Thinking of Buying a New Construction House? 10 Key Considerations

Thinking of Buying a New Construction House? 10 Key Considerations

In many cases, buying a new construction house seems like the right move. This is a brand-new house that will be in nearly perfect condition, at least hypothetically, and you should be able to customize it to your liking.

But before you move forward with a new construction home, there are some important factors you’ll need to consider, such as the quality of your builder, available warranties, and recourse available to you if something goes wrong.

What to Consider Before Buying a New Construction House

These are some of the most important things to consider before buying a new construction house:

1. Your budget.First, you’ll need to think about your budget. New construction homes are typically more expensive than their older counterparts, and for good reason. You may not be able to afford every upgrade, nor will you be able to afford new construction homes in every area or of every size. You’ll be in a much better position to make a financially responsible decision if you have a thorough understanding of what this is going to cost you and what you can truly afford.
2. The builder. Next, you’ll need to consider the reputation of the builder. Many new construction builders have excellent reputations and are committed to making their customers satisfied, but other builders are willing to cut corners for the sake of increasing profits or artificially lowering prices. Choose a builder with good quality homes, transparent practices, a great reputation with former buyers, and excellent customer support. If something goes wrong, you’ll be glad to have a reputable builder ready to step in.
3. Warranties and guarantees. Similarly, you should pay attention to warranties and guarantees. Does this builder stand by their work? How long is the home protected under warranty and what kinds of warranties are available? If there’s a systemic or structural failure, who do you contact and how do you resolve the issue? Of course, if your builder fails to honor their legal commitments, or if they fail to comply with local laws, you can always take legal action with the help of a new construction lawyer– but having strong contracts and agreements in place is always a reassuring start.
4. The timeline.How long is it going to take before you can move in? Most builders have a general timeline you can rely on, with some room for variance based on supply chain issues, aberrant weather, and unforeseen circumstances. Depending on when and how you’re moving, the uncertainty of the timeline may be challenging.
5. Deposits.When you buy a new construction home, you’ll probably be responsible for paying at least one major deposit. You’ll need to pay a deposit to reserve your spot, and you may be required to pay more deposits as the timeline progresses. You’ll need to be ready for this, with cash in reserves, if you want to meet all your obligations and ensure transfer of ownership when the time comes.
6. Pricing and lock-ins. Make sure you fully understand all components of new construction pricing. Depending on the timeline, you may also concern yourself with locking in that pricing; if prices for certain goods increase between the time you sign the initial contract and the time the construction is finished, you don’t want to be on the hook for the difference. Similarly, it may be in your best interest to lock in a mortgage rate; there are several variables to consider here, so do your due diligence before pulling the trigger.
7. <Secondary fees and costs. Are there any secondary fees and costs associated with this transaction? Some new construction home builders will justifiably charge fees for late additions or changes, and some builders charge additional fees that are much harder to justify.
8. Walkthroughs and visitations. Will you be allowed to walk through the property and ask questions while it’s being constructed? What meetings will you have with your project manager? When are you allowed to be on site? Depending on your preferences, you may want to watch the build from start to finish or simply check in whenever necessary to do so.
9. Final upgrades and options. There will likely be a deadline for finalizing your options and upgrades, so be aware of it. If you’re feeling indecisive about certain components, try to weigh them against each other as objectively as possible – and be ready to make a final decision when the time comes.
10. The inspection. You probably know how important it is to get a home inspection when buying an existing home – but what about new construction homes? Aren’t they brand new and therefore free of defects? The short answer is “not necessarily.” It’s usually a good idea to conduct an inspection when you move in, as well as another inspection before your primary warranty expires to catch any issues. It’s a small investment that could save you a fortune.

Is a New Construction Home the Right Move?

New construction homes are certainly appealing. They tend to be more modern, safer, and more customizable than existing homes on the market. But in exchange, these deals can be complicated, expensive, and restrictive.

A new construction home isn’t the right decision for every buyer, and if you decide to move forward with one, you should be prepared to maximize and protect the value of your investment.