10 Tips for Buying a New Construction Home

A lot of people ask what’s different about buying new construction. First of all, you’re buying from the person who built it, not the person who called it home. What can you expect? Here are 10  of the most important things to consider when buying new construction.

1. Find a great agent.

Be sure it’s someone who has experience in new construction and isn’t affiliated with the builder. Model homes are typically staffed by a sales representative of the builder. 

It’s important for you to have an agent to represent your best interests, from advising you on how to structure your offer to be most appealing to the builder to making choices that can affect your home’s resale value. 

Pro Tip: Find a great agent who will represent your best interest and who is experienced with new construction 

2. Be creative during negotiations

Builders don't like to drop their prices. Instead, consider asking for the builder to pay closing costs or perform upgrades at no additional charge. Builders are often reluctant to set a precedent for negotiating prices since future buyers in the development may expect similar discounts. Consequently, builders are often more likely to negotiate “on the back end” since closing costs and upgrades are a less obvious way for them to sweeten a deal.

Pro Tip: Have an expert agent represent you, who knows the best ways to negotiate you a great deal with a builder 

3. Get everything in writing.

Don’t sign anything until everything has been negotiated, agreed upon and written into the contract. If you’re considering purchasing a home that is not yet complete, it’s very important to spell out how the home will be finished, what will happen if construction is not completed on time and the deadlines for decisions that will occur through the process. Verbal conversations are not binding, so everything important must be put in writing and signed by all parties.

Pro Tip: Work with an agent that will help you review the fine print and get everything in writing 

4. What you see isn’t always what you get.

The fit and finish of the model home doesn’t necessarily represent what comes standard. Often the model home reflects a mix of standard materials and fixtures, as well as a handful of upgrades. When touring the model home, make sure to find out which is which. The important thing is to know exactly what you’ll be getting, what’s available and, of course, what it will cost. Keep in mind that costs can change. The price quoted at the start may not be the same when you decide to move forward.

Pro Tip: Ask your agent to help you get a list of standard features and, if available, a list of common upgrades and their associated costs.

5. Do your research on the builder.

Search online for reviews, testimonials and news. Keep in mind that many builders will have both happy and unhappy customers in their past. Look for trends in reviews and make sure any concerns are covered in the purchase agreement documents.

Pro Tip: Ask your agent if they’ve worked with the builder in the past or are aware of their reputation. They are the best people to ask!

6. Get a guarantee.

You’re often buying a home that is not completed. What guarantees do you have the home will be ready on time? Your purchase agreement documents should specify a completion date. However, many builders add provisions that make the completion date dependent on permit approvals from the municipality or availability of building materials from suppliers. There can also be additional charges if you’re unable to close on time if your lender isn’t ready.

Pro Tip: Ask your agent to point out in the agreement what happens in the event of a delay on either side.

7. Get the home inspected.

New homes have problems too. You'll want to choose a home inspector to perform Phase Inspections to make sure everything is safe and up to code. Building a home is a complicated process with lots of details, and you want to make sure your builder doesn't miss anything. It's a lot harder and more costly to correct a mistake down the road than to catch it right away.

Pro Tip: Ask your agent to investigate and explain the inspection process and your rights in the agreement to request repairs or terminate the agreement. 

8. Find out what’s covered.

Many new homes come with a warranty from the builder, but not all warranties are created equal. Know what is and isn’t covered and for how long. 

Pro Tip: Ask your agent to obtain warranty information early in the process so your offer documents can be prepared to address any concerns upfront.

9. Look to the future.

Check with the city to see what is planned for the surrounding area. If you have a view, will it still be there in five years? Most builders put the responsibility on the buyer to be aware of neighborhood or community dynamics related to other development in the area like traffic planning, the development of neighboring parcels, etc. Many new communities also have homeowners associations that can impact your potential new home as well.

Pro Tip: Ask your agent to help you see what the future of the area surrounding the home will be. 

10. Do your homework on lenders.

Don’t automatically use the builder’s lender. Shop around for the loan that is best for you, not them. 

Pro Tip: Ask your agent to help you find out if there are any special offers, promotions or contractual differences if you agree to use the builder’s preferred lender.