What To Know When Buying New Construction

Walking into a decked out model home on a builder’s development is very different than going to an open house for a previously-owned home, even if it’s been staged.

And it’s understandable why new builds can be appealing since homebuyers have the opportunity to pick out customized features or upgrades, sometimes even select the lot or exact location within the neighborhood, and then move into a pristine never-before-lived-in home.  

Being a part of the process from start to finish means you have more control over the outcome of your constructed home and even more say at times when working with the builder. But it can be stressful, time consuming, and not always smooth sailing if you don’t know what you are doing.

Whether you’re working with a local builder with their own development or a major national construction company, buying a new build home will be a different experience than buying a pre-owned home from another homeowner. 

That’s why if you’re thinking of purchasing a new build, make sure you know what to expect and understand some key strategies that can make it a successful journey to your home sweet new build!

Here are the top five strategies to keep in mind:

1. Don’t go it alone — work with your own real estate agent.

• You need someone outside of the builder’s onsite agent to advocate for you and guide you throughout the home-buying process and construction process. You could get into situations that you might not have the experience or expertise to handle.
• The builder’s sales agents can help with explaining what the builder can offer when it comes to home models and other important information about the company and the community — but remember, they work for the builder and not for you. 
• Having an agent that represents YOU (I hope it’s me!) will look out for your best interests and help you navigate this information, even recommend reputable builders in your area and know their track record.
• I can review the builder’s contract and use my negotiation expertise to ensure your needs and wants are met. That way you’ll be more protected and the final contract won’t focus only on what benefits the builder—I’ll make sure you’ll get a pre-drywall inspection!
• I will have a better understanding of resale value and what upgrades are worth it or not in that neighborhood or development. This can be helpful with custom or semi-custom homes, which require you to pick from a wide range of choices for exterior and interior features.
• Tell your builder upfront that you’ll be working with an agent, and usually the builder will pay a buyer’s agent out of their marketing budget. This arrangement should not impact your construction/sales price.
• I can explain your rights as a buyer. You’ll know such things as how long you have to review important association rules and regulations, or how and when you can back out of the contract and get your earnest money deposit back in full.  

2. You don’t have to use the builder’s preferred lender.

• Sometimes developers provide incentives for using their preferred lenders.  These are the “little” things in the contract that an untrained eye could miss, and I can help with going over the contract.  
• That said, you should still shop around for the best mortgage for you and your financial situation. 
• It can be tempting to use the builder’s onsite lender since it can feel so easy and simple — like a one-stop-shopping experience, but they might not always have the best financial deal for you. 
• You still want to compare and understand how all the fine print comes together whether you go with their preferred lender or your own lender.  Oftentimes the contract terms change and you want to be sure you understand what you can and can’t do based on the decision about which lender you are using.  

3. Always get a home inspection or multiple ones with new construction.

• Even though it’s a brand-new home, you should protect yourself and your investment with a home inspection (or inspections!) done by a reputable professional.
• Builders can make mistakes, and new homes can have defects. You don’t want any surprises once you move in. 
• From the many new construction properties I have helped clients buy, I can tell you first hand that it’s often the new construction homes that have the most problems.  
• Make sure you get multiple inspections based on certain steps in the construction process, such as the pre-drywall inspection.
• Even if your home comes with a structural warranty and a workmanship warranty, having a professional inspection or inspections can hopefully eliminate certain potential issues before you move in. 
• You also want to  carefully review any warranties to determine what they may cover and their procedures for service requests. These warranties can provide another layer of protection on top of any home inspections.

4. Expect the unexpected at times!

• Know your timeline but expect delays. From start to finish, new build homes require lots of details on so many fronts, which means snafus can happen. Materials may take longer to get delivered, certain customizations could take longer or are no longer in-stock, or unexpected weather conditions can put a hold on things.
• Have a plan in place if there are delays and if you want to time selling your current home with the completion of your new home.
• Also be prepared for unexpected things even after you move into your home because a new build has not yet been tested by someone living there like a resale home.  
• There can be issues that don’t come up until your fourth or fifth shower, for example. You want to be sure you know how to handle things like that, even if you did have an inspection.  
• I typically negotiate that the builder agrees to fix certain things after move-in for a period of time. 

5. Stick to your budget and don’t get swayed by costly upgrades.

• Even if you’re building your dream home, don’t go over budget. It’s very easy for this to happen when you have the opportunity to customize.
• Understand the pricing for certain customizations and any upgrades on the base model. Pick and choose carefully so you’re not surprised by the final number — and know which upgrades to remove first if you need to cut costs.
• In recent years, rising costs of materials and shipping have had an impact on the price of new builds. A traditional new build could take up to a year or more to finish. A lot can happen in that timeframe so if there is a builder’s escalation clause with pricing, understand it fully and negotiate as needed.
• Some builders or developments focus on modular homes or pre-fabricated homes. These pre-fab homes can sometimes be less expensive and take less time from start to finish. The main construction of the home is done off-site in a factory set-up, and sections of the home are brought to the property and put together.
• I can help you decide which upgrades are worth the splurge and which won’t provide an ROI if you were to sell anytime soon.  Making those types of decisions can help with not over-improving your home.  

As you can see, you’ll need to approach buying a new build in a completely different way than buying a home currently owned by a seller. 

These five tips are just the beginning.  If you or anyone you know is thinking of buying a new construction home or even a recently flipped home, please work with an agent.  

Of course, I hope to be the one to help you, but either way, having an agent on your side will help you stay on budget, sign off on a fair contract, and help you move into home you truly love!