It’s an exciting time you’ve saved and planned, and now, you’re about to purchase your first new construction home. Buying a home is a significant step toward the American dream and probably one of the largest purchases you’ll make in your lifetime. There’s a lot to be excited about, planning a future, imagining life in your new home. Enjoy the excitement and the planning; it should be a fun time.
However, while you’re looking at brochures and picking colors, there are a few questions that you’ll want to ask your builder. Questions that could save you a considerable amount of time, money, and headaches in the future. Here are some questions that you should consider when buying a new construction home.
When looking at construction options, you’ll find that each plan comes with a base cost. This is the cost of the basic structure, the actual house itself, and the interior and exterior features. These are features that the builder offers for no extra fees and can be upgraded for a price.
What may not be included in the base cost of the land on which the house is being built. Check with the builder and make sure the lot price is factored into your new home’s base cost.
If the lot cost is not part of your base cost, follow up and ask what is included. Also, ask if there are additional premium costs and factor those onto your house’s base price. There may be premium costs that you can opt out of that the builder assumes you’d want. Don’t allow yourself to be swept away with excitement at the beginning of the building process and find out later you could have saved money if you had asked some questions.
You’ll want to know how long it will take to build your new home. Of course, unforeseen delays can always happen with the weather and other factors; however, you’ll want a timeline from your builder, and you’ll want to keep them to that timeline as much as possible.
You’ll need to know when your new home will be complete as you may have a house to sell, or you may be renting a place while construction takes place. Either way, you need a plan for move out, move in, and the rest of your life, which doesn’t just stop while your house is being built.
You’ll want to ask if build time includes the time it takes to get permits, keeping in mind that permits may take between 30 and 45 days to obtain.
Accidents happen, things break or fall apart, even in a brand new home, and you’ll want to be protected.
You can, of course, purchase your own home warranty; however, it is not unreasonable to cover your house for, at the very least, the first several years of your new homeownership.
Ask what warranties come with your new construction home. You should be getting at least a short-term whole house warranty and a more extended structural warranty.
Say you want Italian pink marble countertops for your kitchen, but your builder doesn’t offer that. Ask if you can purchase the materials yourself and have the builder install them. If they agree, be sure you follow up with questions about extra costs for the service. If there are additional costs, weigh them against the cost of installing the materials yourself. You may end up saving money by going with what the builder offers as a base and finding the materials you want on sale later and installing them yourself.
Ask your builder about credits. Some builders will offer credits for any upgrades or self-purchased materials or appliances. Credits are generous but, be aware; they are not usually standard. A credit can shave money off your closing costs, but make sure your builder offers them before spending money on appliances or materials.
Some builders will include basic landscaping in your new home’s base cost, while others will leave unfinished land that becomes your responsibility. You have to finish the landscaping, make the area meet the standards of a homeowner’s conclave or the builder’s requirements according to any contracts you sign. There’s usually a time frame as to when you have to have your lawn up to code. You want to ask if landscaping is included and get the details as to what that is included.
You’ll also want to ask about warranties on any materials used. If your newly sodded lawn suddenly turns brown and dies during your first week of occupying your new home, are you responsible for that, or is it covered under warranty?
Laying sod and planting trees could feasibly set you back a few thousand bucks; find out what you’re responsible for before you start putting in an arboretum; you may have some attractive landscaping options available in the cost of your new home.
A cost escalation clause allows a builder to charge you for any costs that arise due to the increased price of necessary labor or materials. For example, if there is a hike in lumber’s price before your builder has purchased the material for your wood floors, the escalation clause means that you’re on the hook for those increased costs. So, even if you have decided and agreed on your new home’s base price, which comes with floors, your cost will increase due to the increased lumber price.
The only way to avoid this is to seek out a builder that doesn’t have a cost escalation clause in the contract. Ask about this clause before you agree to have your home built.
Depending on where you’re building, there may be a homeowners association with a governing body and rules about what you can and cannot do at your new home. There are many nightmare scenarios and bad movies about homeowner’s associations and the evil they do. Those are not all true however, a homeowner’s association does have rules, and you’ll want to know as much about those rules and regulations as possible before you buy.
If you’re building a new home in a development, ask the neighbors, find out what they think about the homeowner association, are easy to work with, etc…
Even if there is no homeowner association, the builder or developer may have rules and regulations concerning what is or isn’t allowed on your property.
For example, you may not be allowed to build a shed in your backyard. In this case, it is not a matter of it being easier to get forgiveness than permission. You are responsible for knowing the rules of the builder or the homeowner’s association. Ask questions. You do not want to find yourself in a situation where you’re in a constant battle with builders or associations, that’s going to ruin the peace of your new home.
Ask all your questions before you decide to build; it could save you money and many headaches in the future.
If your builder has a strong relationship with a mortgage company, they may offer discounts on closing costs if you finance with their company. Ask about this, what are the offerings, and what the rules are. It may be great, and you may save some serious money at closing.
However, even if there is a chance of saving money at your closing, you’ll want to shop for your mortgage. Ask around, talk to friends who have bought new construction homes; maybe there is a better situation available to you, especially if you’re a first-time buyer.
As we said, this is an emotional time, so be cautious. Sometimes we allow our egos or our fears to step in and make the choices for us, and that’s something you shouldn’t do when buying a new construction home. It’s an old joke that men don’t like to stop and ask for directions, well, don’t be that guy when you’re buying a house. Asking questions isn’t going to make you look weak or foolish; it’s going to make you feel more secure and more informed about buying your house, that’s who you want to be.
Do everything you can to make this step as enjoyable and worry-free as possible, including talking to reputable and honest new construction home builders. You want nothing but joy when you walk through the door of your newly built home, so ask your questions, do your homework, and make the right decisions.
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