10 questions when buying a new-built home
Consider deposits, build time before signing on the dotted line
When Sharon and David Laws bought a brand-new home in a London, Ont. development, they admit they underwent a baptism by fire.
“You have to make so many decisions, so quickly. And what you see in the model home is not what you’re going to get,” says Sharon Laws. “Often they have features like beautiful hardwood floors, crown moulding and trade ceilings (read, not popcorn). But you’re not going to get those things unless you pay a lot of extra money.”
Read on for the essential questions to ask when buying a new build.
1. Does the builder have a good reputation? Ask friends and family for recommendations, suggests Frank Oliva, who recently downsized to a townhome in London, Ont. And find out how long the builder has been in business.
“Ours had been around for 30 or 40 years,” he says. “If they’re bad, they don’t exist for long.”
Gary Edwardes, a realtor and former builder, suggests visiting one of your builder’s construction sites and getting input from other homeowners who live in previously built subdivisions. And by all means check out the Ontario Builder Directory on Tarion Warranty Corp.’s website (tarion.com). Tarion administers the Ontario New Home Warranty Program. Although it doesn’t rate builders, it does have info on whether the builder is licensed to build homes in Ontario and whether Tarion has had to resolve warranty claims on the builder’s behalf. 2. How much am I required to put down as a deposit? Tarion protects deposits to a maximum of $20,000 on a condominium and $40,000 on a home. If you go over that amount, make sure the money is put in a trust by the developer’s lawyer. 3. What is the average time to build? Ask for a schedule so you’ll know roughly what to expect. But recognize it’s never carved in stone, says Edwardes. “You have to be willing to be flexible.” 4. Can I get the floor plan down on paper? “Usually you’d want a proper floor plan drawn up for you to sign,” says Edwardes. Make sure it includes room dimensions and plan details. But recognize, he says, “these are approximate. When we go to build there may be differences on site that we can’t do anything about.” 5. What is included in the price? Start with the understanding that most of the finishes you see in that tricked-out model home are going to be upgrades, says Sharon Laws. Translation: they’ll cost you money. Ask what the average buyer has spent on upgrades and try to build some of those extras into the price at the point of negotiation.
“You’re not going to get anything after you’ve signed that contract,” Laws contends.
The model home Oliva visited had a finished basement that was considered an upgrade. Oliva was told that extra alone would set him back $35,000 and other upgrades rang in at $20,000. His solution: “We bought the model home for a price that was within our budget.” 6. How many walk-throughs will I have? Most builders allow you to go through the house at least once before the drywall goes up. That’s when you might realize, for instance, that the standard number of pot lights is going to leave your basement dark and uninviting. Or you need an extra plug or cable outlet.
“You’re going to have to pay for it,” says Edwardes, but it will cost a lot more later. “I wouldn’t buy a house from a builder who wouldn’t allow at least one walk-through,” he says. 7. What products and suppliers do you use? Choose a builder who uses brand-name products with a proven track record, says Oliva, “not products that look pretty but have no warranty.” It’s also a good sign if your builder has ongoing relationships with reputable suppliers. That means two things, says Edwardes.
“The supplier must be doing a good job or the builder wouldn’t keep going back to him,” he says, “and the builder must be paying the supplier and running a decent job site.” 8. How does my lot fit into the subdivision as a whole? You may find that once your neighbours’ homes are built, you can’t spit without hitting the house next door. Look closely at the plan of the subdivision and ask for details. How far will your house be set back from the road? How much space will there be between houses? Where will drainage grates, light standards, electrical boxes and hydrants go? Just keep in mind, says Edwardes, “things can change, especially if the subdivision hasn’t been serviced yet.” 9. What kind of warranties are offered? Your builder will have warranties of his own and the Ontario New Home Warranty Program (administered by Tarion) provides an extra level of protection if you’re not satisfied with your builder’s response. But note that this is a limited warranty. 10. How long will I be covered for? Recognize that you’ll be covered for differing amounts of time depending on the issue. In Ontario, for example, you’re covered against faulty materials or work for one year and leaky basements for two years. Mark the deadlines for different claims on a calendar so you don’t miss them. And make sure you notify the builder in writing as soon as you discover a problem, advises David Laws.
Keep copies of correspondence so it’s clear you were in touch before the warranty was up.