Builders have a slight advantage when you visit their model homes. When you walk into a beautiful model and are greeted by a professional salesperson with freshly baked cookies, you may be looking around at the lovely home, but the sales rep is looking right at you! Not only are these model homes stunning, but you are also very excited and emotional about looking at new homes! It’s hard not to get a little ahead of yourself when you’re looking at a beautiful model home. Builder sales reps understand your eagerness and have been trained to help you move down the path of new homeownership.
During your first onsite visit to preview a builder’s homes, there are a few bits of information that are best kept to yourself. Eventually, you’ll let the sales representative know everything they need to know to suggest the perfect house at the best price. But, there’s a time and a place for everything, and on your first visit, you may want to do more listening than talking! Here are some things that you do not need to share with a builder on your first visit:
1. Keep Your Loan Approval Amount to Yourself
It’s best to have an accurate idea of the amount of a new home loan the bank has approved for you. However, but just because you’re qualified for a specific loan amount, doesn’t necessarily mean you need to spend the entire amount on your new home. Regardless of how much of a new home loan you qualify for, you’ll need to decide how much you should spend on the house based on your household budget.
2. Your Actual Monthly Budget
At some point during your conversation, you’ll have with the builder at the model home, you’ll approach the topic of your desired price and monthly house payment. You really don’t have to tell the builder anything at this point. However, if the builder doesn’t think you know how much you want to spend on a new home, they may not take you seriously, or be as helpful as they could be. Most new home salespeople will approach a new home sale based on a monthly budget. I’d recommend giving the builder a number a little below what you eventually feel comfortable spending. In many cases, a salesperson will show you a number of homes that you may have initially thought were well beyond your reach.
3. Your Down Payment Amount
The amount of your down payment, like your monthly house payment something that a builder will try and discover. Does a builder need to know the amount of your down payment? Not really, but it could be helpful as they try and determine your monthly payment. A large down payment will have a direct impact on your house note and dramatically reduce the amount that you’ll eventually pay for the home. In the early stages, they’ll assume that you’ll be putting the minimum down on the house. On a conventional loan, this amount would be 5%, and if you’re buying a home with an FHA loan, you can put as little as 3.5% down. If you plan on putting more that, keep it to yourself in the early stages of your relationship with the builder. You may decide to keep that money or use it on something else. You can always increase your down payment amount later. You may be a little alarmed at the price of the homes that you’ll be touring at this point. Still, the salesperson will confidently tell you that they think that the homes you’re viewing will easily fit into your budget. Once an onsite sales representative can assign a monthly payment to you, they’re off and running!
4. Your Willingness To Go Above Your Budgeted Amount
Once a new home salesperson determines how much they think you can spend per month, they will start showing you homes and floor plans. You may even find yourself looking at homes that are priced well above the amount you originally wanted to spend. In some cases, the sales rep may show you inventory homes that are priced a great deal more than you wanted to spend. You’ll be amazed that you can actually afford some of these houses. As the sales rep walks you through a real cost analysis of this home, the possibility of owning this home will become more real.
5. Your Buying Timeline
Salespeople need to sell houses to make money. Once they think you’re a real, immediate buyer for a home, they’ll do all they can to get you the deal. It is tough for a builder, even in the best of economic times, to turn down a real deal, even one that isn’t perfect! Not letting the builder know your timeline may help you get a better deal!
6. Your First-Year Expense Budget
Finally, most new homeowners spend between $10,000 and $11,000 on things like appliances, modern furniture, and interior alterations on the house in the very first year they live in it. You’ll probably want to spend money on things like furniture, new bed linens, towels, TVs, stereo, paint and maybe even a higher quality refrigerator, stove or oven. It’s always a good idea to create a first-year expenses budget and allow yourself some room to personalize the home with essential additions the first year. Not spending all you can help you reserve some money to purchase these things.
7. Your Excitement Over the Model Home
Salespeople have a knack for knowing how enthusiasm can help buyers commit to something prematurely. Buying a new home is not an impulse-buy, and you need to create some space between you and a salesperson who only makes money when they sell a home!