Buying a new construction home can be an exciting time. You get everything brand new and how you wanted it. As exciting as it can be, it can also be very scary. You have a lot more decisions to make than you would if you were buying a pre-existing home. You’ll need to understand a lot of lingo and know how to read the contract to make sure you truly are getting what you wanted.
Before you start the process to buy a new construction home, consider the following ten tips.
Is the cost of the land included?
Don’t assume that the cost of the land is included in the price a builder quotes you. Instead, specifically ask about the land. Also, ask if certain parcels have premium pricing, as many builders tend to hike up the prices of certain land, especially those located in a prime area.
What are the standard finishes?
If you’ve ever walked through home models, you’ve seen the high-end finishes they use to lure you in and make you want to buy. Don’t assume those are the finishes you will get, though. Ask the builder specifically what is standard in the model home and which items are an upgrade. You should then ask the cost for those upgrades to see if they fit within your budget.
What are the plans for the development?
Is the builder planning an entire subdivision? If so, how large do they plan to make it? What phases will they work in and how close will the construction be to your home? You’ll want to consider the noise level as well as the dirt you will have to deal with during the construction, which can take six to nine months for each home.
Is there a homeowners association?
Even if you buy a single-family home, you may come across developments that have a homeowners association. If this is the case, you need to know who runs it and what rules you will have to follow. For example, can you only have a certain size or type fence? Can you have a pool? You’ll want to know the answer to these questions before you buy.
How long will it take to build your home?
Each builder has their own timeline. A home can be built in a few months or take as long as 12 months. How long your home takes to be built will play a role in your financing as well as how/when you sell your current home. The builder probably won’t be able to give you a concrete date they will be done, but a rough estimate can help you plan accordingly.
Are there any incentives for using the builder’s preferred lender?
Builders often have relationships with lenders, which can benefit you if you use them. Some builders offer incentives, such as a credit for upgrades or help with your closing costs if you use their lender. Of course, you shouldn’t jump on the offer until you shop around and check with other lenders to make sure the deal is worth taking.
Do you provide a warranty?
The average builder offers two warranties: a one-year warranty on workmanship and a 10-year warranty on the structure. Don’t assume this is the case, though. Ask the builder for specific details about the warranties to make sure you know how well you will be covered.
Can you make change orders?
Once you sign the purchase contract, you may change your mind on certain upgrades or decisions you made. Some builders allow this while others do not allow it. Find out before you sign the contract what the builder allows with change orders including the deadline to make them so you know for sure.
How often can you see the home?
Like we said, building a new construction home is exciting, so chances are that you will want to see it while it’s being built. Ask the builder about their policy about you visiting the home for more than a drive-by. Will you be able to get into the home and walk around? What is required to do so?
Will the builder take care of punch list items before you close?
As a part of the purchase process, you have the right to walk through the home before the closing. If you find things that don’t meet the details of the contract, you have the right to ask for the issues to be resolved. As you can probably guess, though, the builder doesn’t like to do this, so you’ll want to know the details on how they handle these issues ahead of time.
Buying a new construction home can be exciting and overwhelming at the same time. Knowing what you are getting into and having as many questions answered as possible can help you get through the process seamlessly.