Negotiating a New Construction Contract in Star Farms: Our Buyer Journey Part 2

What we reviewed in our builder contract, where buyers commonly leave money or protection on the table, and why having your own agent review the agreement matters.

Once we decided that Star Farms at Lakewood Ranch was the right community for our family and selected the homesite we wanted, it was time to move on to one of the most important parts of buying a new construction home: negotiating a new construction contract in Star Farms and signing it.

This part of the process can feel very different from buying a resale home.

With a traditional resale purchase, buyers typically submit an offer and negotiate price, closing date, inspection periods, repairs, credits and other terms with the seller. With a large new construction builder, much of the contract is already written by the builder, and many of the terms may not be negotiable.

That doesn’t mean there is nothing to negotiate.

In fact, this is one of the points in the process where buyers can potentially leave thousands of dollars on the table if they don’t understand the builder’s incentives, financing offers, available upgrades and contract terms.

Because I’m a Realtor, I approached our own purchase the same way I would approach a new construction purchase with one of my clients: understand the entire deal, not just the advertised price.

The Advertised Price Is Only Part of the Deal

One of the first things buyers naturally focus on is the price of the home.

That’s important, but with new construction, I think it’s better to look at the total package.

Builders may have more flexibility in certain areas than others. Depending on the builder, community, inventory and current market conditions, incentives could potentially include things such as:

• Closing-cost assistance
• Interest-rate incentives
• Mortgage rate buydowns
• Design-center or upgrade credits
• Appliance packages
• Lot or homesite premiums
• Price reductions on certain inventory homes
• Special financing through the builder’s preferred lender

The exact incentives can change frequently, which is why buyers shouldn’t assume the offer they saw online a month ago is still the best offer available today.

When we purchased our home in Star Farms, we looked at the entire financial picture rather than simply asking, “How much can we get off the price?”

Sometimes a builder may be relatively firm on the base price but willing to offer significant value elsewhere.

And depending on your situation, $15,000 or $20,000 toward closing costs or financing could potentially be more valuable than the same reduction in the purchase price.

What is Actually Negotiable When Signing a New Construction Contract in Star Farms

Another important lesson with new construction is recognizing that you aren’t negotiating with a typical homeowner.

Large builders have established pricing strategies, contracts and sales procedures.

That means you may hear:

“The builder doesn’t negotiate.”

Sometimes that’s true about a particular item.

But that doesn’t necessarily mean nothing about the transaction can change.

The key is figuring out where the builder currently has flexibility.

That can depend on several factors, including how quickly homes are selling, how many homes the builder has available, whether you’re purchasing a to-be-built home or completed inventory, the time of year and even the builder’s sales goals.

This is one reason I recommend understanding the market before walking into the sales center ready to sign a contract.

You want to know what else is available.

What are competing builders offering?

Are there similar homes sitting in inventory?

Have incentives recently increased?

Are there homesites with premiums?

What financing incentives are being advertised?

The more information you have, the better you can evaluate whether you’re actually receiving a competitive deal.

Looking Beyond the Purchase Price

When we reviewed our deal, I wanted to understand exactly what was included in the home and what would cost extra.

This sounds obvious, but model homes can make this surprisingly difficult.

You walk through a beautiful model and see upgraded flooring, countertops, lighting, cabinetry, appliances, trim work and landscaping.

Not everything you’re looking at is necessarily included in the home you’re purchasing.

Before signing, buyers should have a clear understanding of what is standard, what is upgraded and what is specifically included in their contract.

If the salesperson tells you something important is included, don’t rely solely on the conversation.

Make sure you understand where it appears in the paperwork.

The written agreement is ultimately what matters.

The Builder Contract Is Different

This is probably the biggest thing I want buyers to understand.

A builder contract isn’t necessarily the same contract you might see when purchasing an existing Florida home.

Large builders generally use contracts written specifically for their company and their construction process.

Those agreements can contain provisions dealing with issues such as:

• Deposits
• Financing deadlines
• Construction schedules
• Builder delays
• Closing requirements
• Inspections
• Changes to plans or materials
• Homeowner association documents
• Warranty coverage
• Default provisions
• Dispute resolution
• What happens if the buyer fails to close

You shouldn’t assume that because something is common in a resale transaction it automatically applies to a builder purchase.

Read the contract.

And if there is something you don’t understand, ask questions before signing it.

A Realtor can help explain the real estate transaction and identify areas that deserve additional attention, while questions requiring legal interpretation should be directed to a qualified real estate attorney.

Pay Close Attention to Your Deposit

One of the first things I look at with buyers is the deposit structure.

How much money is required?

When is it due?

Are additional deposits required later?

And most importantly:

Under what circumstances can you get that money back?

This becomes especially important when financing is involved.

Buyers sometimes assume that if they can’t obtain a mortgage, they can simply cancel the purchase and receive their deposit back.

That isn’t something I would ever assume with a builder contract.

You need to understand the financing provisions, deadlines and obligations contained in your specific agreement.

Missing a deadline or misunderstanding a contingency can potentially become expensive.

Understand the Construction Timeline

Another area we reviewed carefully was the construction and closing timeline.

When you’re watching an empty homesite eventually become your house, it’s easy to think of the estimated completion date as a guaranteed closing date.

It may not be.

Construction schedules can change because of permitting, inspections, labor availability, materials, weather and other factors.

The builder contract typically explains how the construction timeline and closing process work.

This is especially important if you’re coordinating the sale of another home, ending a lease, moving from another state or trying to lock a mortgage rate.

You want flexibility in your own planning because construction doesn’t always follow the exact timeline you originally expected.

Don’t Forget About Financing Incentives

Builder financing deserves its own conversation.

Many large builders offer substantial incentives for buyers who use an affiliated or preferred lender and sometimes a preferred title company.

Those incentives can be significant.

But an incentive doesn’t automatically mean it’s the best financing option.

You still want to understand the interest rate, APR, closing costs, points, lender fees and total cash required at closing.

This is another place where buyers can focus too heavily on one number.

A low advertised mortgage rate may involve specific qualifications or costs. A large closing-cost credit may be tied to using the builder’s lender.

Compare the complete loan package.

For our purchase, we wanted to understand what the builder’s financing incentives actually meant for our monthly payment and total cost—not simply how impressive the incentive sounded in an advertisement.

Where Buyers Can Leave Money on the Table

One of the biggest mistakes I see buyers make with new construction is assuming that because they’re purchasing directly from the builder, the process is automatically straightforward.

The sales representative in the model home can be extremely helpful and knowledgeable.

But it’s important to understand who everyone represents.

The builder’s sales team represents the builder.

Having your own real estate agent gives you someone on your side of the transaction who can help you evaluate the community, homesite, pricing, incentives and overall purchase.

And this should ideally happen before your first visit to the builder.

Many builders have specific rules regarding Realtor representation and registration. If you walk into a sales center on your own and later decide you want an agent involved, it may be too late for that agent to represent you through the builder’s normal process.

Why We Still Used the Same Process I Recommend to Clients

You might wonder why I spent so much time reviewing our own purchase when I work in real estate every day.

Because it’s a major purchase.

Buying a home is too important to become casual about simply because you’re excited about the house.

We wanted to understand what we were agreeing to, what incentives we were receiving, what was included in the home, what our responsibilities were and what would happen between contract signing and closing.

That’s exactly how I want my clients to approach new construction.

The goal isn’t to make the process complicated.

It’s actually the opposite.

The more you understand before signing, the fewer surprises you’re likely to encounter later.

Having Your Own Agent Doesn’t Mean Fighting the Builder

I think this is an important distinction.

Good representation doesn’t mean turning every builder transaction into a confrontation.

Our goal wasn’t to “beat” the builder.

We wanted to make a good purchase and understand the agreement.

A knowledgeable buyer’s agent can work with the builder’s sales team while still advocating for the buyer.

That could mean helping evaluate comparable communities, understanding incentives, comparing homesites, asking questions about fees, identifying important contract deadlines, attending inspections and helping coordinate the transaction through closing.

And in many new construction transactions, the builder is already offering compensation to the buyer’s brokerage, although buyers should always confirm representation and compensation arrangements with their agent before proceeding.

Signing the Contract

Eventually, there comes a point where you’ve negotiated what you can, reviewed the numbers, selected the home and homesite and asked your questions.

Then it’s time to sign.

For us, signing the contract was when the entire process started to feel real.

We weren’t just researching communities anymore.

We had chosen Star Farms.

We had chosen our homesite.

We had chosen our home.

And now we officially had a new construction home underway.

From that point forward, the focus shifted from buying the home to building the home.

And that’s where the fun really started.

Thinking About Building in Star Farms or Lakewood Ranch?

If you’re considering new construction in Star Farms or another Lakewood Ranch community, I strongly recommend talking with your own Realtor before visiting the builder’s sales center for the first time.

There are a lot of great builders and communities throughout Lakewood Ranch, but the right choice isn’t the same for every buyer.

Community location, homesite, builder, floor plan, incentives, HOA and CDD fees, future development and resale potential can all matter.

Having someone help you compare those pieces can make the process much easier.

I’m documenting our own Star Farms build from beginning to end so buyers can see what the process actually looks like—from choosing the community and homesite through construction, inspections, closing and eventually moving in.

Next up: Part 3 — From Contract to Construction: What Happens Before Your House Starts Going Up.