People are buying new homes again, but there are a couple of gotchas you’ve got to look out for.
About a year ago, I told you that Wall Street firms had been inserting a new, hidden resale fee into the paperwork when homebuyers purchased new homes from developers.
The firms fronted money to builders so they could meet their infrastructure costs, including roads, sewers and more. By accepting the money, the builders agreed to insert a one percent fee to be paid to them every time the house was sold for 99 years.
If you are looking to buy a home in a neighborhood developed over the last five years, there’s a fair chance this could be one of the clauses. Beware that it’s now no longer possible to get conventional financing in a development that has a resale fee clause in the contract.
Meanwhile, in another new gotcha, some new home builders are putting a clause in your contract where they strip you of mineral rights below the surface of your home. This is disclosed only in legalese to buyers.
So suddenly, a company could be exploring for natural gas under your home, which could make it impossible to refinance or sell down the road.
D.R. Horton is one builder in trouble with North Carolina over the legalese disclosure that’s made to homebuyers.
My advice is do not buy a home from D.R. Horton or any other builder where you are required to give up property rights to anything but the land at the surface. Do not give up those mineral rights. If you do so, you will severely limit the value of your home and potential profit you can make on that home in the future.