5 Steps For Buying A New Constructed Home

Dated: 11/06/2015

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Buying a "new construction" is a property with no previous homeowner. The negotiation process is easier because there is no present seller who is too caught up emotionally with the property. In this case, you only work with the builder.

Unlike buying an existing home, the process for acquiring a new constructed home will not drain your bank account. This does not necessarily mean that a home buyer should get a pre-approved by the bank and other extra costs.


Follow these 5 steps as a guide for buying a new constructed home

icon128-2xStep 1: Study the Pros and Cons

When things are new, nothing beats that feeling. There are 3 ways to buy a brand new home

  • buying a house already built on specifications

  • having a semicustom home built as part of a development (you can choose from a set palette of finishes and upgrades)

  • having a purely custom home designed and built to your specifications.

Before deciding on finishes and granite countertops, evaluate your situation again. Think about your lifestyle to check if you can afford the costs and responsibility. Ask yourself these questions:

  • Consider the location; new homes are usually far from the city center. Do you mind commuting every day for work or errands?

  • Are you willing to entice a new lawn into existence, and can you wait 20 years for sapling trees to mature?

  • Do you mind the closeness and potential lack of privacy? Houses tend to be built near each other.


Step 2: Investigate Neighborhoods and Builders

Neighborhoods are tricky, consider working with a buyer's agent who knows the area well, can set up home tours and walk you through the closing process. Remember, the listing agent works for the builder, not for you. Their loyalties are with their clients.

In case you have your own agent, tell him up front that you're interested in looking at new homes. If for example, your agent could not walk you through with buying a home in a subdivision, the builder's sales rep will get the full commission if you decide to purchase a home there.

When researching on neighborhoods:

  • Look online for listings on newly built home.

  • Scout the area for proper amenities and the quality of the homes. Also, ask the homeowners about their experience.

  • Attend open houses, keep a journal and take photographs. Enjoy the experience.

  • Study the homeowners' association (HOA) fees and rules; some are incredibly expensive -- and strict. You would not want to get caught up with rules you can’t follow.

  • Check cable and internet strength, some neighborhoods are not wired to have all the technology.

  • If a subdivision is still under developed, remember that it may be inconvenient for a while.

  • Check zoning laws, they can change quickly.

  • Visit the city planner's office to see what's in store for a particular location.

  • Ask your agent about plans for the area.

When researching builders:

  • Double check if there are no Better Business Bureau complaints on file against your builder's company.

  • Ask around if the builder has a good reputation.

  • Get a feedback from the builder’s past clients.

You can actually choose the builder you can work with.

"The buyer is more educated today," says Rhonda Hoeft, area sales manager for The Estridge Collection in Carmel, Ind. "It's amazing how much they know as opposed to five years ago. At least 80 percent of prospective buyers who walk into our sales office have researched our homes and the builder."


Step 3: Ask About What’s Standard and What's Extra

Get information about amenities and upgrades. Amenities ike a clubhouse, health and fitness center or a gated entrance. Upgrades can refer to any new feature attached to the home you are buying.

Compare upgrades, feature to feature. Find out what comes with the base home price.Here are some things to keep in mind:

  • If the stove is included, visit the showroom to see the model. If cooking is your passion, get an upgrade

  • Decide on the upgrades wisely.

  • Remember to separate your needs and wants, those are two different things.

  • Builders are running a business. They take advantage of because they can get parts and labor cheaper than anyone else. Better investigate all options, if it is cheaper to bid upgrades out after you move in.

  • If you're stuck haggling over price, get builders to throw in the upgrades you want at a reduced cost or for free. Builders, in general, need to sell quickly to make a profit.


Step 4: Order an Inspection and Home Warranty

Make your sales contract contingent on a final home inspection by a professional you hire. Sometimes even new homes have defects. If the builder objects to this, there might be something wrong with the home.

Get warranties, preferably backed by insurance. The builder shoud have a warranty for a period of time following move-in that covers any defects in craftsmanship. Preferably, this warranty should be backed by insurance. For extra peace of mind, have your real estate attorney look over the warranty to make sure everything goes well.


Step 5: Close the Deal

images (3)Usually, builders have in-house mortgage lenders or connections to a other lenders. New homebuyers can use the builder's lenders or find their own financing. Ask your agent for information and contact at least two lenders and compare terms, fees, rates and points.

Kriss Lindblom did just that before he and his partner, Angela Diesner, closed on a Pulte-built home in Maricopa, Ariz., last year. "I read every piece of paper they gave me, every contract, disclaimer, declaration of covenants and restrictions, the bylaws of the community association."

To calm yourself with the legal process, better hire an attorney. Do not sign anything until you fully understand the meaning of a contract.


Related Topics: Deciding Existing vs. New Construction

Checklist for First Time Home Buyers

Think Twice On For Sale By Owner


Blog author image

Rick Hogue

As the team leader for our group, my responsibility is to all of our clients to insure they are treated with respect and all of their needs are met. In addition I am the listing agent for the team hel....

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