New construction homes are exactly that — new. Popular with today’s home buyers, new builds offer customization options that simply don’t exist with a pre-owned home without remodeling or renovation. In fact, in January 2021 alone, 923,000 new homes sold in the United States.
Whether you’re considering a new build because you want a truly new home or a property built to the latest quality standards, there are many great reasons to choose a new construction home.
Here are a few tips that will keep you ahead of the curve as you start your search.
#1. Find a Licensed Real Estate Pro
Buying a home is one of the most significant purchases you’ll make in your lifetime — it only makes sense that you’ll want the support and guidance of a real estate professional to walk you through the process.
When you start your search for a new construction home, you’ll often meet with the builder’s on-site sales agent to tour model homes. But keep in mind that not all states require sales agents to be licensed and the on-site sales agent is representing the interests of the builder.
It’s often best for you to work with your own real estate agent, who will represent you and your interests throughout the buying process. As with any home purchase, always do your research to find an agent with experience in the type of property and location you’re interested in — in this case, new construction homes.
#2. Understand the Offer Process
While similar, the offer process for a new construction home isn’t the same as a pre-owned home. You will still have your real estate agent write up the paperwork on your behalf — and it will include basics like who’s buying, who’s selling, how much are you offering, and other standard items — but your negotiation may look different.
A builder usually has standard pricing for properties in the development, so it’s more likely that you’ll negotiate on upgrades and additions rather than on the price of the house. This is another excellent reason to ensure you have a real estate agent experienced in transactions on new construction homes to help you.
#3. Plan Ahead for Taxes
No matter what kind of home you purchase, you’ll be responsible for property taxes. However, with a new construction home, the property taxes you pay in the first year will likely be lower than in future years. That’s because your county will base the first year of taxes on the assessed value of the land and then on the value of the land and finished home, thereafter.
Your mortgage lender will work property tax costs into your monthly payment calculations — but it’s a good idea to understand what they will be. Your real estate agent and mortgage lender can help you estimate based on historical data of similar properties.
#4. Ask About the Builder’s Warranty
When you buy a new construction home, builders often offer a warranty covering the home’s materials and workmanship, which you should request in writing. It can last anywhere from six months to two years, depending on the agreement. It will typically include carpentry, insulation, roofing and siding, windows and doors, plumbing, electrical, paint, the heating and cooling system, and other significant items.
Unlike a home warranty that buyers purchase on pre-owned homes, a builder’s warranty generally doesn’t cover appliances. Although, new appliances, whether purchased or included with the home, will come with their own manufacturer warranty. Your real estate agent can advise on whether or not an additional home warranty might be required.
#5. Shop Your Mortgage
Builders and developers have made it increasingly easy to purchase a new construction home using their in-house services — including their lender. Just keep in mind that the mortgage terms offered by the builder’s lender may not be the best for your unique situation.
Shop your mortgage with a handful of places to ensure you’re getting the rate and terms that best suit your needs. Not all lenders offer new construction home loans, but your real estate agent should be able to refer you to those that can.
#6. Decide on a Production Builder or Custom Home Builder
As you dig into your search for a new construction home, you’ll likely come across the terms “production builder” and “custom home builder.” A production builder typically offers the home and land as a package and allows buyers to select from various floorplans and materials.
Whereas, a custom home builder offers more customized homes, meaning you may be able to choose your land separately, draw a unique floorplan, or select materials within your budget.
Both are great options. Your choice will likely come down to your timeline (custom homes can take much longer than a production build), your budget, and how much input and creativity you want to have in the process.
#7. Research the Developer and Builder
When considering new construction homes, always look into the developer and builders. Knowing the track record of who is building the home can give buyers a great perspective on what to expect.
Hit the web and search for reviews, testimonials, and pictures from past projects. You can also interview the builder or developer and tour their model homes to gauge their workmanship and style.
#8. Don’t Skip the Inspection
Just because a home is new doesn’t mean you can skip the home inspection. As with a traditional home purchase, an inspection is a great way to uncover any hidden issues that might come up in the future. In most cases, the builder will be happy to make the repairs — whereas, in a traditional sale, you may negotiate a lower purchase price to accommodate for future repairs.
Your real estate agent can refer you to home inspectors in your area and add an inspection contingency to your offer paperwork.
Searching for New Construction Homes
Purchasing a new build can be a rewarding experience and doesn’t have to be complicated. Keep these tips in mind as you start navigating your search. If you’re interested in new construction homes, you can customize your search from thousands of the latest listings, here.
