5 Mistakes to Avoid When Buying New Construction

When buying new construction, it's easy to get swept up in all the excitement of choosing a lot, home configurations and finishes, especially when you're walking through one of those shiny, fully fitted model homes! But also keep in mind these 5 common mistakes you'll want to avoid, so you can save yourself some money, time and stress:

1. Not reading the fine print and asking ALL the questions

It’s crucial to ask questions along the way. This will keep the dialogue between you and the builder open and the process transparent. Lapses in communication can lead to misunderstandings and misaligned expectations.

Asking questions about the builder’s past work, financing, and scheduling plans is fair and actually quite common as well. Doing so will not only help you better manage your expectations around the process, costs and timelines, but it will also help put your mind at ease as you wait for your dream home to come to fruition.

Here are a few common questions to ask your builder:

  • What percentage of the homes have sold so far?
  • Who is your point of contact during the build?
  • Which features are included and which are upgrades?
  • What happens if there’s a delay in the schedule?
  • How often will you be able to view the home during construction?

Don’t be afraid to do a little research on your own time. You can search for reviews of the builder online or even do a drive-by of any of their previous projects to get a sense of their reputation and the quality of their work.

Many builders use purchase contracts that are different from state-issued real estate agent documents. Be sure to read these contracts carefully and have your Realtor review them before signing anything. Builder's contracts protect the building company, not the buyer, so make sure your Realtor writes addendums to keep you protected during each phase of the purchase. Additionally, make sure you review all of the warranties so you know what is covered, and what is not.

2. Not asking what’s included (appliances, upgrades, finishes, landscaping, etc)

When you’re shopping newly construction, you’ll probably tour a model home at some point. These homes basically function as interactive showrooms that are outfitted with premium upgrades. Their purpose is to demonstrate the customization a builder can offer by allowing buyers to experience the full design potential of a home.

Before you get too lost in a model home’s beautiful design, it’s imperative to remember one thing: model home's configurations aren’t usually reflected in base sales prices. That’s because most base prices are based on the homes featuring “builder grade” options, aka less premium materials and finishes.

Ask the sales agent for a complete list of the extras in the model unit such as extra can lights, heights of doors, appliances, window coverings, landscaping, sprinkler system and more. If it's not expressly disclosed in the contract, your agent can list in detail anything you expect to avoid any miscommunications.

Luckily, the design options of a model home are typically very flexible. Much like buying a new car, you can decide which upgrades you want to add to the base configuration and which you don’t. Unlike buying a new car, where the value decreases the moment you leave the lot, adding premium elements to your home’s design can actually increase its value*. Just be sure to consult your budget before making any final decisions.

*Side note: It's worth mentioning the cost of upgrades. Builders will typically have a larger than retail markup on their upgrade options, in exchange for the convenience of getting your home to you fully finished to your liking upon move-in. If you're willing to take on the task of upgrading on your own after closing, this will save you a lot of money.

3. Not hiring a real estate agent to represent you

Oftentimes, buyers don’t feel a real estate agent is necessary when building a new home. After all, there’s a sales agent on-site to assist you with your questions, right? Wrong.

The builder's salesperson will be ready to help you with the process. But make no mistake: You need your own real estate agent from the get-go. Even if it seems like plug and play to sign up with the builder's on-site agent, you're going to want someone representing your side of the deal. Here are a few ways having your own agent can save you money, time and unnecessary stress:

  • Advocates for your best interests: The builder’s real estate agent can be a good resource in the new construction process, but they’re representing the builder and their fiduciary duty is to them. Having your own agent means someone is invested in your happiness with your home and experience.
  • Negotiations: The job of the builder's agent is to get the highest price for the homes the builder is selling so they are not going to be as eager to negotiate down. Your own agent will have deep knowledge of what comparable new builds are going for and will not be afraid to negotiate on your behalf to ensure you're getting a fair price.
  • Communications with the builder: Having an agent to keep in constant contact with the builder can provide peace of mind. A seasoned agent with experience in new builds can save you time, give you invaluable insight and a wider context to your transaction.
  • Overseeing inspections: Having someone familiar with new builds oversee inspections and walk throughs with you will provide an extra set of eyes, who knows what to look for and what questions to ask.

These are all areas where a knowledgeable buyer’s agent who has new-build experience and local builder connections can be invaluable. And if you thought buying new construction without an agent would save you a few bucks in commission, think again. It’s customary for the builder to pay the agent’s fee, so hiring pro help here is a no-brainer.

*Side note: Select an agent before you even step into a sales office. Some builders will not cooperate with an agent to help you if your agent is not registered with the builder or comes with you to your first visit. 

4. Not getting an inspection

Many homebuyers will assume that because the home is brand new, there will be no issues and therefore, an inspection isn't necessary. The truth is, mistakes happen and even new construction can have structural issues. This is why it’s always a good idea to have any home you purchase inspected by a licensed professional before closing. Your agent might also recommend that you have the home inspected not only after it's completed, but also before drywall is installed.

Typically the homebuilder will handle city and county inspections, but that does not replace a licensed inspector. Just as they would with a previously-owned home, the home inspector is there to verify the property is safe and up to code. If any of the work done is not up to par, the inspector will include it in his report and suggest a remedy. You’ll then have the opportunity to bring your concerns to the builder and negotiate a fix.

*Side note: Buyers are entitled to a final walk-through of their home before closing to ensure all punch-list items have been completed to your satisfaction. It’s during this time that you can point out major cosmetic issues (such as nail pops or chips in cabinetry) or any other major issues, such as missing landscaping that was included in your contract. If you don’t address it before closing, you may have a hard time getting the builder to fix anything once the home is officially yours.

5. Not being aware of new construction timelines

When purchasing in a new development, it's important to keep in mind how long it will actually take before you can move in. While typical resale homes will close and be ready to move-in 30-45 days, production homes can take 6-7 months from start of construction through final walk-through. The five most commonly cited factors influencing construction time: pre-construction and permits, weather and environment, availability of workers and supplies, design changes along the way and construction style (fully custom vs. production).

As long as you're okay with the timelines and set your expectations accordingly, you can avoid any additional stress.


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