From my experience of assisting numerous homebuyers purchase new home construction I would like to add to what Wendy Gilch shared in her earlier post.
1. Builder upgrades are marked up 50% to 100% so that is your best source for negotiating a lower price from the builder.
2. I definitely encourage my clients to have a third party home inspection done before closing! Yes the builder will have a final inspection done, but they are paying for the inspection and on average that inspector will spend 20-30 minutes doing the inspection and not the 3-4 hours needed as a third part inspector will do. It is worth the buyer's expense of around $500-$550 to prevent dealing with home issues after closing which can be a frustrating and stressful process.
3. Choose a Realtor to represent you when you first decide to purchase new home construction as they can be a true asset in the 8-12 month process that you are going to encounter. They can be invaluable to you and your family as a second set of eyes and ears due to their experience in working with builders before.
4. Be careful at the builder's design center as you can quicly spend a lot of money and in some cases increasethe home's cost so much that it will not appraise for the value needed for your mortgage loan. Also, in many cases you can have those upgrades installed after the fact for much less money. A couple of examples would be plantation shutters and ceiling fans.
5. Most imprtantly ask the builder if there is an escalation clause in the contract and if there is please make sure you undersatnd what it means! This is a huge issue in the North Texas housing market right now as these escalation clauses are being activated and enforced by many of the home buiders in our area. Due to the severe increase in building materials such as lumber the builders are notifying their clients under contract that the price of their home is being increased as much as 25% in some cases. The buyers are given the option to agree to the higher price and given a limited time such as 3 days to decide. If they decide not to agree then the builder invokes the escalation clause which allows them to cancel the contract and then sell the house to nother buyer at a higher price. Also be aware that if you do agree to pay the higher price the builder is asking for the house may not appraise for the amount needed for the mortgage lender.