Tips for buying new construction homes

A new construction house is a home where the buyer is the first person to live there after it’s built—but it can happen in a number of ways. A buyer may purchase their own plot of land and contract with everyone needed to build a custom home, including an architect and builder. On the other end of the spectrum, a buyer may purchase a completely built home and the property it’s on from a developer. The home buying process can fall somewhere in between as well. For example, a buyer might purchase empty land from a developer and then choose from a variety of home design options, and then a builder will build the home.

Most new construction homes offer one of the following customization options:

• Built on spec: The home is completed and can be purchased as is.
• Semi-custom: The structure is mostly built, but you can customize it in some ways.
• Full custom: You have a say in everything.

Once you determine which level you’re comfortable with, make sure you know what comes standard with the home and what costs extra. Then get it in writing. You’ll be bummed if the quartz counters and hardwoods you loved in the model come with a hefty additional price tag.

Besides cost, another factor to consider when choosing a customization option (and whether to go with new construction at all) is timing. Overall, the timeline for building a home can be unpredictable, because of weather, vendor delays, and waiting for logistics like permit approvals to happen.

Typically, the further along the home is in the building process when you purchase it (if it’s semi-custom or on-spec, for example), the faster the process should go. On average, building a home can take from three to seven months, depending on size, but it’s not uncommon for it to take nearly a year if any delays happen along the way.

If you’re considering new construction, choose the build option that fits with your current living situation. If it’s flexible enough to allow for a lengthy—and potentially unpredictable—lead time, building from the ground up might be for you. If not, a semi-custom or built-on-spec home could be a better choice.

Buying new construction is like any home purchase: you need a team with your own interests at heart. Research, interview, and hire your own real estate agent, and apply to multiple mortgage lenders to find the best deal, just like you would with an existing home purchase.

Builders often have an agent on site and preferred lenders, and it’s not uncommon for them to suggest buyers just use their team. But it’s good to do your own research. A builder’s lender may offer you incentive money, but an outside lender may charge you less in points—which means bigger savings over the life of your loan.

Check out your local home builders’ association (you can find listings through the National Association of Home Builders) to find builders in your area. Also, check out the new homes section of your local paper’s real estate pages. Use your list of builders and homes to:

• Find a neighborhood with several new homes and drive by. Check out the quality and style you like best.
• Research builders online. You’ll find local business reviews, public records, and feedback from the Better Business Bureau.
• Check out their websites and social media pages for information, photos, and interviews with staff and clients.
• Interview a few builders and get names of references.

When you pick a semi- or full-custom new construction home, it’s easy to accidentally spend too much, one customization option at a time. Be realistic about how much house you can afford, and take into consideration costs that are easy to overlook:

• Landscaping: You’ll likely need to build your lawn after you build your house.
• Homeowner’s Associations: If you build in some neighborhoods, you could owe monthly homeowner’s association fees—and you could be bound by their policies to meet certain property standards, which can make costs go up.
• Furnishings: Builders will install your bathroom vanity, but probably not your toilet paper holder or towel rack, so those won’t be covered in your contract. Make sure you budget for those smaller furnishing in every room.

Usually, warranties on new construction homes offer limited coverage on workmanship and materials. Some coverage is offered for just the first year (for siding, doors, and trim, for example); some for two years (often for HVAC, plumbing, and electrical), and some for a decade for major structural defects.

Understand exactly what is included and what is not, and don’t be afraid to ask for changes or concessions if you’re not comfortable with the language.

Home inspections aren’t just for existing houses. In fact, when buying new construction homes, you should get two: one before the walls are closed, and one after. It’s much cheaper to fix issues like electrical or plumbing before the drywall goes up.

Your second home inspection should come before your final walk-through with the builder. Try to hang out with the inspector while it happens. They’re often able to offer you maintenance tips and handy things to watch for in your new home.

Make sure to put a home inspections contingency in your sales contract. This way, you can back out of the deal if something major is wrong.

If the home inspections go well, you should be on course for the closing on your house, just like any other home purchase. Be prepared with your closing costs and favorite pen, and you’ll soon be signing your way to home ownership.

If new construction homes don’t sound like the best fit for you, there are tons of existing homes out there. Here’s how to make an offer on a house with previous owners.