New Construction: A Guide to Buying a Newly Built Home

How is buying new construction different from buying an existing home?

When purchasing a newly built home, you'll likely get modern designs, up-to-date construction standards, and brand-new appliances. Since many new homes are sold before they're fully finished, you may even have the chance to personalize some features, like upgrading the tile or choosing the color of the carpet. Plus, you won't be moving in with a list of projects and repairs waiting for you.

Here are some tips to help you through the process of buying a new construction home.

Finding a Brand New Home

How do you find a newly built or under-construction home? A good real estate agent can be a valuable resource, as they often know about new developments in your area. Keep in mind, new construction isn’t always part of a large development—some builders work on a few homes at a time in established neighborhoods. Watch for construction in areas you're interested in, and ask your agent to contact the developer.

Have the Right Team on Your Side

Builders in larger developments often have their own sales team, but you should have your own agent to represent your interests. The same goes for lenders—builders may have preferred lenders they ask you to get pre-approved by, but you usually still have the option to choose your own.

Research the Builder

It's important to know who you're buying from. Look up reviews on the builder’s previous projects. Do they have a reputation for quality work, or do they cut corners? Ensure they’re financially stable so you don't risk losing your deposit if they can’t complete the home. Also, ask about the warranties offered on the home.

Understand What You're Buying

When purchasing new construction, you may be buying before the home is finished. Usually, you’ll tour a model home to get a sense of the layout and design options. Be cautious—model homes often feature both standard and upgraded finishes. Make sure to ask for a detailed list of what comes standard and what costs extra so you know exactly what’s included in your purchase.

Negotiating with Builders

Builders are less likely to negotiate on the sales price, as it can affect future sales. However, you can negotiate on other things like upgrades, closing costs, or other perks. If you’re buying in the early stages of a development, you may get a better deal since builders often offer incentives to get things moving. But be aware, buying early also carries some risks, like price fluctuations or unfinished developments.

Deposits and Contracts

When signing a contract for a home under construction, you'll need to provide a deposit, which could range from a few thousand dollars to 10% of the purchase price. Make sure your agent explains the contract in detail, including if and when you can get your deposit refunded. It should also include a projected completion date and outline what happens if there are delays.

Managing Delays

Your contract should specify what happens if the home isn’t completed on time. Ensure everything is in writing and don’t rely on verbal agreements. A written contract holds everyone accountable and can protect you if things don’t go as planned.

Inspections and Warranties

Even though the home is new, you should still get an inspection. An inspector can help ensure everything is up to code and that there are no hidden issues. Most builders will fix any problems that arise during inspection, but make sure you know your rights. Additionally, new homes often come with warranties for appliances and a builder warranty for the home itself. Review the warranty details before signing the contract to understand what is covered and for how long.

By following these steps and working with a knowledgeable real estate agent, you can make the process of buying new construction smoother and more rewarding.