Ten Steps of Buying New Construction 

Currently new construction sales make up almost a third of the housing inventory.  If you’re considering new construction, you want to be aware of the benefits and disadvantages of purchasing a new home. It is important to be educated before starting the process. 

1. Find a real estate agent first. 

Don’t go onsite without your agent. Usually when you go in, there is an on-site agent who will ask you to sign in before they start showing you the models. Typically, that allows them to claim you as their client, when they are already representing the seller. Most builders have already agreed to pay real estate agent’s commission. Having your own separate agent can help you negotiate and stay protected throughout the transaction. 

2. Get pre-approved for a mortgage. 

Before you look at homes, get pre-approved. You want to know how much you can afford according to the bank and what payment you are comfortable with, because those numbers could be quite different. Many builders have financing incentives which may require using their in-house lenders. Using their lender may be worth it but get a cost estimate from the builder’s lender and one that is not affiliated with the lender to determine what the true benefit of that incentive is. Sometimes the builder will require you to pay many of the sellers’ costs such as state deed tax to “take advantage” of their incentive. 

3. Set a budget for yourself.  

New construction price per square footage is almost always higher. New construction is usually more expensive upfront. The average median cost for new construction is 493,000. Models often include a mix of standard items and upgrades. Falling in love with the upgrades can boost that sales price significantly if you’re not careful. Review the list of extras being offered while touring the home, to see what you can pass on. Minimizing the amount of upgrades is one the most significant ways to stay within your budget. Don’t forget that there will be additional costs once you close for every room of the house i.e., window treatments, toilet paper and towel holders, shower curtains, sod etc. If there are features that you really want, it is probably cheaper to add them during construction, then renovating later. Builders can buy in bulk and pass on those savings, and you don’t have the cost of demolition. 

4. Be aware of the construction timing. 

Besides cost, the other big consideration is timing. The timing for having a new home built from start to finish is usually a year to a year and a half. Even when you are told the home should be completed in so many months – delays happen due to weather, lag time waiting for permits and inspections, and supply chain issues. Most builders have stopped making custom homes but are selling spec homes to reduce supply train issues. 

5. Set your location parameters and start looking. 

Before you go looking, talk through several of these points. 

• If we found the right home for less further out, would that be an option? 
• Do you want a home that is a part of an association? What amenities would be important? A clubhouse, pool, exercise room, playground etc. 

• What are things that you really want to be close to: work, family, friends, church, parks, schools. 
• Is there a specific school system that you want to be within? 

Figure out what are non-compromise items and what are things that would just be nice. Once you start looking, jot down what you like and don’t like about each area, the floor plans, and the community itself. 

6. Compare home builders. 

Find a homebuilder with a solid reputation. There should be online reviews, and we can help you too. Cost is often a major factor in deciding on a new construction home, make sure to compare prices and builders’ incentives. Ask questions. Do they have a new home warranty, and average utility bills. If the home is part of an association, what amenities does it cover? What is the guest policy? Familiarize yourself with the rules and regulations and make sure they are ones you can live with. 

7. Write up a purchase agreement. 

Many builders have their own purchase agreement forms. The MLS publicizes the sales price, so most builders won’t negotiate the sales price (although it never hurts to ask?) You may have more success in negotiating sales incentives or asking for premium upgrades. Many builders have financing incentives which include things like paying the buyers closing costs, buying down the interest rate or installing high end appliances for a fraction of the price. This is also a good time to address delays. What recourse do you have if the move in date is delayed? 

8. Picking out your personal selections. 

This is the part many buyers love or get completely overwhelmed. Many builders have “bundles” suggested by the builders on staff designer. The builder can often purchase these items in bulk and pass on the savings to the buyer. These bundles can help a buyer from over improving a home by selecting upgrades and increasing the price significantly. 

9. Get a home inspection.

Even though it is new that doesn’t mean it is perfect. When selling new construction, I have never attended an inspection with an independent inspector where there were not some issues. New construction homes are also inspected by the city or municipality throughout the construction process. When all the inspections have been signed off the builder will file for a certificate of occupancy. A final walk through is usually done prior to closing with the builder’s rep and the buyer. During this walk through a “punch” list of to-do items for the builder is generated. Typically, these items are small, paint drips, touch up paint, or cleaning. 

10. Close on your mortgage and move in.

Once all the inspections have been signed off, the certificate of occupancy obtained, the punch list completed, it is time to close on the house and move in.