Our client, Sarah Kang, is no stranger to new construction or Glass House Real Estate. In fact, Sarah owned a Toll Brothers home before moving to Northern Virginia. Khalil helped Sarah and her family buy a new construction home from a custom home builder, Sekas Homes, back in 2014. When it was time to sell and buy something a little bigger and closer to the hospital where she was a physician, she called Glass House Real Estate. Selling and buying a new Toll Brothers home during the early stages of the Pandemic in 2020 while on the front lines provided several complexities. In this case study, we will examine the following three obstacles and how we overcame them:
- The Kang family needed a “sale of home contingency.” Sale of home contingencies are rarely agreed to with production builders, but without it, we were not comfortable moving forward given the uncertainty of the market due to the pandemic.
- Major concerns were identified during the pre-drywall home inspection with regard to water infiltration. Identifying the problem and an adequate solution required multiple site visits and upper management.
- Quality Control. Over 4000sf of hardwood floors were installed and ultimately, upon objections and escalation to senior management, were removed and replaced.
New Construction Buyer Challenge: Sale Contingency
Sarah needed to sell her home in order to purchase a new construction home with Toll Brothers.
Sarah wanted to purchase a new home with Toll Brothers. Unfortunately, production builders like Toll Brothers rarely agree to a contingent sale within their community. They seldom agree to this because these more prominent builders typically offer end-unit loans, which means that they finance the build and only receive payment once the home is completed and delivered. Agreeing to a home sale contingency put Toll Brothers in a risky situation - in the event Sarah didn't sell her home, they could lose money.
Glass House Solution: Sale Contingency Prior to Construction
Glass House negotiated a 30-day sale of home contingency that would allow Sarah to get her home under contract and closed before Toll Brothers started construction. We knew this approach was shorter than we liked; however, we ultimately ended up with a 45-day extension, which we needed to succeed. The Kang family wound up needing a rental during construction - which they did, in a nearby luxury high-rise. However, Sarah could lock in her pricing and preferred lot while securing her home sale by doing so. By working with Toll Brothers and thinking outside the box, the Kang family mitigated risk and escaped significant price increases that occurred over the next several months.
New Construction Buyer Challenge: Builders’ Inspection Report
Buyers typically have an inspection contingency when buying a resale home, also known as due diligence. The contingency protects the buyer, who can cancel the contract based on the home inspector's findings. However, builders have in-house contracts that diverge from resale contracts. Unlike the option resale contracts allow, new-build buyers cannot back out of the contract because of an inspection - instead, the contract provides limited protection for buyers.
Because new construction homes are exposed to outside elements, it is customary to find small amounts of water inside the home during construction. However, in the course of Sarah's pre-drywall inspection, we found excessive water throughout the home in areas that were not near windows or drains. A major concern for the Kang family and the inspector. Upon a second walkthrough with the builder, the water was gone, despite a light rain the night before. Without any rectification, Toll Brothers considered the issue closed; we did not.
Glass House Solution: Builders’ Inspection Report
Because of this red flag, we objected, refused to sign the pre-drywall walk through where Toll considered it resolved, and insisted on a thorough investigation of the underlying issue. We worked with senior construction managers and our inspector to conduct a series of tests to identify the source of water leakage. The underlying problem from our perspective was that the most recent rain was not torrential enough to replicate the problem, should it still exist. Ultimately the source of water was found and corrected.
New Construction Buyer Challenge: Defective Materials
New construction contracts often state that building materials such as wood and stone are natural materials that are not uniform in look and consistently. Oftentimes, the end product can look different than what was selected at a design center. When the floors were installed, the consistency of the finish, color, and grain were not satisfactory. The builder pointed to the contract that stated the wood was a natural material and may occasionally look different. The flooring contractor also objected to our claim, stating they had installed the same floors for several other homebuyers without any grievances, who had already closed.
Glass House Solution: Defected Hardwood Floors
After we escalated the matter, a representative from the flooring manufacturer came from out of state to inspect the floors and determined they were in fact defective. Toll Brothers tore out nearly 5,000 square feet of floors and reinstalled new flooring. Subsequently, the homeowners who had not raised objections concerning their floor received new flooring as well.
Working with Glass House Real Estate & Toll Brothers Builders
The Kang family were experienced, new construction buyers. Having owned a Toll Brothers home in the past and working with Khalil to purchase a custom home in 2014, they were well-informed buyers. However, the issues we faced together were new learning experiences.
Purchasing a new build home can be tricky. It's essential to work with an agent who understands new construction contracts, and how to make sure you get what you pay for. Glass House Real Estate and Toll Brothers Builders have a long and successful history that results in our clients getting the dream home they desire.
A note from Khalil El-Ghoul:
Over the last 15 years I have sold dozens of Toll Brothers Homes, my wife is a former sales manager for Toll Brothers, and I have represented Toll Brothers Sales Managers in a personal capacity when they need to buy and sell a home. My unique insight into their sales techniques, incentives, and negotiation philosophy uniquely position me to be an effective negotiator for my clients when buying new construction homes.
"Thanks for reading! I’m passionate about empowering home buyers and sellers with professional advice and unbiased information, throughout the real estate transaction. Unlike most agents, I always put clients first. When it comes to negotiating, marketing homes, and sealing the deal, I’ve got the experience and knowledge you’re looking for. If you have any questions about moving to VA, D.C., or MD, don’t hesitate to reach out."