Buying a new construction home can be very overwhelming.
It’s important to understand that not at all builders build alike. Some specialize in one-story homes on large lots, while others will offer low maintenance yards with rooftop terraces boasting strip views.
Builders will also have varying levels of energy efficiency upgrades, which will impact your monthly utility bills. Most builders will have different price ranges and floorplans. There are also neighborhoods and communities that will have HOA (homeowner association) fees or SIDS/LIDS (special improvement district and local improvement district) payments.
If you visit the different builders’ websites you won’t find everything, but you will get an idea of pricing, areas they are building, and what the homes and floor plans look like.
Remember to NEVER register on any site or at the builder’s sales office, otherwise, your Realtor cannot represent you or negotiate on your behalf.
1. Get a pre-approval
Before starting your search for a new home, I always recommend getting pre-approved with a lender.
By doing so, you have a lender look through your credit report and your DTI (debt to income ratio). The lender may recommend paying off a credit card to lower your mortgage interest rate, which increases your buying power by increasing your maximum purchase price.
Knowing exactly what you qualify for allows you to start your new home search in the right price range. You don’t want to get excited about your dream home only to find out it’s out of your reach.
2. Look for incentives
Once you’ve found the perfect home, it’s time to let your agent negotiate for any possible incentives.
One common incentive is getting the builder to pay some of your closing costs. Sometimes agents are even able to negotiate a lower interest rate if you’re willing to use the builder’s lender.
The point is, you have options and a good real estate agent can help you navigate those options!
3. Make custom selections.
If the builder and the model you’ve picked have options, this is when you get to go to the design center and select your finishes and upgrades…budget permitting.
You get to pick finishes such as flooring, cabinets, lighting fixtures, door or ceiling height, baseboards, extra windows, dens vs a third garage, a tankless water heater, all the way down to the toilets. Once you are done choosing your options, be prepared to pay a separate deposit for them.
The deposit can vary from builder to builder, but 20% of the total cost of the upgrades is common. Remember to not spend more than 10% of the total purchase price on upgrades. If you add too many upgrades and bring your purchase price higher than the other new homes in the neighborhood, it will likely not appraise.
It can also cause headaches down the road if you decide to sell the home. Say you put $25,000 more into your home in upgrades with the builder, then finish the backyard landscaping, add a pool and a built-in barbeque…you may have trouble recouping all your money.
On a more positive note, most builders offer free options to select from as well. Some of the most common options are the ability to choose between two to three cabinet colors, two to six tile options, and two to ten carpet color options, sometimes even more.
4. Wait for your home to be built
This is the exciting part. You get to see your new home as it is built!!!
You will get several opportunities to walk the home site with the superintendent during various phases of the construction. And you’re always welcome to visit at any time, just check in with the sales office to ensure it’s safe that day.