Considering building a house in an established subdivision. What to do first?

Asked by paoli.nadia, Raleigh, NC Tue Apr 23, 2013

Hi, we're considering having a house built in an established subdivision that has a few lots available. We still need to decide what floor plan we want and other specs, but we know exactly what our budget is (and it is below what we qualify for based on speaking with a lender). Other than deciding on a floor plan and general idea of what we want that we think we can get in our budget, what should be our next steps? Should I talk to a construction lender first or talk to a few builders first? Is it a good idea to buy the land first and then have the house built on it, or buy the land and home together under one construction loan? Or some other arrangement? I've read the book "What Your Contractor Can't Tell You" from cover to cover but I'm still stuck on how exactly to get started. Thanks.

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Michael Colv…, Agent,
Tue Apr 23, 2013
I would get yourself a Realtor first they can help you through this process with the lender and the builder.
1 vote
Gail Ferri P…, Agent, Cary, NC
Wed Apr 24, 2013
Generally if you already know the floor plan, it would be a good idea to talk with a builder to see how much it will cost to build the home. The builder should be able to give you a rough total cost including the land, and then give you a range of land prices you should look for. If it is a local builder, a lot of them are not purchasing the land anymore, but rather building on your land. In that case, you would need to buy the land first and then go to the bank for the construction loan. There are a couple of banks here in the area that will give out that type of loan to an individual homeowner.
0 votes
Irina Bennett, Agent, Chapel Hill, NC
Tue Apr 23, 2013
Nadia, I have helped many people to buy and build new homes, had to learn so much in the process which allowed me to earn New Construction Specialist title! I love helping people with all the numerous details of the building process, here is the short list of things to do before building and we can talk about all the details if you like by the phone.
1. If you have not bought the lot yet, consider speaking with your preferred lender about best way to finance your project as a package, vs just buying land first
2. If this is not a city water/sewer system then check on how many bedrooms you can get the septic tank approved for, this will help you with your floor plan
3. If you do not have a survey, it is time to do it so you can look at the best placement of your home and make any needed adjustments to the floor plan you want to build
4. Get an architect to review your plans
5. Shop for a builder that can do what you want
6. If you are not working with a Realtor, have an attorney to write a new home contract for you and negotiate all the details
7. Watch your home being built and do not forget all appropriate inspections!

If you need more info, call/text me at 919-868-1040
Irina Bennett
Remax One Realty
0 votes
My NC Homes…, Agent, Chapel Hill, NC
Tue Apr 23, 2013
You're to be commended for your question.

Often you cannot buy a lot, as the builder/developer owns them and will insist on you're using them to build your home. You need to find out if these lots are available for sale separately and if they are you'll need to get a set of either recommended or approved builders or find out if you are free to choose whomever you like

You'll also want to get a copy of the developments rules and regulations, and HOA restrictions and a copy of the builders guidelines or Architectural guidelines to confirm that the house ou want built will be permitted by the development.

if you're looking to build immediately and you're free to buy a lot and choose any builder then before you buy the lot you'll want to interview your builder, get a proposal from them which you'll need for your lender and then sit down and discuss a construction loan with your lender. The purchase of the land and the construction loan that will give you the financing you'll need to build are best done at one time.

It sounds as if you're doing this all on your own and honestly I think this is a mistake. You should be working with an experienced buyer broker who has proven experience working with new construction. I've attached a link below on how to find a great buyer broker regardless of where you're working.

Feel free to check me out here on Trulia, if you're looking in either North Cary or the north Raleigh area and I can be of any assistance feel free to contact me directly, otherwise I wish you all the best and hope you enjoy the entire process.
0 votes
Karen Johnson, Agent, Raleigh, NC
Tue Apr 23, 2013
Hi Nadia.

Good for you! You've been busy doing your research and it looks like you're headed in the right direction. I agree with the other Realtors that you'll want to have one of us represent you as a buyer's agent during the process and to help zero in on a lot if you haven't already identified the one you want. Pretty much at the same time, I'd suggest talking with a construction lender to make sure you're on target with your budget. Next, a good Realtor with construction experience (important!) can suggest a few builders you may want to talk with. I'd really like to be your Realtor and hope you'll call me to help you get started.

Karen Johnson, GRI, CRS, SRES, CDPE, SFR
0 votes
Tracy Levitt, Agent, Chapel Hill, NC
Tue Apr 23, 2013
If the lots are being sold by the builder of the subdivision, then I assume they are still building their product on the lots and you will choose floorplan, amenities, etc. then they will build the home for you. In that case, you do not need a construction loan and you wouldn't worry about hiring a builder. If you are simply buying a lot as raw land, then you should speak with a lender about a construction loan and also start interviewing local builders.

In either case, I agree that it's best to work with a realtor as they can make the whole process easier for you.
0 votes
Skye Creech, Agent, Apex, NC
Tue Apr 23, 2013
First thing you need to do is retain a Realtor. Their fee is paid for buy the builder and they are going to be able to guide you through what needs to be done step by step. After all the builder, while excited to build a home for you, has representation on his side you as well should be represented by a professional too. I have sold quite a few homes that were built from ground up and you would be very suprised what more extras you can benifit from having that Realtor on your side to get you the best bang for your buck. The Builder has hidden cost that he can save if you dont know about them and even though his product may be top notch he can stand to give you a few extras that you wouldnt necessarily know about. Good luck and if I can help let me know!

Skye Creech - Owner Blue Skye Realty
(919) 622-2469
0 votes
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