Q: Please help me. I am freaking out. My husband and I are first time home buyers and we are looking to buy a house that’s nearing completion.

My agent is telling us that we can’t negotiate the list price of this new home. Is that true? This builder also is not one of the mainstream builders. In fact, my agent who has been in this area for 25 years says she never heard of him. How do I find out more about this builder as they have only built one other house in the neighborhood.

Please help me. I am terrified that we are making a $400,000 mistake and my husband is NOT listening to me!

A: First, calm down. You can’t make a rational decision if you’re “freaking out” as you put it.

As I discuss in my book, new construction builders don’t like to cut the price on their homes. But, when negotiating, they are often willing to upgrade carpet and paint or even tile or appliances.

Your broker should know this, and perhaps she has tried to counsel you on how to negotiate and what kind of luck you might have.

Typically builders like to sell homes that are under construction because it allows the buyer to add personal touches, such as choosing tile, carpet and paint colors, but also because it means that when the house is done, it will be sold and the builder won’t have extra carrying costs.

Although you’ve selected a builder who is little known in the area, you should be able to find out about his past work. Ask for the names of 5 to 6 homeowners whose houses he built over the past 1 to 5 years. Visit these homeowners and ask them how they like living in the property.

Ask if there have been any problems with the houses, and if the builder came back to fix them. Ask what they don’t like about the house and what, if anything, hasn’t worn well.

When you are working with a builder who doesn’t have a long track record, you are taking on quite a bit of risk. You should negotiate to have a professional home inspector inspect the property when the walls have been put up, before the walls have been closed in and before you close, and make sure you are going to have an escrow account for holdbacks if something isn’t finished before you move in (like landscaping). You should also negotiate the punch list ahead of time and make sure that it becomes part of your final contract.

Hire a real estate attorney to go through the builder’s contract and make sure you are protected. And, work with your agent to be sure you aren’t overpaying for what you’re buying.

If you do all your homework, you ought to be okay. The biggest mistake would be to simply sign documents without doing due diligence on the property and on the builder.

I hope this helps. Good luck. Let me know how it goes.

Published: Nov 21, 2005