Buying from a Builder

Buying a new construction home is a major purchase.  From picking your lot, to choosing your upgrades, to moving in - The entire process can take months, if not longer to complete

New home buying begins with research - look at homes and communities, and talk with builders. Do some pre-planning to help you to focus on the decisions ahead and prepare you for a successful house search.

Define what you are looking for in your new home and community, it helps to identify your needs and wants:

• Type and size of home; number of bedrooms; other space requirements, e.g. garage.
• Layout: open or divided spaces; flexibility for future changes.
• Outdoor living areas: space and privacy.
• Desired features for looks or convenience.
• Special considerations, e.g. accessibility for household members with mobility restrictions.
• Distance to work, shopping and medical facilities.
• Public transportation.
• Schools, recreational facilities, places of worship.
• Green spaces.

 

Get pre-approved

It is a good idea to determine your price range before you start looking for your new home.  Discuss with your Mortgage Specialist / Broker your options for a pre-approval.  That way, you know exactly how much you can afford to spend on your new home.

With a pre-approval, your lender approves the amount of your mortgage and gives you a written confirmation or certificate for a fixed time period before you start looking for a home. The pre-approval term, for new home usually lasts up to 365 days, also sets the mortgage rate the lender will offer to you. If rates go down in that period, the lender should offer you the new lower rate.

 

Selecting the right builder for you

Buying a new home may present some advantages over resale properties. You get everything you want in a house right from the start.  You may have a choice of upgrades and are able to define the look and style of your home.   

If you decide to buy a brand-new home, it is extremely important to choose the right builder.  When you choose to buy a new home, you also buy the company that will build it.  Your experience and satisfaction will depend on their experience, their skills and their commitment to customer service.  Ensure that your builder has the qualifications and the ability to meet your needs and expectations.

There are thousands of builders in Canada, ranging from small companies building a few houses a year to large builder-developers constructing thousands of homes annually. Whether you live in a large urban area or a smaller community, you will have a number of builders to choose from. Each company may offer a different selection of homes. Some may focus on specific market segments or neighbourhoods. Others may specialize in particular types of homes or have certain distinctive expertise, such as adult lifestyle design or energy efficiency.  Every company does business in its own unique way.

To ensure a builder’s credibility and quality, ask for references, talk to other customers about the builder’s work or check with the new home warranty program.  Before choosing which one to buy from, take a close look at each builder you are considering and ask these questions:

• Who are they?
• How long has the company been in business?
• What is their background and experience?
• Is the company a member of an industry organization, and does it have all the licenses and registrations required for your province?
• Do they build a quality home?
• Will the company provide you with a list of previous clients for a reference check?
• What are they like to buy from?
• Will you be able to visit your home during construction? Are there any restrictions, such as the number of visits or who can accompany you?
• Will they conduct a pre-delivery inspection of the home with you before you take possession, to verify that everything has been completed as agreed and identify any outstanding items?
• Can you have a professional home inspector inspect the home?
• What is their after-sales service like?
• Will your home be covered by a new home warranty program?
• What is their reputation, what do others say about them?
• Has the company won any awards for excellence or outstanding performance in construction, design, innovation, and marketing or consumer satisfaction?

Finding a Builder

Everyone may have a different idea about what makes a good home, but most people have a strong sense of what quality means to them. Think about the specific characteristics you equate with quality; make a list and check it against homes you visit.

As you go through your home search, collect as much information as you can — pamphlets, brochures, builder’s packages, product literature, warranty information and so on. Read through it all and create a file of everything that interests you.

• Ask friends, family and coworkers for names of reputable builders they have dealt with.
• Call or check the Web site of the local Home Builders’ Association for the names of builders in your area.
• Call the new home warranty provider(s) in your province for a list of registered builders, or check their website (the Ontario New Home Warranty Program lets you check the builder’s warranty record at the same time).
• Home builders in British Columbia and Quebec must be licensed. In British Columbia, contact the Homeowner Protection Office (www.hpo.bc.ca) for a list of companies. In Québec, contact the Régie du Bâtiment du Québec (www.rbq.gouv.qc.ca).
• Visit the websites of different builders in your community.
• Go to home shows to meet builders and to explore the latest in features and finishes.
• Visit builders’ sales offices and model homes

• Go through the house in detail. Keep in mind that the builder created this home as a model home, so what you see represents the best quality that you can expect.
• Take your time - look in every corner, sit down and look up. Jump on the floor to feel the solidity of the construction. Listen to sounds that carry through the home. Notice how doors and windows fit and operate. Pull out drawers and open cabinet doors to see if they work smoothly. Check that baseboard, door and window trim is installed neatly without gaps or poor seams, and that paint and stain coverage is smooth and even. Examine the exterior with the same attention to detail.
• If you do not feel you know enough about construction, bring someone with you who does and can help you to evaluate the home.
• Consider the design and layout. Does the home make efficient use of space? Would it work for your lifestyle, could you see yourself living there or what changes would you want to make?
• Check the products used in the homes. Are they brand-name products that you are familiar with, and do they come with a manufacturer’s warranty?
• Note which features are upgrades and extras to get a better sense of the basic model. It should be indicated in the model home; if not, ask the builder or salesperson to explain.

Visit a work site

• Ask builders you are considering buying from if you can get a tour of a home in progress.
• Visiting a home under construction offers a great opportunity to see the quality inside the walls, floors and ceiling before everything gets covered up.
• Look for straight lumber, smooth cuts, neat seams, well-installed insulation, and well sealed air barriers, etc. Again, you may want to ask the builder if you can bring someone knowledgeable along for a second opinion.

Read the builder’s information materials

• A builder should be able to give you written information about the company and their homes — what do they offer, what do they tell you about the homes, and where relevant, about the community?
• Ask for a list of specifications, i.e. an itemized description of the materials, products and finishes that go into the homes.
• Take note of the standard features that are included in the basic price of the home. Compare this to the builder’s model home — if a feature is not listed as a standard, it is most likely an upgrade or option that you will have to pay extra for.
• Also check the specifications against the builders’ printed renderings, or drawings, of the exterior of the home —builders often take artistic license in their marketing materials.

Visit the community

• Ask the developer for a detailed master plan covering everything from the location of each home to street design to recreational facilities
• There may be a scale model or map in the sales office that can help to give you a realistic impression of the community when completed.
• The sales representative should also be able to give you a sense of the people who have bought in the community to date — for instance, are they young families with children or empty nesters?
• When you are considering a specific lot, ask about things that could affect your enjoyment of your property, such as community mailboxes next to your lot, or a bus shelter directly across the street.
• Get a sense of light and sun patterns — for instance, will you get the morning sun where you want it?
• The salesperson should be able to answer any questions you have about schools, hospitals, shops, traffic, and public transportation and so on, that could influence your decision.

Ask questions

Do not be afraid that you are asking too many questions or that some of your questions may seem obvious to others — ask about all the things that are important to you.

Write down your questions in advance - it ensures that you get the information you need in order to make a decision. Here are some suggestions:

• If the company offers standard plans, how much change is allowed?
• Will the builder modify the floor plans to your needs?
• Can you change some of the finishes? Add more features?
• Will you get a written contract? (If the answer is "no", look for another builder.) Could you see a blank copy of the company’s Agreement of Purchase and Sale form (i.e. the contract)?
• What are the standard features included in the basic price of the home?
• Does the builder offer a selection of standard finishing products, such as flooring and tiles, and can you have a look?
• Does the builder offer upgrades and options, and what do they cost?
• Does the company have someone on staff that can help you coordinate the final look of your home? Do they have a separate design centre where you can browse around and make your choices with expert assistance?
• Beyond the basic price of the home and any upgrades or extras that you choose, what other building or closing costs will the builder charge you for?  (This could include a second coating of asphalt on the driveway, the cost of the new home warranty, the fee for the builder’s lawyer to transfer title or adjustments on utility bills, to mention a few items.)
• Are the GST/HST as well as the GST/HST New Housing Rebate included in the price quoted to you?
• What size deposit is required?
• Does the builder require construction draws, i.e. payment at various stages during construction?
• When will the builder be able to start construction on your home? What would be the completion date?
• Will you be able to visit your home during construction?
• Will you get regular updates during construction, and will the company appoint a contact person that you can easily reach?
• What is the builder’s policy on change orders? Will you be able to make changes after construction begins?
• If the builder has to make alterations to the plans or specifications for any reason during construction, will you be advised and how?
• Will your home be covered by a third-party new home warranty?
• What happens if construction falls behind schedule? Does the company have a clear process in place for dealing with delays, including informing you within a reasonable timeframe?
• Will the builder conduct a pre-delivery inspection of the home with you before you take possession of the home, to verify that things are done as agreed and to identify any outstanding items to be completed?
• Can you bring others to this inspection, such as a family member or a professional home inspector?
• Throughout the discussions, also note the following:
• How well does the builder listen?
• Are your questions answered clearly and fully?
• Does the builder seem knowledgeable and able to offer suggestions or alternatives to meet your needs and preferences?
• Are you treated with respect?

Take your time and make sure that you have a good sense of each builder you may be considering.  It may take several visits to cover all the details before you feel comfortable in making a decision.

 

Warranty

Builders commonly offer a one-year warranty and after-sales service on workmanship and materials in your new home. This service often backed up by a third-party warranty.   Third-party new home warranties are mandatory in British Columbia, Ontario and Quebec.

Warranties vary from one province to the next; however generally include coverage and provisions for:

• One-year warranty on workmanship and materials.
• Additional warranty on the building envelope against water damage (some programs).
• Major structural defects, up to 10 years in some regions.
• Deposit insurance, up to a certain maximum amount.
• Completion insurance (some programs).
• Practices regarding construction delays and customer notification.
• Customer inspection of the home prior to taking possession.
• Dispute mediation between builders and customers.
• Guidelines for construction performance, workmanship and materials (some programs).

The warranty coverage usually begins when you sign your Certificate of completion and/or possession, following a predelivery inspection just before you take possession of your home.  During this inspection, anything left to do in the home should be written down and included with the certificate, down to the smallest detail on missing items or things requiring repairs. The builder is obligated to take care of all items on this list before you move in or shortly thereafter, with the exception of "seasonal holdbacks", which are items that have been delayed due to weather.

 
Maintenance (After Completion)

Many builders will provide you a homeowner’s manual describing the various elements of your home and setting out the requirements for regular maintenance and service. This not only helps you to keep your home in great condition, it also helps to ensure that you do not void the warranty on your home.

 

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