The Ins And Outs Of Building A New Home Part I

Dated: 10/10/2017

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Electing to build a new home appeals to many of today’s homebuyers. Instead of moving into a pre-designed house, new construction allows for hand-selection of land, interior customization and a blank canvas for a couple or a family to create their own memories.

We’ve compiled a list of tips and expectations for those considering new construction:

          1. Use your own Broker/Agent

The first and foremost piece of advice we can give you if you want to ensure that you get what you want: use your own broker or agent. The sales reps you meet at a new construction community are commonly representatives of the seller – the builder, corporate owners, developers, etc. These people are at new construction sites to present their product and answer any questions you may have - but also do the best job for the seller. You should look for something similar, however with your benefit in mind. Using your own broker or agent is a great way to avoid conflicting interests at a new construction site.

          2. Don’t expect price reductions

Remember that these builders, corporate owners and developers have an established set of prices they feel best makes their houses appealing to the market with an expected profit margin. Additionally, the comparable values of other homes in the community drop when lowering the price of one home – bringing the entire collection of houses down in price. Unlike traditional homes, new construction rarely drop in price if they have not sold for a period of time – they actually go up in price, supporting the builder’s position that materials and labor costs increase.

          3. Look instead for additional upgrades from the builder

Considering the likelihood of a price reduction, homebuyers may be able to obtain a few upgrades from the builder either at no cost or for less money. For example: adding a new fence, upgrading the flooring or light fixtures, or even incorporating tasteful landscaping at no extra charge.

          4. Know where “builder incentives” are coming from

Don’t be fooled by new communities boasting incentive programs such as “3.50% financing for 30 years” or “No Closing Costs”. These types of incentives typically originate from the builder’s preferred lender – who is counting on a sufficient number of loan transactions in order to compensate for the cost of incentives. Builders of course cannot require you to use their lender, however they can require use of this lender in order to partake in the incentive. Check with your own lender to see if they can match the terms or provide a benefit in another fashion before changing lenders.

          5. Use the builder contract

New construction homes often require the use of a builder’s contrast, or at minimum a lengthy addendum, on top of typical purchase forms use by a broker or agent. Be sure to thoroughly read these documents! If you have any questions or concerns you should then consult with a qualified real estate attorney. Agents – even the representatives for the seller – are not allowed to advise you or interpret what the contracts or addendums say.

          6. Not all builder warranties are the same

Some builders warrant their work from top to bottom for several years, some only for one. As far as structural-type concerns, many builders offer a warranty of up to 10 years with other warranty time frames for things like plumbing leaks. In addition, individual warranties will also accompany things like appliances, windows, roods, etc. As always be sure to carefully read the warranty offered by the builder of your desired home before signing any final contract.

          7. The floor plan isn’t set in stone

Things aren’t always as they seem especially when it comes to new home floor plans. For example, exact measurements and shapes are usually close estimates and could actually differ when the project is over from the original floor plan. Depending on your particular lot, modifications may also need to be made in order to fit the home properly.

          8. Rarely can you modify the floor plans

Custom homes allow the buyer to nit-pick any and every detail of the home. Community site homes, where several homes are being built by the same builder or group of builders are based on a preapproved set of plans, do not allow for complete customization due to time and budget restraints. Changes to floorplans must be included in the particular permit and approved – which will require more time and effort on several parties.

          9. Expect changes

The appearance of your finished-product-home may not be an exact replica of the model. Suppliers can run out of or change materials creating a hiccup in the original plan and thus affecting the appearance of your home. It is not uncommon for builders to reserve the right to substitute materials and finishes. If you can, tour a couple of finished homes and ask the builder what they may use as substitutes for different elements throughout the home.

         10. Time frame of the start of construction

Each player in the new home construction industry – builders, the city, the county, etc. - has different time frames that have historically worked for them when completing a home. Each geographic location varies in time, but expect several months for a builder to complete a home after the large haul of lumber is delivered at your home site. Remember: the lumber drop occurs after the builder receives the construction permit from the city/county/etc., and after the foundation is complete. Allow for another month or two for both of these tasks to be completed.


This is a good start to preparing you and your family for the journey of building a new home. Stay tuned for Part II where we explain tips 11-20.

Donna Johnston

Donna’s top priority is providing you with quality service. To accomplish this, she’ll listen to your needs and wants, presenting you with properties that match your criteria. Donna, who is very p....

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