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What To Know When Buying a New Home from a Builder

1118 Marchesi
1118 Marchesi – The Pinnacle

When many people think about buying a new home, one option tha they turn to is having a home built for them exactly the way they want it.  Like buying an existing home, there are pro’s and con’s about buying a new home and the process is very different.  More often than not this will be the most expensive way to purchase a home because what you are buying is brand new and customized to the way you want it.  Like anything else in life there is a trade off: you are getting exactly what you want on the lot you want it on in the area that you want, but you are paying a premium for it.

     To start with, there are three general categories of builders: Production Builders, Semi-Custom Builders and Custom Builders.  A Production Builder has a set number of plans for you to choose from, a set number of interior finishes for you to choose from, and they will not customize or deviate.  This allows the Production Builder to offer a lower price point because they know exactly what is going into each of their homes and can purchase in bulk.  A Semi-Custom Builder will also have a set number of plans but is willing to make changes to those plans to suit each individual buyer.  With a Semi-Custom Builder you may be able to change the dimensions of rooms, make the house wider, curve a staircase, add a bathroom and make other changes.  A Custom Builder will start from scratch with you to design and build a completely custom home.  Production Builders and Semi-Custom Builders typically purchase a group of lots in a new neighborhood and will allow you to select a lot within that group to build on.  A Custom Builder will build on your lot anywhere.

Many neighborhoods have two to five builders who are building in that community.  You may have two or three that offer similar price points, and one or two that are higher or in a gated part of the community.  Each of them knows very well what the others are building and selling, so tour them all and ask them all about each other.  What you are looking for is not what bad things they have to say about one another, but factual differences in the way that each of them build.  Some of them may order their framing as a package that is made off-site and delivered and assembled on your lot, others may have carpenters that frame your house on your lot.  Some may include a higher level of interior finishes as standard, others may have an incentive waiving lot premiums.  They have all purchased different lots from the developer so maybe one builder has the premium hilltop lot that you want and you will need to build with them to get that lot.

Once you’ve chosen a builder and a house plan, the next choice to make is which to build on.  Some house plans will only fit on certain lots, for example a large one-story home may not fit on a narrow lot that would accommodate a two-story home because of the size of the footprint of the house.  Builders charge lot premiums for lots that they feel are more valuable, and this is paid in addition to the price of the house.  When selecting a lot always keep in mind whether the lot premium is something that will increase the re-sale value of the home, many times it is not.  A lot with a view will probably increase the value, a lot that is slightly larger than your neighbors probably will not.  A lot backing up to a busy street will probably decrease the value of your home while a lot backing up to a greenbelt may make it easier to sell.

Once you have selected your lot, you’re on to selecting the interior finishes of the home such as flooring, cabinets and paint.  Ask the builder for a list of their standard finishes as these are the items that are included with the base price of the house.  When you walk through the Model Home you will see a lot of finishes that are not standard, in fact probably most of them are not standard.  The Model Home is the builder’s opportunity to show off to you the beautiful things they can build for you, but they are not usually included in the base price.  Ask for the cost of the Model Home as it is built and you may be surprised at the difference, then ask if they have any homes currently being built that you can walk through to visualize the difference.  Many builders will offer you an allowance for interior finishes, this is a budget that you have to use when making your selections.  Maybe you spend a little more on prettier granite counters and a little less on flooring, upgrade the exterior from siding to brick or add a sink in the laundry room.  Keep in mind that there may be upgrades in the Model Home that are not as apparent as flooring and counters such as: higher ceilings, extended patios, taller doors, upgraded appliances, arched doors, ceiling fans & lighting, backsplashes, separate tub and shower, dual vanities and larger rooms.

When deciding what to have the builder include with the home, think about which things you can add later and which things you can’t.  Extending the size of the Master Bedroom is very expensive once the house is built and it is very likely that the builders charge for doing that is less than half what it would cost later.  This is true of anything structural, it is easier to change before it exists.  Items like outdoor kitchens, pools, upgraded flooring, light fixtures and shelving are relatively easy to add later and you may be able to find someone to do it at a lower cost than the builder can.  Consider asking the builder to run the gas line for the outdoor kitchen but add the actual kitchen after closing or next year.  Ask the builder to extend the covered concrete portion of the patio that involves the roofline and hire a contractor after closing to add a deck.

Once you have made all of those decisions, the builder will get started building your home.  Most builders will offer to pay a third party inspector once the home is complete to inspect the home on your behalf.  While this is a nice gesture on their part, they often use the same third party inspector for all of their homes and the inspector has an interest in keeping the builder happy.  You should hire your own inspector who you pay and who is accountable only to you.  In addition to the final inspection, your inspector should inspect when the slab is poured, when the framing is complete, and when the sheetrock is complete.  Inspecting at multiple points along the way will allow you to catch any problems or defects before they are covered up with sheetrock or flooring.  Once the builder says the house is complete, you will walk through and create a Punch List of all of the remaining items.  This is your opportunity to point out defects in the paint, scratches on the floor, missing trim, visible carpet seams, etc.  This is also the point at which you will have the builder’s full attention because you have not yet purchased the house and they have all of their various trade workers who have not yet been paid.  If you wait until after closing to address little things you may find that the builder is less focused.

Lastly, make sure you are working with a Realtor that has experience with new construction.  There is a lot to know about buying a new home from a builder, and a good Realtor is your best defense against being taken advantage of.  A good Realtor will ask the right questions to make sure that you are fully informed at the very start, and will push hard to get you the best deal available.

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