Buying A New Construction Home: What To Know

Buying a new-construction home can be one of the largest investments of your life. With the ability to choose your home’s features, layout and design, you can create the perfect home for you and your family.

While buying a new-construction home is worth the effort for many people, there’s a lot to learn before you buy – from the types of new construction available to your financing options. It can be different from buying an existing house, so here’s what you should know before buying a new construction home.

What Is A New-Construction Home?

A new construction home is a home the buyer is the first to live in, which can happen a few different ways. You may buy a home designed and built by a builder, or you may do all the work, hiring all contractors and subcontractors to build your home from the blueprints you helped create.

Before buying a new-construction home, think about your goals for the home, the desired layout, important features and the cost of building a new home.

If you're buying a completed new construction home, you'll want to make a competitive offer, since brand-new, move-in ready houses are often popular among home buyers.

New-Build Customization Options

Part of knowing how to buy a new-construction home is understanding what type of new-construction home is right for you. In some cases, you choose every little detail of the home, and in other cases, you only have a say on a few features or designs.

Here are the different options:

Custom Home

In a fully custom home, you pick the features of the house. Plan to decide the smallest of details, like the type of light switches or the direction the electrical sockets face.

Semi-Custom Home

In a semi-custom home, some of the structures and features are set, but you can customize certain features and areas. This is common with cookie-cutter homes. The builder has a distinct structure and style, but you can choose items like the countertops, floors and lighting.

Spec Home

A spec home is a new-construction home sold to you by the builder as is. If you want to make changes, you’ll do so after you own the home and at your own expense. Spec homes usually happen because a buyer who customized the house backs out or someone buys the model home for the builder.

How To Buy A New-Construction Home

If you’re in the market, it’s important to know how the new-construction home buying process works. From start to finish, you’re in charge of the project but should have the support of several professionals throughout the process.

1. Start The New-Construction Home Loan Process

Before making an offer on a new-construction home, you’ll likely need mortgage financing. Unless you can pay cash for the home, that means you’ll need a mortgage lender to fund the transaction.

You’ll want a mortgage lender who’ll walk you through the process, give you loan options and help you choose the one that suits your financial needs.

2. Hire A Real Estate Agent

The agent working for the builder represents the builder and may not always have your best interests in mind. Instead, you’ll want a real estate agent who’ll watch out for your needs and ensure you’re getting the best possible deal.

While you won’t use a real estate agent the traditional way to build your house, you’ll need their expertise when talking with the builder and contractors.

3. Choose A Location

When you’re deciding where to live, look at different neighborhoods. Evaluate important factors such as the crime rate, schools, accessibility and the distance to your favorite and necessary amenities.

If you work with a real estate agent, you can ask about potential future developments in the area or any news/issues the agent knows about the area.

4. Research Home Construction Companies

Rather than choosing just anyone to build your home, do your research.

It’s best to stick with local home builders if you can, for several reasons:

• They can usually start the job sooner.
• They may have closer relationships with local suppliers and vendors.
• They know local talent when they need to hire subcontractors.
• They could be easier to contact after the house is built if problems arise.

No matter which route you choose, it’s always a good idea to get two or three quotes. Also, look at the quotes side by side, comparing services, costs and timelines.

5. Design Your New Home

Before you design your new home, you must decide what type of custom home you’re interested in – fully custom or semi-custom.

When designing a fully custom or semi-custom home, you’ll work with the builder and their subcontractors and designers. When choosing your builder, ask detailed questions about the design process so you know what to expect.

If you have specific designs or features in mind, ask each builder/designer whether it’s something they can do.

6. Get A Home Inspection

Once you take possession of the house, any issues are your responsibility. It’s to your benefit to pay for a professional inspection before you close. This will ensure everything is in good shape. Even though no one has lived in the home, the inspector may find areas where the builder cut corners or missed something that needs fixing before you move in.

The Pros And Cons Of Buying New Construction

Real estate, in general, is usually a good investment. Real estate often appreciates, and you can help its value by fixing it up through the years.

A new-construction home can be a solid investment because of its age. Its value may appreciate faster compared with an older home that’s had multiple owners. But like any investment, a new-construction home has pros and cons.

Pros Of New-Construction Homes

It’s hard not to think of all the advantages that come with building a new home. You’re essentially the designer, so you can build your dream home exactly how you want it from the start. But there are plenty of other advantages as well:

• Greater customization: Besides building your dream home to your specifications, you may also be able to choose where to build your property