10 Questions to Ask When Buying New Home Construction

Buying new construction is a different process than buying your typical pre-built home. What’s included, what’s not, and what’s hidden in that massive contract depends on the builder that you use. As with any situation where you’re moving or about to spend a lot of hard earned money, it’s important to go in prepared – and that means bringing your real estate professional with you and asking the right questions!

VERY IMPORTANT - bring your own real estate representative with you the 1st time you visit the new home subdivision. If you go on your own, then the Realtor representing you will be the builders agent. Whose interest do you think they have in mind ultimately - yep, their bosses, not yours! The builder will actually compensate your Realtor to represent your interests, as long as you bring them with you the 1st time. Do not feel that you are bothering your Realtor to ask them to come with you to look at new home subdivisions. Realtors feed their families by helping people buy and sell. You will want a Realtor representing your best interests and who is unafraid to ask the tough questions.

The first interaction you and your Realtor will have with the builder (the first several) will be with the builder’s sales representative. These meetings are your chance to ask all of the questions you might have regarding costs, labor, and other essentials that you need to know about before jumping in. Write your questions down before you go in so that you can be sure not to forget anything important, and don’t be shy about getting the answers that you need. This is a major purchase, and you don’t want any surprises later.

Not sure exactly what you and your Realtor should be asking? These "10 questions to ask when buying new home construction" will help get you started.

1. Is the lot cost included?

When you’re exploring new construction options, you’ll see that each plan comes with a base cost. This is the cost of the structure itself, as well as base interior and exterior features. What may not be included is the cost of the land, so be sure to ask if the lot cost is figured into the base.

If the lot cost is included, ask if there are premium costs for certain lots. It’s possible that the base cost does include the lot, but the remaining lots in the development all have added costs for certain features that you can’t opt out of, such as wider yards, view, etc. If the lot cost is not included, ask what it is (and whether there are additional premium costs) and factor those into the base price for the house.

2. How long will building take?

It’s important to know what you’re getting into timing-wise with a new construction build, particularly if you have a house to sell first (Matthew Stewart Real Estate Team can certainly help coordinate the sell then buy) or you’re going to be renting. While the building process is prone to delays and you won’t be able to get a finite schedule for how long the build will take, you’ll be able to get a general idea of what you can expect. Be sure to also ask if the build time includes the time it takes to get the permits, since those will typically take about 30-45 days to obtain.

3. What warranties are provided with the house?

Just because a home is brand new doesn’t mean that no problems will arise. Fortunately, most new construction homes come with one or more warranties that protect you in the event of a mishap early on, including a short term whole-house warranty and a longer structural warranty. Ask what the warranties include and how long they last. While you can always buy your own home warranty, you should expect that the builder will cover you in some way for at least the first several years.

4. What are the standard finishes?

Does a base cost look too good to be true? That might be because the builder is expecting you to spend big when it comes to finishes like flooring and countertops. Ask what types of finishes are included, and better yet, go through the model unit with the sales representative and have them point out what’s standard and what is an upgrade. You likely won’t meet with the design center until after you’ve gone under contract, so it’s important to figure out early what sort of finishes and appliances you can expect to be included in the home’s base price.

5. Are you allowed to purchase your own appliances or materials?

Had your heart set on butcher block countertops but the builder doesn’t offer them? It’s possible that you may be able to purchase them yourself and then have the builder install them. Alternately, some builders won’t let you purchase your own materials, but they will let you bring in your own appliances, even on items that are included in the sale, like sinks and toilets. Keep in mind that, in terms of appliances, you probably will have to make some purchases on your own, such as washers, dryers, and refrigerators.

6. If you can bring in your own materials or appliances, will you get credits?

Let’s say the base price of your new construction home includes a kitchen sink worth $200, but you’d like to upgrade and purchase a sink on your own that costs $400. Will you get $200 off the purchase price for not using the sink that’s included in the base? Some builders offer credits for any upgrades or self-purchased materials or appliances, while others you’ll just have to eat the cost of the originally included item. Credits are a nice touch, but they’re not usually standard, so it’s best not to go in expecting that you’ll get money off the base cost for purchases like these. In general, builders don’t like to lower the base cost, but if they do offer credits, that’s a win for you.

7. Is landscaping included?

Depending on the size of your yard, landscaping, including sodding and putting in trees and plants, can set you back several thousand dollars or more. Is that a cost you’ll have to factor in on top of the home purchase? Some builders include your basic yard work, while others leave you with unfinished land that becomes your responsibility to landscape (and generally must be completed in a set amount of time, per the contract). Ask whether landscaping is included, and if so, what that entails and if there is any sort of warranty on the materials so that if your newly sodded grass dies right away or some other mishap occurs you’re not responsible for fixing it.

8. Does the contract include a cost escalation clause?

New builds are notorious for last minute surprises, but you don’t want to be on the hook financially if it happens. A cost escalation clause allows the builder to charge you for any unanticipated costs that arise as a result of necessary labor or materials. So if lumber prices go up before the builder has purchased the materials for your flooring, or an unexpected delay adds a few weeks onto the build, you’re on the line for those costs. If you’d rather not deal with the stress of unanticipated costs, find a builder that doesn’t include a cost escalation clause in the contract.

9. Are there any homeowners rules or regulations?

Even if there is no homeowners association for the development, the builder may still set some guidelines as far as what’s allowed and what’s not on your property. For example, you may not be able to use a particular type of fencing or install a shed in your backyard. It’s better to ask this question early and know what to expect than to move in and find out that you can’t bring into fruition certain plans you had for the space.

10. Are there any financial incentives for using the builder’s preferred lender?

Some builders offer discounts on closing costs if you obtain your mortgage through a company that they have a relationship with. Ask if these sorts of financial incentives are offered, but don’t make your final decision about where to get your mortgage based on the discounts alone – you may still be able to find a better deal through other lenders. It’s still good to know however if there are benefits to working with the builder’s preferred mortgage company.

If it’s your dream to build a new construction house, go into the process with an open mind and a clear idea of what you can expect. If going into a new home subdivision, it is strongly recommended to have representation for yourself. The agents at the subdivision are very helpful but you must remember who cuts them their paychecks. They work for the builder. The more questions you can ask in the beginning, the less surprises you’ll potentially face in the future.

As with any home purchase, be sure to have your trusted Realtor read over your contract so that you can be sure everything is fair and equitable. Be smart, ask the right questions, and at the end of the day (or year) you’ll end up with a beautiful home built just for you.

BEFORE YOU GO DIRECTLY TO A NEW HOME SUBDIVISION FOR THE

1ST TIME....

CONTACT: Matthew Stewart

(916) 718-2979

You must have Matthew with you the 1ST TIME YOU VISIT in order for him to be logged into their system as your representative...otherwise you negotiate on your own. The builder will actually compensate Matthew to represent you and your needs when buying the new home.

** Matthew made a huge difference for Mr. and Mrs. Loeffler in their new home purchase. He actually got the builder to move the entire building foot print over 7 feet to allow Mr. Loeffler the ability to park his RV. The builder originally said no to doing any changes, and the setbacks did not allow Mr. Loeffler the ability to park his RV. It actually nearly cost the deal, but Matthew aggressively pushed back and negotiated successfully. Today the Loefflers love their new home with plenty of space for the RV!