stage, too. He and other builders encourage buyers to visit their new home under construction, but only when they are escorted by a sales manager.

"Possession takes place at settlement," he said. "Technically it's not the buyer's house and they have no rights to enter the premises," until the sale is closed. He said builders are concerned about accidents at the site involving the buyer.

"It's only human nature to want to see your home being constructed," Mr. Hickey said. "I just ask them to come see me first."

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