Eight Things to Know When Buying A New Build

Moving into a brand-new home is beyond exciting! But buying a speculative home or a new-build home is a little different than buying a regular home on the market. Here are some things you should keep in mind. 

1. New construction is very different from writing a contract on a house that’s 10+ years old.

The biggest difference is that as a buyer, you don’t have any negotiation power when you sign a contract. You’re not submitting an offer. Instead, whatever the list price is of the home is the price you’ll agree to on the contract.

2. You might be able to choose your floor plan

Many “spec homes” now come with different floor plan options, depending on where the builder’s at in the process, you might be able to choose your floor plan and finishes. However, if construction has already started, you might only be able to pick your finishes. This means that if you’re interested in a specific neighborhood, jump on a home quickly in order to pick what you want.

3. Spec homes are often in neighborhoods with restrictions and HOA fees so be sure to do your research.

This isn’t always the case, but if you’re interested in a spec home, do research to see if the home is in an HOA. If so, look into the bylaws to make sure you’re comfortable with the restrictions and fees.

4. New construction homes generally come with a 1-year builder warranty.

This can vary by builder, so be sure to ask about this and make sure you know what it includes and that the warranty is included in your contract. It likely won’t cover your pipes freezing, but it should cover things like your foundation settling or the windows suddenly not opening.

5. New builds can take up to 8 months to complete

Normally, eight months is a reasonable time frame to complete a spec home, but COVID has caused serious delays in the supply chain. This mean you might need to plan on the new build taking longer than expected to finish. This might be the most important thing to keep in mind especially if you have a move-in date you need to stick to. When it comes to building a home, things often come up that are beyond anyone’s control, so be prepared.

6. You might be able to select your finishes

When picking finishes such as lights, cabinet styles and flooring, you might get to pick some, but generally your builder will give you a handful of options to choose from that fit within your agreed upon budget. If you want something different, it will likely cost more, which could increase the sales price and throw you off your schedule, depending on when those materials can come in. Be sure to talk with your builder about all the options. Additionally, be ready to pay out of pocket if you want upgraded finishes because you won’t be able to add that extra cost to your loan.

7. Keep your eyes on interest rates

You can’t lock in your interest rate with a lender until 90 days till closing. This means that if you go under contract on a spec home that’s just breaking ground, your interest rate can change.

8. Be sure to still schedule a home inspection

I know this might sound nuts. You’re moving into a brand new home after all, but it’s still so important to have a home inspection. There are countless subcontractors coming in and out, and sometimes things get missed or there might be defect from a manufacturer.