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Buying New Construction Hosts: Kathi Kelly-Billings & Ian Miller Redfin Mill Creek Woodinville Team April 28, 2015 Woodinville, WA @Redfin Facebook.com/Redfi n

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Buying New ConstructionHosts: Kathi Kelly-Billings & Ian Miller

Redfin Mill Creek – Woodinville Team

April 28, 2015

Woodinville, WA




Meet Kathi and Ian!

Ian MillerRedfin Agent

● 42 Redfin buyers & sellers

● 4.83 star rating (47 reviews)

Kathi Kelly-BillingsRedfin Agent

● 110+ Redfin buyers & sellers

● 4.8 star rating (121 reviews)

● Redfin

● Pros & Cons

● Finding New Construction

● New Construction - Levels of


● The Build Process

● Upgrades & Changes

● Negotiating

● Preferred Lenders – Theirs or Yours?


● Q&A


A Little Bit About Who We Are

Redfin is a real estate brokerage that has helped over 20,000

people buy or sell a home; 97% would refer us to a friend.

● Customers, not commissions

● Accountability: were on your side to give honest advise

● Technology: sellers get more traffic; buyers tour homes first

● Value: a full service brokerage that saves you thousands

● Teams: creates experts

No obligation

Get back a portion of our commission

Your Redfin Team

AGENTResponsible for your success

Writes your offer

Handles negotiations


COORDINATORPrepares paperwork

Works with escrow


COORDINATORSchedules tours

Prepares paperwork

ASSOCIATE AGENTTakes you to see homes

Sees 50+ homes a week

Redfin Agents are paid a salary (not commission)

and receive a bonus based on your satisfaction at closing.

It’s easy

to reach


See our

deals &


Pros & Cons of New


New Construction Pros

● You have more choices in what you want

● You may be able to pick the location of your home in a


● Modern floor plans

● All major systems are new – lower maintenance

● Higher energy efficiency

● Planned community – parks, retail, harmonious


● Warranty – shorter term touch ups & longer term


● No fixing some prior owner’s mistakes or problems

New Construction Cons● Usually the newer the house, the smaller the lot

● HOA may have lots of rules

● Houses look the same

● Landscaping isn’t mature yet

● Living with construction noise

● Process can be more complicated, longer

● Usually more expensive per square foot

● Builders may not be very negotiable in this market

● Builder may change the homes they are building in the

future – either the plans or the price

Finding New Construction

Searching New Construction on Redfin

Finding new home listings

● Builders may not list every home in a development on the

MLS – your agent can inquire about other homes

● A neighborhood may become available in phases – sign up

to be on a notification list

● Notice of “Proposed Land Use” sign

● Search under specific builder websites

photo: vintageseattle.org

Local Builder WebsitesLocal Builders

Murray Franklyn murrayfranklyn.com

William Buchan buchanhomes.com

Burnstead burnstead.com

Polygon Homes polygonhomes.com

Westcott Homes westcotthomes.com

Pacific Ridge Homes pacificridgehomes.com

Quadrant quadranthomes.com

Mainvue Homes mainvuehomes.com

Village Life villiagelifecommunities.com

National Builders

Centex Homes centexhomes.com

DR Horton drhorton.com

Toll Bros/CamWest tollbrothers.com

newhomesource.com is the best website I have found that has the most

comprehensive list of new construction in the area

Touring New Construction

● Site registration►Most new construction sites have a registration policy.

They differ from builder to builder

►Usually a card that needs name, email and agent


► If home buyer completes registration without indicating

that they have a buy-side agent or plan to use an agent,

the builder cuts the buy-side commission

►With Redfin, this means little to no Redfin commission

refund or difficulty receiving the Redfin commission

refund. (case by case)

New Construction – Levels

of Finish

How far along is it?

• City permits

• Most options for changes and upgrades

• Longest timeline



• Limited changes

• Pick colors

• Timeline varies

Under Construction • No changes

• Add upgrades

• Close quickly, like a resale home

Completed “Spec” Home

“Pre Sale” or “Under Construction”

Is it a Home or Condo?

● Single Family Home

● Condominium

● Detached Condo with Fee Simple land

● PUD – “Planned Unit Development”

What’s the difference?

● The way the property was developed

● Financing is different for SFHs

vs condominium/detached condos

The Build Process

Presale: Picking Your LotWhen in the presale stage, you can choose your lot from lots that

have been ‘released’ at the time. Builders release lots in phases

in a development and start the permitting process only on

selected lots. Some floor plans will only fit on certain lots.

Basic Build Process 5-8 months

Permitting Process (inspected by the city/county)

Foundation poured

Framing/Roof/Windows Stage (re-inspected by the city/county)

(order for cabinets/plumbing fixtures/furnace/H2O tank, trim, doors)

Exterior Siding/Painting Stage

Electrical/Plumbing/Heating/Insulation Stage (re-inspected by the


(order for flooring/appliances)

Drywall/Interior Painting/Doors/Millwork Installation Stage

Cabinets /Plumbing Fixtures/Other Fixtures Installation Stage

Flooring/Appliance/Landscaping Installation Stage

Clean-up and touch up

COO (Final ‘Certificate of Occupancy’ Certificate from the city/county)

Private Inspection and Builder ‘Blue Tape’ Walk-through with Buyer

Builder contractsBuilders have a package of documents:

● Builder addendum

● Full builder purchase agreement

● Neighborhood description documents

● Timeline advisories

● Warranty information

● HOA documentation

These are non-standard forms that will

override standard purchase agreement

documents and must be read carefully.

Common ProvisionsSome common clauses in builder contracts are:

● No inspection contingency – inspections are allowed

and builder must fix code issues but you can’t walk away

● Builder walk through – “blue tape walk through” to

create a “punch list”

● Closing delays – builder may automatically extend

closing with no penalty if the build process is delayed but

buyers may not be able to extend without monetary


● Repairs after closing – builder may be allowed to finish

things after closing within a certain timeline

● Earnest money non-refundable – after a certain period

your earnest money will go “hard”

Sewer Capacity FeesWhen a home hooks into the sewer

system in King County (and parts of

South Snohomish County) it is assessed

this utility charge at closing.http://www.kingcounty.gov/environment/wastewater/CapacityCharge.aspx

● Paid over 15 years

● On top of regular water/sewer bills

● Builder will require you assume it

● Rate locked in at time of construction

– currently $55.50 per month

● Will be assumed by the next buyer

when you sell, so never pay off!

Upgrades & Changes

Model Homes and Upgrades…If there is a model home, it may have a number of upgrades


Some upgrade examples in model homes:

● Upgraded flooring hardwoods/carpets (or added amounts)

● Upgraded countertops, custom tile work, paint and trims

● Refrigerator, washer & dryer are often shown in model


Other examples of typical upgrades:

● Window screens (sometimes included in standard specs)

● Garage door openers

● Rear yard landscaping

● Air conditioning

Paying for upgradesEvery builder has different rules:

● Roll it into the purchase price

● Upfront deposit is usually required

● Upgrade deposits are usually


● May be fees for making changes after

upgrades are chosen

Every builder has a deadlines specific

to a certain house after which changes

cannot be made.

Specifications ListEvery builder should be able to provide:

● A list of what upgrades are present in the model

● A list of standard specifications or “specs”

● If the lot you are considering has any upgrades pre-selected and if it is

included in the price

● Warranty information

They may or may not have:

● A list of common upgrades

● A price list or master list of options you can choose

● A cost associated with quoting custom finishes

● Limits on changes that they are willing to make


Front End vs. Back EndFront End means on the purchase price:

● an offer of $540,000 on a list price of $550,000

Back End means concessions or upgrades:

● an offer of $550,000 on a list price of $550,000

● asking for the builder to include certain upgrades or credit

a certain amount towards closing costs.

What works best?Most builders prefer to negotiate on the back end. Why?

● Avoid setting a precedent of discounting for future sales

● Avoid upsetting prior purchasers who paid full price

● May be able to control material and labor costs

The best approach varies case by case. Builders often have

certain styles. An experienced agent can lay out your

options and make a recommendation.

Negotiation Factors

● Market demand – How many homes has the

builder sold this month, last six months? What are

the current market conditions?

● Phase of construction – May be willing to negotiate

more if an completed home has been sitting

● Health/size of builder – Do they need to sell it?

Some small builders don’t have the flux of money

that larger builders have and may be more willing

to negotiate to sell a home

● Willingness to use a “preferred lender”

● Number of requested upgrades

Preferred Lenders &


Preferred LendersMany builders have a special relationship with a lender.

● Ownership – may be owned by the same parent

company, or may just be an institution the builder likes

● Concessions – certain “specials” may be linked to you

agreeing to use the specific lender

● Rates – usually comparable, maybe not the very best

deal you can find, may have longer term rate lock


● Process – may be contractual provisions that are easier

if you use their preferred lender as they are familiar with

builder and their contractual deadlines

What can you get?● Specials – some builders may offer certain upgrades for

a limited time only – like countertop upgrades for offers

made before a certain date

● Allowance – some builders allow a buyer to specify a

certain dollar amount in the offer that they can later

specify how it will be spent

● Redfin credit – typically the rebate from Redfin must go

towards your closing costs – it’s good to keep that in mind

during negotiations with the builder


Common Questions● Is this builder reputable?

● What does the warranty look like?

● Can I change “_______”?

● When do I have to tell them I am working with an


● The agent in the builder’s model told me they are a

buyer’s agent. Are they working in my interest?

● Can I get a better deal by going with the builder’s


● Can I tour new construction, at any phase, with

Redfin? Yes you can!


After Class…

Please fill out the survey. We will also you this slide

deck. We’d love to get your feedback so we can


Redfin Hosts: Kathi Kelly-Billings – [email protected]

Ian Miller – [email protected]

To get even more info on the home buying process, check out our home

buying guide:


Check out our schedule of upcoming classes at


Thanks for attending!