If you’re in the market for a new home, you should shop for your builder as carefully as you shop for your home. Whether you are buying a condo, a townhouse, a house in a subdivision or a custom-built house, you want to know that you are buying a good quality home from a reputable builder.
Once you have thought about the type of house you want, you can create a list of potential builders.
Contact me or your local home builders’ association to obtain a list of builders who construct homes in your area.
Look in the real estate section of your local newspaper for builders and projects. Looking through the ads and reading the articles can help you to learn which builders are active in your area, the types of homes they are building, and the prices you can expect to pay.
Make a list of builders who build the type of home you’re looking for in your price range. Ask friends and relatives for recommendations.
Ask about builders they have dealt with directly, or ask them for names of acquaintances who have recently had a good experience with a builder.
Before you actually sit down to talk with anyone, do some research with your spouse or partner to become well versed in the home building market. Today, that’s as simple as sitting down at the computer and doing a few quick searches on your local builders or ask around.
When you have a list of potential builders, it’s time to start asking lots of questions — of both the potential builders and the owners of their homes.
Then, visit a builder’s recently built homes and subdivisions. Drive-by on a Saturday morning when homeowners may be outside doing chores or errands. Introduce yourself and say you are considering buying a home from the builder who built their home.
Usually, people tell you if they are pleased with their homes. And if they are not, they’ll probably want to tell you why.
Look at new homes whenever you can. Home shows and open houses sponsored by builders are good opportunities to look at homes.
Model homes and houses displayed in home shows are often furnished to give you ideas for using the space. You may also ask a builder to see unfurnished homes.
When examining a home, look at the quality of the construction features. Inspect the quality of the cabinetry, carpeting, trim work, and paint. Ask the builder or the builder’s representative a lot of questions. Get as many specifics as possible.
If you receive the answers verbally rather than in writing, take notes.
Never hesitate to ask a question. What seems like an insignificant question might yield an important answer.
Part of doing your research is knowing your costs. Have a starting number, something you can come into the negotiations with, so you can establish the range you’re working in. You should also decide on an upper limit, a number that you absolutely cannot pass. The range between those numbers will give you some room to work as you discuss the project. The best-case scenario is that you get everything you want for much cheaper than you anticipated.
Throughout the whole process, it is imperative that you keep an open dialogue with your builder. On your part, that just means you accurately convey what it is you want. Whether that means you use pictures as examples, read and cite articles on the subject, or sit down and take some time to write out exactly what you’re looking for is up to you. What matters is that you put in the extra effort to ensure you’re coming across as clearly as you can.
Before you leave the table, be sure to decide exactly how any change requests will work. It’s something many prospective homeowners forget, but it is by far one of the most important things to figure out ahead of time. Without planning ahead, change requests can provide major hurdles for both parties. Coming to an agreement ahead of time will ensure a smooth process, saving everyone a massive headache.
Come with me to visit Mark Ferguson with MVB Mortgage as he explains the industry of construction lending.
Vice President | Builder Division | Senior Loan Officer
(571) 266-6485 | (301) 674-5851
It’s important to know what you’re getting into timing-wise with a new construction build, particularly if you have a house to sell first or you’re going to be renting.
While the building process is prone to delays and you won’t be able to get a finite schedule for how long the build will take, you’ll be able to get a general idea of what you can expect. Be sure to also ask if the build time includes the time it takes to get the permits, since those will typically take about 30-45 days to obtain.
Just because a home is brand new doesn’t mean that no problems will arise. Fortunately, most new construction homes come with one or more warranties that protect you in the event of a mishap early on, including a short term whole-house warranty and a longer structural warranty.
Ask what the warranties include and how long they last. While you can always buy your own home warranty, you should expect that the builder will cover you in some way for at least the first several years.
Does a base cost look too good to be true? That might be because the builder is expecting you to spend big when it comes to finishes like flooring and countertops.
When discussing costs with your builder, make sure you’re both clear on what comes in the agreement and exactly what falls within the purview of the deal.
A good plan would be to start at the low price point, then work within your budget to secure what upgrades you can as you address the specifics of the build.
Had your heart set on butcher block countertops but the builder doesn’t offer them? It’s possible that you may be able to purchase them yourself and then have the builder install them.
Some builders won’t let you purchase your own materials, but they will let you bring in your own appliances, even on items that are included in the sale, like sinks and toilets. In terms of appliances.
Let’s say the base price of your new construction home includes a kitchen sink worth $200, but you’d like to upgrade and purchase a sink on your own that costs $400. Will you get $200 off the purchase price for not using the sink that’s included in the base?
Some builders offer credits for any upgrades or self-purchased materials or appliances, while with others you’ll just have to eat the cost of the originally included item.
Depending on the size of your yard, landscaping, including sodding and putting in trees and plants can cost several thousand dollars or more.
Some builders include your basic yard work, while others leave you with unfinished land that becomes your responsibility to landscape. Ask whether landscaping is included, and if there is any sort of warranty on the materials so that if your newly sodded grass dies right away or some other mishap occurs you’re not responsible for fixing it.
New builds are notorious for last minute surprises, but you don’t want to be on the hook financially if it happens. A cost escalation clause allows the builder to charge you for any unanticipated costs that arise as a result of necessary labor or materials.
So if lumber prices go up before the builder has purchased the materials for your flooring, or an unexpected delay adds a few weeks onto the build, you’re on the line for those costs.
Even if there is no homeowners association for the development, the builder may still set some guidelines as far as what’s allowed and what’s not on your property.
For example, you may not be able to use a particular type of fencing or install a shed in your backyard. It’s better to ask this question early and know what to expect than to move in and find out that you can’t bring into fruition certain plans you had for the space.
Some builders offer discounts on closing costs if you obtain your mortgage through a company that they have a relationship with.
Ask if these sorts of financial incentives are offered, but don’t make your final decision about where to get your mortgage based on the discounts alone – you may still be able to find a better deal through other lenders.