Wondering what you should know before buying a new home from a builder? I’ve got you covered. I’ve personally purchased three new homes from builders over the last 15 years. I’m going to share the 13 things every buyer should know when purchasing a new home. And I’ll wrap things up by including a free Building a House Checklist that you can download for free today.
13 Things to Know Before Buying a New Home from a Builder
- Using the builder’s lender does not necessarily give the best deal – Many times new home buyers use the builder’s lender because of “hard to turn down” buyers incentives. But know that they might not be the best deal. Ask your agent for their advice. And know that it’s OK for you to shop lender and rates.
- Research the builder’s reputation – Before signing the contract, do your research and find out the builder’s reputation. Some builders are known to be difficult to work with. Others may have a reputation of being hard to get ahold after the sale when it comes to warranty repairs. And some builders are known for high quality workmanship. This is where talking to people who have purchased a home from the builder in the last 3-5 years (long enough to run into some warranty issues) comes in handy. It’s also a good idea to ask your agent what they know. If your agent hasn’t worked with this particular builder before, he or she can ask their network and find out which other agents have worked with the builder, for perspective.
- Know the main point of contact for construction questions – There will come times during the construction process when you’ll have a question. Either how the building is progressing, or when closing has been scheduled. You may want to make changes to some design center choices or any number of concerns. Find out the best point of contact. Should you reach out to the sales agent, the actual builder or project manager?
- Know the standard features – Your home will most likely not look like the model home. The model home is filled to the brim with options and upgrades. Those upgrades help sell the home, increase the price tag, and gives potential buyers real world examples of what certain upgrades look like. Nothing like a real-world example to sell a product. So, make sure you find out which features are upgrades and which are not. This includes landscaping, extra windows (per floorplan), type of flooring, tile, etc.
- Know the upgrade options – For upgrade options, find out if you’ll need to pay more before closing or if 100% of the cost can be wrapped into the loan. I know some builders require 20, 30 or 50% down before upgrades are installed, while others will wrap the entire upgrade into the price of the home. Either way, whatever agreement or changes you make, make sure you get it in writing, along with a receipt.
- Understand build time line, potential delays and solutions – Ask the on-site agent what you can expect in terms of building time line. Ask for a schedule so you’ll know when certain items are being installed in the home on site. For my current home, I kept in close contact with my builder’s project manager. I knew when each step was happening with my home and I was able to see the progress. I learned so much about my home! And I was able to let them know when something looked incorrect. Staying informed of the building progress will allow you to know ahead of time if the builder is falling behind schedule. If there will be potential delays, you can let your inspector, agent and lender know. One other thing to find out is what happens if your closing has to be pushed back due to building delays. Find out what the builder will help with financially and in terms of housing if there’s an inconvenience to you.
- Get parameters for when you can schedule inspectors and final walk through – Did you know that you can hire an inspector to inspect your home during various phases of construction? Yes! You don’t just have to wait until the end. You can actually hire an inspector to do what’s called a framing or pre-drywall inspection. The inspector will stop past the house to check pluming and electrical systems before drywall is installed. And then come again for the final inspection. I certainly wouldn’t replay upon the builder or the county inspectors. I’ve heard too many stories of how quickly county inspectors “inspect” a home. They are typically over worked and under paid to do a thorough exam on every single home assigned. And as much as your particular builder may want to ensure quality work, it’s hard. Remember in school when a classmate would read over your essay and find mistakes that you missed? It’s the same thing here. Others will find areas that you simply overlooked just because you were too close to catch it yourself.
- Know what the warranty covers – For this, you will want to know what is covered under the builder’s warranty. You’ll also want to know how long the warranty lasts. And how to contact someone in case you have a warranty item in need of repair. Please don’t take the sales agent’s word or make assumptions on what’s covered. Read the paperwork. For a short time, I worked for a builder in the warranty department and you’d be surprised to hear what people think is covered because of a certain builder’s reputation or what they heard through the grapevine. You do yourself a disservice by not reading over the actual paperwork.
- Know what are the HOA guidelines – If you’re purchasing a new home in an area with HOA covenants, take the time to read over those documents. When you purchase in an HOA restricted neighborhood, there are certain things you will and will not be able to do to your home. Limitations may include having a business on site, turning your house into a rental home, parking limitations, changing exterior paint colors, adding a fence or any other exterior modifications. It’s best to know ahead of time what your limitations are so you can decide if you’re willing to live with them.
- Know what’s in the contract ahead of time – In my area, builders use their own contracts, not the standard contracts used for resale homes. And you know what that means? The builder contracts are written by their attorneys who are looking out for their best interest. Many times, these contracts are one sided. And these contracts are different from what your agent may be used to seeing in resale homes. Make sure both you and your agent get a chance to read it over and ask clarifying questions. Know what you’re getting into before you sign.
- Research builders’ previous neighborhoods – I highly recommend that everyone take the time to find out some of the older and more established neighborhoods the builder has completed. As well as get the names of the neighborhoods they’re currently working in. Take the time to tour similar floorplans that you’re interested in to get a true feel for what they’re like. For our last home, we didn’t like the floor plan on paper, but once we had a chance to walk through a resale, we were able to clearly see how that house would work for us. Touring the other homes will also let you see in person, and at full scale, the paint, brick color or siding colors available, as well as build quality.
- Inquire if the builder offers credit for removing or for you providing your own materials – Some builders will allow you to remove features from a house and give you credit. Meaning, they’ll reduce the cost of the house. For example, you could potentially remove cabinets or doors from the original floor plan. Other builders will remove items from the build but won’t offer any credits to you. They save money, but they won’t’ pass that savings onto you. And still, other builders build the home exactly as it is. No removals and no credits. Find out from your builder what their particular process is.
- The builder pays your agent commission – Many times it’s important that you take your real estate agent with you the first time you visit a new home community. Other builders will want your agent to call ahead of time and some will be happy that you put your agents name on the sign in sheet during your first visit. Either way, check with your agent to find out the proper protocol for your area and that particular builder. You don’t want to get in a situation where you don’t have representation. Because remember, the on-site agent works for the builder. It’s their duty to protect the best interest of their client, the builder. Your agent will protect your best interest as the buyer.
13 Things to Know Before Buying a New Home from a Builder
We just covered what you should know before buying a new home from a builder. These 13 tips will help you be more informed as you move throughout the buying process. The next best thing to help you along the way is to download this free Building a House Checklist today.
- 10 Ways to Know If You’re Buying the Right Home
- How to Choose the Right Home for You
- Exclusive Tips for Buying a Luxury Home
- Do You Need a Buyers Agent?
- Making Design Center Choices You Won’t Regret
- How Much House Can I Afford? Dave Ramsey Style
- What to Expect When Building a New Home
- Why the Forever Home is a Myth
- Tips for Buying a New Construction Home
- Design Center Upgrades to Avoid
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