Buying a new home to be built by one of Denver’s major builders is a fun and at times stressful process. The construction of a new home involves many moving parts and people. From the buyer, buyer’s broker, builder’s sales representative, design center staff, construction supervisors, mortgage lender and the actual contractors constructing the new home everyone must work together for a successful transaction and outcome. For a detailed discussion of the process click on Tips For Buying New Construction.
The purpose of this blog is to track and share the experience of two home buyers, Laura and Alex, as they work through their home buying experience. In this case, Alex and Laura are purchasing a new home in Southeast Aurora ( Southlands Area ). Alex and Laura are purchasing a new home in Serenity Ridge from Richmond Homes. Richmond Homes is the number one homebuilder in Denver according to the Denver Business Journal. Tom Gross of the Tom Gross Team is representing Alex and Laura in their purchase of their new home. We will share the process and experience from start to move in day. Along the way you will have the opportunity to meet Laura and Alex. The blog will be updated on a regular basis so please come back often to follow Laura and Alex in their new home buying experience.
Background – Laura and Alex are past clients of Tom Gross and the Tom Gross Team. Tom listed and sold their condo a few years ago. Laura and Alex have been preparing to buy their next home. Their goal is to buy a home in 2018.
January 13, 2018 – Laura contacted Tom on Saturday to let him know they were out looking at new neighborhoods and found an opportunity in Serenity Ridge. The house was under construction (foundation and frame). They spoke with the on-site sales representative, Meghan of Richmond Homes. Laura had questions about the process and her mortgage options. Richmond Homes encourages their home buyers to use Richmond’s preferred lender. Tom responded and set an appointment with Laura for Monday to discuss the situation.
January 15th – Tom and Laura (Alex was working and unable to jump on the call) discussed their interest in the home as well as the entire process including mortgage financing options. Tom recommended that Laura contact Matthew Hibler at Cherry Creek Mortgage for an independent mortgage pre-qualification and consultation. See Tips For Buying New Construction for a discussion of the benefits of securing a mortgage pre-qualification from an independent mortgage lender. While Laura was connecting with Matthew, Tom contacted Meghan at Richmond Homes to confirm the details (sales price, incentives etc.) as well as to register as the broker representing Laura and Alex in their purchase of the new home. Meghan had also arranged for Laura to visit the Richmond Design Center to review the features, pre-selected finishes and upgrade options for the home. Later in the day, after Matthew confirmed Laura and Alex’s ability to secure acceptable mortgage financing and Laura completed a visit to the design center, Laura and Alex decided to move forward with a lot deposit to hold the lot. Based upon Laura’s visit to the design center, Laura felt she would want to change many of the pre-selected finishes in the home. Tom recommended that they proceed with the fully refundable lot deposit to secure the lot and gain more leverage with the Richmond and the design center to allow Laura to negotiate desired changes in the selections. It was agreed that Laura and Alex would not proceed with executing the Richmond Sales Contract until Laura was satisfied with her ability to change finishes and selections in the home. An appointment to deliver the lot deposit of $9000 was schedule late in the day on January 16th. Meghan was scheduled to be off on January 16th so the appointment was confirmed with Meghan’s partner (John) in the Serenity Ridge sales office.
Note – this particular home was already under construction so the ability to change finishes and selections was critical to Laura and Alex.
January 16th – Tom, Laura and Alex met with John late in the day to deliver the lot deposit. John confirmed the basic details of the transaction. It was agreed that Tom would coordinate with Meghan to schedule an appointment later in the week to execute a sales contract. This would allow time to confirm Laura’s ability to change pre-selected finishes and features in the home. The lot deposit would be fully refundable so Laura and Alex could decline to proceed and get their lot deposit money back if it was determined that Laura could not change the pre-selected finishes and features. Laura and Alex took a deep breath and wrote the check for $9000 to hold the lot.
January 17th – Bad News! Meghan informed Laura that the price and incentives for the home were changed sometime on January 16th. John was unaware of the changes when he met with us for the lot deposit. Richmond would not honor the price and incentives based upon a lot deposit. Of course, this was a terrible way to start a transaction. After further discussion with the sales management team at Richmond, Meghan informed Laura that Richmond would honor the price and terms if Laura and Alex agreed to use Richmond’s preferred lender. As explained in Tips for Buying New Construction the builder’s mortgage lender often charges considerably more (higher interest rate and closing costs) then a lender such as Cherry Creek Mortgage. In this case, Richmond Homes was offering a $10,000 incentive for Laura and Alex to use Richmond’s preferred lender. However, based upon past experience the added closing costs and higher interest rate charged by Richmond’s preferred lender would offset the benefit of the $10,000 incentive. If Alex and Laura agreed to this stipulation they would be at the mercy of Richmond’s preferred lender when it came time to finalize the mortgage terms and rate (approximately 60 days before completion of the home).
It was agreed that Tom would contact the management team at Richmond Homes to discuss and hopefully negotiate acceptable terms for Laura and Alex. It was Tom’s hope that he could leverage his past sales track record and credibility with Richmond Homes to negotiate acceptable terms. Tom proposed a provision for the sales contract giving Alex and Laura the right to still use their own lender (Cherry Creek Mortgage) if the closings costs and interest rate proposed by Richmond’s lender exceeded the closing costs and interest rate offered by Cherry Creek Mortgage by agreed upon margins. The challenge with new construction financing is the delay in the buyer’s ability to lock in the interest rate and closing costs until the home is about 60 days from final completion.
January 18th – Good News! Richmond Homes reconsidered their position and agreed to honor the original price and incentives and to allow Laura and Alex the right to use the lender of their choice. Plus Richmond Homes agreed that Laura could work with the design center to change the pre-selected finishes and features in the home. Although the change in pre-selected finishes and features might delay completion of the home by a few weeks Laura and Alex were thrilled with the outcome. Tom confirmed an appointment with Meghan for late in the day (after Alex got off work) to execute the Richmond Sales contract. Once the contract was fully executed the terms were locked in which would eliminated any more surprises. Tom, Laura, Alex and Meghan met late in the day at Richmond’s Serenity Ridge sales office to review and execute the sales contract. After thoroughly reviewing the lengthy sales contract Alex and Laura signed the contract to purchase their new home.
The lot deposit of $9000 was applied to the sales contract. Laura and Alex were on their way to purchasing a beautiful new home. Completion of the home was projected to be in July or August.
January 19th – a question regarding the half wall on the upper level loft came up. Alex really preferred an open railing with balusters rather than a half wall that was currently planned for the home. Alex and Laura asked if that could possibly be changed. The initial response from Meghan was not encouraging. The option of the balusters was a “structural option” that typically cannot be changed after commencement of construction as explained in Tips for Buying New Construction. I advised Alex and Laura that based upon past experience with Richmond Homes it was unlikely they would agree to the change but there was certainly no harm in asking. We submitted the request to Meghan who agreed to speak with the Richmond management and construction teams regarding the request.
January 24th – Good News! Richmond Homes agreed to change the half wall to an open railing with balusters. Alex and Laura were now moving forward with the flexibility to select the finishes and features. It was agreed that Meghan would help Laura coordinate visits to the design center to make her final selections.
February 7th - Tom, Laura and Meghan met with the construction supervisors at Richmond’s Serenity Ridge sales office. The purpose of the meeting was for Laura to meet the construction team that will be supervising the construction of the home. The construction supervisors reviewed the entire construction process and time line. They reviewed the features of the home (including the open loft railing with balusters) in detail. It was agreed that Laura needed to make some final electrical selections (extra outlets and canned lights) by the end of the week to stay on schedule. Laura would also continue to finalize selections at the design center. The two hour meeting was very productive and informative for Laura. It appears Richmond has a strong team working on the construction of the home.
February 9th – Laura and Meghan finalized the electrical selections on schedule. Meghan prepared the required paperwork documenting the selections and changes. Moving forward!
February 16th - Quiet week. Laura is finalizing her selections at Home Gallery. Construction work continues. The mortgage process is on hold until about May when a projected closing date is determined.
February 23rd - Laura continues to work on final selections at the Home Gallery. Here is the latest update from Laura:
Everything went well during our all day appt last Thursday. We are going in tomorrow to finalize our decisions at 10am. Total home gallery spend is looking to be slightly over 10% of the base price of our home so we are prepared to pay the 50% difference.
Had my weekly call with Meghan yesterday. Metal is going in for HVAC and plumbing as well. We are third in line for electric but the roof has to be installed first. We saw stone out front when we drove past the other day so they will be putting that on the house in the next couple weeks. Driveway is in as well which makes it easier to peek around inside the house :-)
February 24th - A few photos of the home - interior duct work is in progress
A few photos of Laura's beautiful Home Gallery selections:
Laminate, carpet, countertops, cabinets
Laura's favorite the fireplace tile
Laura and Alex's vision is taking shape!
March 5th - Here is the latest from Laura
Thanks, Tom! Was snooping around the house last week and bumped into DJ. We did our weekly update onsite. House and shingles are going on soon. Plumbing and HVAC is pretty much done. We do have some sort of wild animal (coyote or fox) that has decided the toilet is our stairs leading to the top floor. DJ told me there was a pigeon infestation at one house and they had everything cleaned up and sealed before external finishes went in. Also heard that some kids plugged up a sink and caused plumbing to overflow in a house a couple months ago... Looking forward to having more things closed up! This is unfortunately normal at new home sites and the pros of being one of the last new homes built is we have neighbors to catch unusual activity around the property.
Met our next door neighbors and talked about fencing. Still waiting for the stone to go on the exterior. This is normal as exterior finishes, like paint and stone, happen at random times. Most important thing is the siding and roofing, according to DJ, so that electrical can go in. Just a week or so out from that!
March 12th - Weekly update from Laura
Alex and I stopped by the house yesterday. We were pretty amazed to see the roof, garage door, copper, tubs and shower basin were in. We had a dry spell for a couple weeks, but now we are ready for electrical to go in. After drywall goes up, we will get our 60 day close date.
Right now we are dealing with our lease renewal. Our current 12 month lease ends 5/31. We just received the numbers for going month to month and it will be an extra $800 per month. This is extremely high and not standard in the rentals space, so we are working to negotiate. We will let you know how it goes.
Roof and Garage Door installed
Copper, Tubs and Shower Basins in!
March 19th - Construction of home continues. Some issues have developed with animals and kids getting into the house. Her is the latest from Laura
I have some concerns on a few things RE the house I wanted to bring to your attention. Alex and I spotted several pieces of wood with black mold this weekend in the flex spaces. There are also pigeons living in the house that have left feces everywhere (most concerning of which is our master). Richmond’s way to address this is to just clean it up, not replace the pieces of wood covered in waste. There has also been a coyote or fox in the house that has been defecating on our stairs. A friend of ours who has a Richmond had the same issue when building in Evergreen. Richmond did not replace the wood that was saturated in urine and feces and instead superficially cleaned it. They have since had to replace the carpet and the company had to tear out the wood as well since it caused an odor.
The covers to the vents have been taken off and there are pigeon feces in them and feathers. The health complications of bird feces in the HVAC system are very serious. Another issue our friend experienced and had to pay for since saw dust, bird feathers and animal waste was sitting in the vents. This caused issues as she has asthma and a weakened immune system. I have asthma as well and am concerned. I have pictures of the areas, but did know the best way to handle this. I really want to ensure that this is addressed and not just cleaned with soap and a sponge. I feel the wood should be replaced due to health risks. Can you advise us on what to do? Thanks for your help!
I advised Laura to communicate her concerns to her Richmond sales representative. The representative responded that they are aware of the problem and are taking steps to remove all animals and birds from the home. Richmond also indicated that will clean the impacted areas and all duct work will be thoroughly cleaned prior to occupancy. No definite determination if any impacted wood will be replaced. Hopefully the house will be secured very soon. Stay tuned....
March 19th-Response from Richmond Homes
We are aware of the unfortunate excrement. DJ thinks it’s a raccoon that has been in an out of every house in the neighborhood that’s not locked up yet. Regarding the stairs that are soaked in it, typically we would not replace these, but DJ said he will look into whether we are able to replace them as you’ve requested. A construction clean is usually just a sweep but considering the amount of excrement, DJ said he’d try to go through with bleach.
In an attempt to get rid of the pigeons, DJ will leave a couple of windows open upstairs to help evict them—so rude, especially since they’re not paying rent!
The vents will be professionally cleaned before the home orientation walk. They take almost a full day to do it, where they even take apart the furnace, clean it and put it back together. So while it’s dirty now with debris falling into the vents, they will be thoroughly cleaned.
We’ll circle back to the wood in the flex space with the mold, if it hasn’t been addressed by the time of the electrical walk through.
Since we’re still waiting on the electrician, not much has happened in the home. DJ and I were about to call you and say just that, but then I received your email, so we will consider this email your update for the week if that’s ok with you."
Looks like the animal situation and related clean-up concerns are under control for now. The Richmond Team has been very responsive to Laura's concerns.
March 29th - update from Laura - e-mail communication with Richmond Homes
Alex and I stopped by the house yesterday and saw the electrical is mostly in! Very exciting!!
We did want to bring a couple things to your attention that we noticed. We aren't sure if the attached picture is the TV outlet for the master. It is raised to the middle of the wall, but it's in the very right corner of the room. From the other Whitmans we looked at, we saw them raised and centered on the wall (they are centered correctly in the loft and living room).
The framing is still up in the stairwell, loft and near the 2 bedrooms. The electrician is installing the outlet in the wood on the half wall in the loft. Assuming that outlet should be in the floor since there will be railing replacing the framing.
We saw the additional outlets we requested in the garage and in the master closet. Looks like the basement is still being worked on so I'm sure the electrician will get to the outlet we added in down there.
Thank you for looking into this!
Laura is doing a great job of communicating with Richmond Homes regarding possible issues and concerns. Fortunately, the Richmond Homes Team is very responsive and doing an equally great job of responding to Laura's concerns.
March 30th - update from Laura
Thanks, Tom! Just had a weekly update call with DJ and Meghan. We scheduled the electrical walk through for the 9th at 11am. Does that time work for you?
DJ is going over tomorrow to look at the weird outlet placement in the master, the missing outlet in the basement, missing media conduits in the master, loft, and living room along with the bird mess upstairs. Alex and I also called out that there are boot imprints in the basement concrete and asked that those be buffed out. They said to just keep emailing them as we spot things that don't look quite right so they can address ASAP.
The electrical walk through is an opportunity to verify the proper placement of all electrical outlets, switches etc. before the drywall is installed. It is also a great time to photograph and document the framing of the wall areas. This is really helpful if you plan on installing wall mounted flat screens or anything that will require a secure installation into the framing of the house. I look forward to meeting Laura and Alex at the house next week. This is a fun time as the house really begins to take shape.
April 9th - Laura and I met with a representative of Richmond Homes to complete the electrical walk-through. The purpose of the walk-through is to verify the placement of electrical and media wiring, outlets and switches. A few issues and questions came up but overall the house looks great and the walk-through was successful. Questions included a missing light switch at the bottom of the second floor stairway, missing vent fan in the upper level laundry room, a missing outlet in the basement and a discussion of the need to relocate the exterior gas line for a grill to the inside the future railings of the deck. The Richmond representative was cooperative and responsive. At this point, we do not anticipate a problem in addressing the issues. The representative also confirmed that the home may be completed by the end of June. As publicly traded company Richmond Homes will often push to deliver homes by the end of the quarter ( June 30th ). This was good and frustrating news for Laura as she just signed a 3 month extension of her lease in anticipation of closing in August as originally stipulated. Overall, the home looks great!
April 29th - we have a closing date!
Laura and Alex received word from Richmond Homes that final closing has been scheduled for June 20th. The home is coming together nicely. Alex and Laura will be in their home in less than 60 days. Now that a closing date has been set Alex and Laura will be finalizing their mortgage financing. Unfortunately, mortgage interest rates have increased over the past few months. This is always a risk with new construction and the inability to lock the mortgage interest rate more than 60 days prior to closing ( without significant fees ). Alex and Laura will be speaking with their lender in the next 48 hours to discuss the final loan approval process. The lender will be ordering the required appraisal. The appraisal process is bit challenging with a new home. The appraiser will typically inspect the home about 30 days prior to closing. The appraiser will typically require a re-inspection immediately prior to closing to verify the proper completion of the home.
The question of a home inspection is another issue that is bit more challenging with a new home. If Alex and Laura elect to have a home inspection it will need to be approved and scheduled by Richmond Homes. A home inspection on a new home is typically scheduled 10-14 days prior to the closing date. I will be discussing this option with Alex and Laura later this week.
May 8th-Inspection and Mortgage
The "blue tape" walk-through has been scheduled for the second week on June. This is the walk through where the buyers literally mark items to be repaired or improved upon with blue tape. Laura and Alex have selected a home inspection company to perform a full home inspection. We are working on getting the inspection company approved ( proof of insurance ) by Richmond Homes. Once the inspection company is approved we will work with Richmond Homes to schedule the inspection most likely immediately before the "blue tape" walk-through. Laura and Alex will make a final decision regarding a mortgage lender this week. Richmond Homes in encouraging Laura and Alex to use their preferred lender. However, I have advised Laura and Alex to insist on a written disclosure of closing costs from Richmond's preferred lender before selecting a mortgage lender.
Laura and Alex were advised this week that the damage to the basement floor resulting from an unidentified sub contractor walking across fresh concrete will require the replacement of the concrete basement floor. Richmond offered to install carpet over the concrete floor. However, Laura and Alex prefer a permanent solution. It is unfortunate that situations like this occur on a new home construction site. Fortunately, Richmond Homes has agreed to do the right thing and replace the floor.
May 14th - Mortgage Lender
Laura and Alex decided to move forward with Cherry Creek Mortgage for their mortgage financing. This was a difficult decision due to the incentive Richmond Homes offers to encourage home buyers to use their preferred lender. The problem is the preferred lender often charges higher closing costs and rates that effectively nullifies the benefit of the incentive. In addition, the preferred lender tends to be slow and reluctant to disclose the actual closing costs and interest rate. Consequently, many uninformed home buyers agree to use the preferred lender to take advantage of the incentive only to be taken advantage of by the preferred lender. In addition, Richmond Homes require home buyers to use their preferred home owner's insurance company as an additional requirement of receiving the incentive. This requirement may cause the home buyer to lose their insurance discount derived from bundling their car insurance with their home owner's insurance further nullifying the benefit of the incentive. Fortunately, we negotiated early in the contract process to retain Laura and Alex's right to select their own lender.
May 29th - Preliminary Punch List
The property inspection and blue tape walk through are only a few weeks away and there remains much work to be done in the house. This is a stressful time for Laura and Alex as they wait to see evidence that Richmond Homes will address their concerns prior to the walk through in a few weeks. Based upon past experience I have learned that Richmond Homes can mobilize their contractors to rapidly complete the final work in a home. The challenge for Laura and Alex is to continue to communicate with Richmond Homes to address their concerns. It is in everyone's best interest to have all the outstanding items completed prior to the blue tape walk through. This gives Richmond Homes time to address, prior to closing, any addition items that arise during the home inspection and blue tape walk through. The goal is to have no pending work items at closing. Once closing takes place the response time of the builder tends to increase(less responsive). Once any remaining work items are transferred to the warranty team the response time can easily stretch to weeks instead of days. Alex and Laura prepared a detailed list of 28 outstanding issues to be addressed in the house. Laura has expressed her desire to delay closing if all the work items are not completed by the walk through and certainly by closing. Unfortunately, Richmond's sales contract does not allow for a delay in closing provided Richmond Homes is able to secure the required occupancy permit. The next two weeks will critical as we approach the blue tape walk through.
June 4th - Successful Meeting
We ( Laura, Alex and myself ) met at the house Saturday ( 6/2 ) morning to walk through the house with the construction manager. Laura and Alex had prepared a list of almost 20 items of concern. The construction manager went through the list item by item. With the exception of one item that will require the participation of the Design Center all the items of concern were addressed. The house definitely looks like a bit of mess at the moment which is typical. There are many trades ( sub-contractors ) working in the house. There are many things that need to be addressed before the blue tape walk-through in 10 days. Fortunately, the construction manager is well aware of the work to be done. This is crunch time for the construction manager and his sub-contractors. The goal is to have the home completed and ready for inspection ( home inspection and blue tape walk-through ) by next week. There are a few items on order that may not arrive in time to meet this goal. However, 95% of the home should be done by the blue tape walk through. The remaining work ( including any inspection items ) will be completed in the last week prior to closing. The construction manager also indicated that the grading and landscape work ( front yard sod, shrubs and trees ) will be completed by closing. This is important so the sod has a chance to take root before the summer heat in late July and August. Alex and Laura are excited about their new home. The next two weeks may be stressful at times but also fun as the home comes together. I believe Alex and Laura can now begin to envision living in their beautiful new home! The mortgage appraisal has been completed. The mortgage loan is in the final process of approval.
June 11th - Home Inspection
Laura and Alex hired an independent home inspector to inspect the home and sewer line. Fortunately, nothing serious was found during the inspection. The inspector did provide a detailed list of items to be addressed in the house. We will review the list with the construction manager at the blue tape walk-through.
June 13th - Blue Tape Walk-Through
We ( Laura, Alex and myself ) met at the house to walk through the house with the construction manager and sales representative. The purpose of the walk-through is to identify and label ( blue, green and red stickers ) items to be addressed in the house such as drywall damage, paint touch-up etc. Overall the walk through went well. Laura and Alex were very careful and particular in identifying items to be corrected and improved upon. Despite a three hour walk-through the construction manager was very cooperative. Several major items were discussed and identified including the installation of the wrong faucet in the main floor half-bath. The faucet that was installed did not fit the space correctly which prevented the operation of the drain stopper control ( see photo below ). The construction manager suggested the installation of a manual stopper. However, Laura and Alex were not happy with that solution. Laura and Alex requested the correct faucet be installed. This request will require the approval of Richmond Management. The second significant issue were the sliding trays in the kitchen cabinets. Laura and Alex paid for upgraded soft close trays. Unfortunately, the standard trays were installed. It was agreed that the correct upgraded trays will be ordered and installed as soon as possible. In both cases it appeared the staff at the Richmond Design Center had mishandled the paperwork. Richmond Homes now has one week to address the outstanding issues. We scheduled a final walk through for the afternoon of June 20th about 2 hours prior to the final closing.
June 20th - FINAL CLOSING!