Alright! You’ve weighed your pro’s and con’s and you’ve decided the best decision for your family is to build a new construction home. First off, CONGRATULATIONS! That is so exciting. Second off, the entire process is a little different than purchasing a pre-existing home. We really appreciated how this article from Home Light broke down the steps and thought we’d pass along the information to you to check out and begin to understand what will be happening for you during the building period.
- Find a buyer’s agent for new construction
This is always one of the most important steps, since a good real estate agent saves you time, money and energy. Of course, we’ve talked about hiring an agent in previous blogs, so check out those interview questions. We at RMG Real Estate believe in being the client’s biggest advocate. For new construction, asking the agent “how many new construction homes have you and your team helped your clients purchase in the past” could be another helpful question to get some background on that agent before getting into contract with the project.
- Work with a lender who is familiar with new construction
Another equally important piece of the puzzle is a lender that is well versed in the new construction process. A home construction loan is different than traditional mortgages because instead of dolling out the entire amount of the loan at once, these short term loans will allow for release advances,, called “draws” throughout the construction of the home. Once the house is completed, the new construction loan will most likely be converted into a traditional mortgage, but make sure you know what those specifics will be when working with a recommended lender. Your realtor and even some builders can recommend certain lenders to research. Make sure they have your best interest in mind and a good reputation with good interest rates too!
- Research prospective builders
Ever heard the saying “you get what you pay for?” Well, it is especially true when working with builders and contractors. There’s so much more to a good builder than just having them meet building codes. Some other things to consider when hiring a builder would be their reputation with the Better Business Bureau or to see what their reviews are like on sites such as Google, Yelp or even Facebook. Always ask for a list of previous clients that builder has had that you can ask about their experience, but keep in mind that the builder is probably going to give you their list of people that have been satisfied with the process, so you might be getting only the good part of their building history.
- Research the builder’s developments
Most builders choose to build in a certain neighborhood. So, when building a new construction home, you can either choose to build in that specific area or purchase your own piece of land and have them build on that. Always make sure you think about the location of your home in detail before you get into contract on that land. If you’re going through the builder’s neighborhood, get out and walk around. Try to meet some neighbors that have moved in and get a feel for if that area will be a good fit for your family. Don’t forget to ask about HOA fees!
- Choose your new home’s style
Most likely you already have a design style in mind. Make sure your builder that you choose matches up with your vision of your new construction home! Most builders have base plans to begin from and you can go from there, just be aware of additional costs for upgrades when you’re thinking about your family’s future living arrangements in that home
6. Choose your standard items
Again, builders will have a list of standard finishes that are available with their new builds. You’ll be able to select paint color, flooring, countertops, cabinetry, light fixtures, appliances, tiling, etc. Keep in mind that standard options typically mean the less expensive options, which brings us to our next point….
7. Decide on upgrades
Upgrades are a great way to bring some of your own personality and preferences into your home, keeping in mind that these upgrades are going to increase the purchase price of your home so you have to be mindful of what and how many you are choosing. Your trusted real estate agent can help you navigate what upgrades could bring more value to your home for resale versus what would just be a cost that may not be worth the investment. There are options for upgrades, so work through those with your builder and realtor. And be realistic with yourself too 😉
8. Figure out your living situation between homes
New construction can be tricky, since there is usually a few month gap between selling your current home and being able to move into your new home. Make sure you are up front with your builder and realtor before you begin the project to understand the timeline to the best of everyone’s ability. With new construction, it’s wise to expect delays for a closing date, so don’t be surprised if closing gets pushed back due to unforeseen circumstances.
9. Have the new home inspected
Don’t overlook this step! A reputable home inspector is always an asset to you as the buyer and worth it! Even if it is a new construction project, it’s important to due your due diligence and have your home inspected a few times, such as during the framing process, before the sheetrock goes up, and when the building is finished.
10. Sign and review the warranty documents
Warranties on new construction are a big deal and it’s important to know what you are getting. Builders offer either implied warranties or express warranties. Implied warranties will cover workmanship defects that will have a significant impact on the home’s livability, habitability, and safety. Express warranties clearly define the problems the builder is responsible for fixing. Each have different time periods, so keep these in mind when going over this with your builder.
11. Wrap up the new construction home buying process
And finally, the closing day is approaching! Before that happens, your agent will do a final walkthrough of the property with you while the project manager should give you the rundown of all the systems and features of your brand new home. Closing with the title company includes finalizing the loan requirements and paying for closing costs, such as loan processing, title fees, recording the deed, insurance, taxes, HOA fees, etc. Be ready to sign all the closing documents with your real estate agent and any questions you may have will gladly be answered before or during closing with your agent and loan officer.
What’s left? MOVING IN! Enjoying your space! Making this house a home! What an exciting thing, to be able to see the land that was once just empty take shape into a home worth sharing with those you love for years to come!