Few purchases in your life are as exciting as buying a home. When you’ve decided that your new home will be new construction, that can add some special touches to the experience.
The term “new construction” simply means that you’ll be the first person to live in the house. It could be a model home or a recently constructed house that is complete and move-in ready. Many times, however, that new house you’re purchasing is still in progress or hasn’t yet begun being built. That’s definitely the case if you’ll be building your own custom home, but it’s also a common scenario if you’re buying into a Planned Unit Development (PUD).
If your home is still in the process of being built, that may afford you some chances to customize some of the finishes like flooring, countertops, appliances and more.
Here are some tips to help ensure you have a smooth new construction home-buying experience.
Do your research
Whether you’ve shopped for a home before or not, you probably have a good idea where to start. Real estate websites like Redfin, realtor.com and Zillow are great resources to find out what’s available in your desired cities and neighborhoods. They offer valuable research you can use to compare prices and historical data. You’ll also find any listings for new construction, even if the homes haven’t been built yet.
Your local Multiple Listing Service (MLS) may also have a public-facing website that allows you to browse listings. The MLS tends to be updated before other listing sites.
Once you’ve zeroed in on a neighborhood you like, find out the name of the developer. Just like any other business these days, builders have online reputations and entries on review sites. Do some web searches on your builder’s company. In those results, you’ll find common issues or complaints from previous people who have bought their homes. It’ll help you get familiar with the process and what to watch for as you go through it.
Get your financing ready
Developers will often have preferred financing partners they recommend to prospective homebuyers. Those lenders have the experience of working with the specific builder and sometimes offer discounts in conjunction with partner builders.
Just like any big purchase, however, don’t walk into builder’s sales office without already setting up your own financing options. You may find cheaper deals or better terms on your own. Your credit union or bank likely already has a preapproval or prequalification process that helps you know exactly what you can afford, and they even have programs designed to work with the extended timelines of new construction.
For instance, at CoastHills Credit Union, the extended lock program was specially designed for new construction and paying off that construction loan. Depending on when you start, your home could be complete in as little as a few months up to a year or more. The extended lock program allows you to lock in your interest rate, and, unlike standard loan locks, it will remain valid until your home is completed. That way, if interest rates rise between the time you sign your contract with the builder and the completion of the home, you’ll be saving money. We even offer a float down option, so if rates decrease during the construction period, you'll be able to take advantage of that as well.
If you’re interested in the CoastHills extended lock program, please fill out a free no obligation consultation form to speak to your mortgage loan officer.
Partner with a realtor
Just like builders have their own preferred lenders, they also have their own realtors, sometimes called brokers. These agents will represent the developer and are often your main point of contact when it comes to purchasing the home. Just because there will be a real estate agent handling the paperwork, that does not mean you should skip involving your own realtor.
In fact, it won’t cost you any money to have an agent representing your interests as you progress through making the deal. Your realtor’s commission will be paid by the developer. Bonus points if you can an agent who’s experienced in new construction. They may find ways to help you negotiate upgrades as your home is being completed. They should also have proper judgement to be able to tell whether you can bargain down the price of the home.
Like most things, leverage on the price of new homes is determined by supply and demand. An experienced negotiator will know the market well enough to guide you.
Talk to your new neighbors
Chances are you won’t be the first person buying a home in your new neighborhood. There may even be people already living on your street before you move in. On one of your early visits to the construction site, try introducing yourselves to a neighbor who’s already settled in.
Having recently gone through the process of buying a house in the neighborhood, they should have recent and relevant feedback. They might suggest questions to ask, potential issues to be aware of and what to expect in a timeline. Should they invite you in, you’ll also get a great look at what your house might look like.
Communicate about everything
Don’t be afraid to ask lots of questions. Before you pick an address, you’ll definitely want to know the size of the lot, the size of the yards, the floor plan, the paint colors and all of the options for things like cabinets, flooring, countertops, major appliances, lighting fixtures, solar panels, landscaping and more.
Never assume work will be done a certain way. Always ask, and get every specification that is important to you agreed to in writing. You expect a new home to be perfect, and the last thing you want is to be irked every time you look at a special detail that fell through the cracks.
To help make sure your home is perfect, set up a home inspection. A good home inspector is a must when you are buying a home, even if it’s brand new. Mistakes happen during construction. Let your home inspector find any that my be visible and work with the builder to correct any issues.
Know your warranty coverage
Your new home will very likely come with a warranty that covers defects or failures within a specific time period. During those periods, the developer will be liable to correct any issues.
Make sure that you know exactly what is covered and for how long. The electrical may be covered longer than the plumbing or vice versa. Warranties for different aspects of the home tend to run out at different times. It pays to know in case something goes wrong.
You’ll also want to know the procedure you need to follow in case something does fail. Who is your first contact? What is that source’s phone number and email? How quickly should you expect a response? Have all of these questions answer before you close on your home and keep that information handy for when you may need it.