Table of Content
- answers to common questions about buying a new construction home
- How much are closing costs?
- You're Buying a New House, not the Model Home
- Can I negotiate with a builder on price?
- Should you get a home inspector to examine the property before you close?
- How To Find A New Construction Home
- Pro: Limited options
This is why it’s important to choose companies you can build a good rapport with, as this step is important and costly. Before making an offer on a new construction home, you’ll likely need mortgage financing. Unless you can pay cash for the home, you’ll need a bank to fund the transaction. As opposed to a home warranty, which homeowners can buy to cover appliances, a builder’s warranty covers the home’s materials and workmanship. Most builders will provide a warranty of their own or through a third party provider at no additional cost to the buyer.
Even though builders follow specific inspections while building the home, it’s best to hire an independent inspector. The inspection ensures everything is completed up to code and that the home has a good structure. Your mortgage approval should tell you how much money you must put down on the home.
answers to common questions about buying a new construction home
Use the internet to your advantage, read online reviews and check a builder’s ratings with the Better Business Bureau. If you work with a reputable real estate agent, you can ask about potential future developments in the area or any news/issues the agent knows about the area. The more you know about the demographics, zoning and crime rates, the better decision you can make for you and your family. It’s best to interview at least three agents and see which one you believe is the best match. Don’t be afraid to ask tough questions and to gauge the agent’s experience in new construction. Closing costs are in addition to your down payment, so make sure you have enough money to cover the entire transaction.
If you're committed to more unusual design and have the wherewithal to build according to your complete preferences, then the sky may be your limit. The Balance uses only high-quality sources, including peer-reviewed studies, to support the facts within our articles. Read our editorial process to learn more about how we fact-check and keep our content accurate, reliable, and trustworthy.
How much are closing costs?
For example, let’s say that you begin your home loan application, get pre-approved, and lock your rate 30 days before construction is supposed to be complete. Then, your builder encounters permit issues and suddenly construction is delayed by 3 months. You’re now at risk of losing your rate-lock window because your lender is unable to close on your loan. Rest assured, our Loan Consultants can offer advice on the best time to begin your application.
Those three factors never really go down in price, and as Ontario grows in population size, the demand for more housing increases, therefore so does the price of land. With that being said, if this article reads with familiarity, that’s because there are similarities between buying an existing home and buying new construction. If you haven’t read the most recent guide to buying a homearticle yet, stop and read that first. Then, after you finish this article, read this one - how much does it cost to build a house?
You're Buying a New House, not the Model Home
Another perk of new construction is access to a builders warranty, which protects you from paying for costly repairs for defective materials or work that was done incorrectly. Keep in mind that this warranty only covers specific components for a specified period (e.g., two-year warranty for the HVAC system; 10-year coverage of major structural defects). You can ask your real estate agent and lender for their recommendations and search the National Association of Home Buildersdirectory. Either way, it’s often beneficial to find a builder who can help you choose the right plot of land. Some properties may have beautiful views but aren’t ideal for construction.
A good buyer’s agent will be able to review these contracts with you and make sure you’re not signing off on terms that benefit only the builder and leave you — perhaps literally — out in the cold. Not all developers are the same, there are some that are more widely known and have better reputations than others. When buying a house from a builder, you’ll need to do some research into the company. You should be checking to see how many projects they have successfully completed, how many they canceled, and if any projects were significantly delayed. While a good agent will be able to tell you which developers to trust and which ones to steer clear from, it’s always good to do your own research when buying a new build house.
Can I negotiate with a builder on price?
Equally important as the new community details are the research you do on the developer or builder. Understanding neighborhood details and future plans will help you determine which community is right for you. His list is in no specific order as it really matters what your own priorities are. Selling your home is a matter of matching a buyer with their needs.
They can help you negotiate a fair price for the project and offer their expertise in customization options. For example, your agent may have insight into which fixtures and flooring will give the home a higher value in the future. When the underwriter has completed their review of your finances, you’ll receive a preapproval decision that helps you move forward with building your dream home.
Don’t be surprised if builders require you to be pre-approved by their preferred lender. They just want assurance that you are a serious buyer and the deal won’t fall through. But if it’s a development with no finished homes, you may have a tough time finding another lender willing to loan you the money. Speaking of upgrades, it’s important to be aware that when buying a new build house the builder will likely include a few premium features in the model home. So when you’re walking through the model home, or going to the sales center and looking at the renderings of condo units, what you see may not always be what you get.
“A lot of items that are in the design center do not offer 100% return value in a resale. For example, builders might have an extreme high-end cabinet line and rare granite that’s more expensive, but they do not equate to resale based on what the other homes sell for in the neighborhood. If the other homes don’t have these upgrades, you’re probably not going to get that return,” Cooley explains.
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