How to Protect Yourself When Buying a New Home

There's an old joke in the construction industry that if you want to build a home, you need an architect, a contractor -- and a marriage counselor. Many people think building a brand new house is a way to avoid buying somebody else's problems.

That may be true, but trust me, you're buying plenty of potential problems of your own. One problem is your own expectations. You may expect a new house to be a perfect house.

These days, houses are built so fast, and county inspectors are so scarce that quality can really suffer. Construction crews can be obnoxiously careless. I found old food wrappers and cola cans inside the walls when I did some work at my own house.

Paying more money doesn't necessarily guarantee that you'll be insulated -- or that your house will. Over the years, I've heard home-building horror stories from people building modest houses and mansions.

Unless you're a construction expert with plenty of time to spend at the job site, you should hire somebody to represent your interests during construction. I'm talking about an engineer or home inspector with experience scrutinizing new construction.

They should inspect multiple times: after the concrete is poured, after the framework is done, during the plumbing and electrical phases and once the house is finished. Before you sign a contract with the builder, make sure this inspector will be allowed onto the property during construction.

Some home building contracts forbid inspectors. You see, the builder owns the property until the house is complete. Some states may require builders to cooperate with your inspector. Find out.

Do Your Homework

If there is one time that you are going to do your homework, this is it. It's the most expensive purchase you'll ever make. The steps below are pretty involved, but well worth the time.

Find out if homebuilders have to be licensed or registered in your state and make sure yours is.

Check the builder's complaint record with your county and state consumer protection offices and/or the licensing division plus the Better Business Bureau. Also check at your local courthouse to see if the builder has ever been sued.

Visit homes constructed by the builder and ask the owners if they are satisfied. Also ask if the builder was good about fixing flaws. Visit entire developments and gauge the quality of the community centers, landscaping and other amenities.

Contact your city or county land planner and find out what the plans are for any vacant land near where you are looking to build.

Hire a home inspector or engineer to be your advocate during the construction process. Make sure your home inspector will be allowed onto the property before you sign your contract. Visit the job site a lot yourself, too.

Have an attorney review your contract with the builder before you sign it. Pay special attention to "mandatory arbitration clauses"" that deprive you of the right to sue the builder in court if you have problems. Cross them out if you can or at least note your objection in the margin. Also be aware that many builder contracts contain language that says you will receive certain features "or similar items." That gives the builder an awful lots of leeway to use materials you're not expecting. Use caution.

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