Thinking of new home construction? The possibility of owning a brand-new home has obvious appeal. Brand new everything! No need to worry about all the problems that come with older homes. Just move right in and enjoy-right?
Not really. In reality, there are a lot of things you need to be aware of when buying a new home, some of the issues that are unique to new construction.
We have a client that has been working with a builder on a custom home west of Raleigh. Our builder, who had an excellent reputation and had been in business for many years, had an interesting perspective that he shared with my clients,
Building a home is like being engaged, we are going to be working together every day for at least a year…
For this reason, here are some of the most important questions to ask a home builder when buying new construction!
Before We Begin…
Even before you begin the process of speaking with a builder, it is important to have a real estate agent representing you when buying new construction to help you ensure that you ask all the right questions.
In North Carolina, you are entitled to have a licensed buyer’s agent to represent you when buying new home construction, but you must identify that agent when you first make contact with a builder. Remember, that nice salesperson that meets you at the builder’s model home, they are an employee of the builder. They work for the builder. They do not represent you! You will pay no less for your new home because you decide not to use a buyer’s agent. Instead, the builder’s agent will get both sides of the commission and you will be working alone, without a qualified representative.
What Can Go Wrong?
As amazing as it can be to own a new home, it can be equally frustrating to discover that your dream property doesn’t come close to meeting your expectations.
So, what can go wrong? Just about anything…. One of our passions is selling new homes. The excitement of a client getting the keys to their brand-new home is one of the best parts of our job, but there is an infinite number of things that can go wrong when building a new home. From experience, we can say wholeheartedly there is a broad range of builders when it comes to quality, performance, and communications skills.
Given the variation in home builders, it is imperative to ask the right questions when buying a new home! Below you will see my suggestions on what to ask the builder before you sign a purchase contract. Use these tips for buying a new home to make sound decisions!
Here are the Questions that You Should Ask
Who is the builder, and what is their reputation? How long have they been building?
The abilities and experience of the builder will have a significant impact on the quality of the final product. You are spending a lot of money, so you deserve a well-built home. Ask your realtor to talk with other agents, recent buyers, and maybe even a few other builders or related contractors in the area that will know the work of the builder you are considering. Understanding the builder’s reputation is one of the most important factors before committing to them.
Also, check out online reviews, the local Chamber of Commerce, and information posted with the Better Business Bureau, as well as any other public information.
What type of homes do they typically build?
Different builders specialize in various types of construction. It makes sense to choose a builder with a proven ability to build the kind of home you want.
For example, if the builder typically builds economy homes and all of a sudden jumps into selling luxury homes, this is something you may want to think twice about. There is so much that goes into building a luxury home. Building an economy home vs. a luxury property is night and day!
Ask to view their recently completed homes & not just their models.
Another vital question to ask a builder is whether they have properties you can look at right now. It can be helpful to visit homes they are currently building to see the process they use. At the very least, you should look at homes they have already completed to see what the final product looks like.
Checking out other existing projects allows you to explore the builder’s craftsmanship. What type of products do they use? What is the level of detail? How neat do they keep their worksites? Does pride show in their work? These are good questions to get answered when building a new home.
Who will oversee the construction of my home, and who can answer my questions once the building starts?
Ask about the person(s) who will be overseeing your project and ask to meet with them before you start your project. What experience do they have? What experience do their sub-contractors have? How will issues or concerns be communicated? Will you have regularly scheduled meetings?
These are just some of the questions that will help address any potential communication issues going forward.
What are the standard features in the homes, and what are the extras?
Another critical question to ask a home builder is what will come standard with the home.
Every home builder includes standard features in each home built while offering extras that cost more. Much like buying a car, you want to find out what is standard and what is extra. The scope of what is included and what isn’t is one of the most important questions to ask when buying a new home.
The builder should have a detailed “specifications” sheet that details everything that comes standard with your new home. The builder will often have a pre-determined upgrades list that allows you to pick and choose what you would like added to the home and at what cost.
Will you have an opportunity to make changes or upgrades once the home has started and what is the cost?
Building a home takes time. There is a possibility that you will decide later that you want additional features. It can be helpful to know that you can request upgrades after the builder has started on the home. Some builders will not allow changes to be made after they start construction. Finding out a builder’s flexibility is a critical question to ask them.
How often and when will I be allowed to tour the home once construction has started?
You should be able to tour the home periodically during construction. However, you most likely won’t be able to wander the work site whenever you like. Talk with the builder to determine when and how often you can tour the home while being built.
Some builders will be very restrictive when it comes to site visits. It would be best if you asked the question upfront on how often you will be able to visit your home. After all, you are spending a lot of money and, of course, are going to be excited to watch the progress.
How long will my home take to build and what happens if you don’t make the date?
The builder should have a good idea of how long it will take to build your home and be willing to explain what will happen if that date is not met.
As the buyer, you will need to be somewhat flexible – no one knows exactly what the weather will do in the months ahead – but you have the right to a clear estimate.
The builder’s policy on completion date is one of the most important questions you can ask when buying new construction. Some builders have a fantastic reputation for delivering their products on time, and others are downright awful!
You want to have a strong grasp of how closing date issues will work especially if you are buying and selling a home simultaneously.
Are there any differences in cost for the lots?
You will probably have several different lot options. Keep in mind that different lots may have different price tags. You may want to save money with a less desirable lot or get a lot that costs a little more and puts you where you want to be in the neighborhood.
Make sure, however, that you look over the lot premium carefully. Quite often the lot premiums builders assign to their lots do not translate to the value when it comes time to sell. You want a good location but not at the expense of overpaying.
Some of the valid reasoning for charging a lot premium include:
- A lot with a walk-out basement which is more valuable given you can have a beautiful living space with natural light.
- A better location within the neighborhood.
- A larger, flatter, or more usable lot.
Will I be able to have a home inspection when the building is completed?
This is one question that seems to be missed by many buyers of new homes. Many buyers seem to think that a home inspection, unaffiliated with the builder, is a necessary step when buying a new construction home.
I was working with a buyer several years ago in purchasing a new construction home. We had just completed one of our weekly meetings when I turned to the builder and asked when we could schedule our home inspection prior to closing. My buyer blurted out,
Why do I need to spend the money on a home inspection?
You spend thousands and thousands of dollars on a new home, possibly this biggest investment that you will ever make, and you won’t spend a couple of hundred dollars on a home inspection? What?
Keep in mind that in all major cities and towns the home will need to be approved by all the various city inspectors, but a city inspection won’t catch everything. I purchased a new construction home several years ago that passed the city inspection, only to have our home inspector identify a significant issue with the electrical system. Had it not been caught; the issue could have resulted in a fire to the home.
How quickly will punch list items be completed after the final walk-through?
You may discover on the final walk-through that some things are missing from your home, either due to a mistake or other issues.
You want to make sure that the builder will take care of the problems in a timely manner, so you can fully enjoy your new home as quickly as possible. You should make sure you get in writing the complete schedule of the builder.
If a major item hasn’t been completed or is on backorder, it makes sense to hold back funds to ensure these things will be finalized.
Does the home come with a builder’s warranty?
One of the most important questions you can ask when buying new construction is what kind of warranty is included. The warranty offered can vary quite a bit from builder to builder.
A builder’s warranty provides peace of mind, particularly when it comes from the builder.
If something breaks early on, you want to know it will be fixed. The typical length of many warranty contracts is a year for all the major components in the home.
Does the neighborhood have any restrictive covenants?
A neighborhood of new homes should have some restrictive covenants to preserve the value of the properties. You will need to know the covenants that will affect both you and your neighbors.
For example, some of the more common protective covenants will be things like:
- What percentage of the community is available for renters?
- Can you operate a business in your home?
- Storage of campers, boats, commercial vehicles, etc.
- What is the process for making changes to the appearance of your home?
- How are roads, sidewalks and common areas maintained?
Request a copy of the restrictive covenants at the very beginning of the home buying process and read them! What is allowed and not allowed can significantly impact your enjoyment of your new home, but also the long-term value of your home.
Will there be any homeowner’s association?
An HOA will be responsible for enforcing the rules that are supposed to protect the value of your property and the quality of life in the neighborhood. The quality of your HOA is important because a bad HOA experience can make life much more challenging than it has to be.
Other Resources from Our Blog
Pros & Cons of New Construction: Link
New Construction Home Buying Tips: Link
Things to Avoid When Applying for a Mortgage: Link
Home Buying Myths that Need to be Busted: Link
Mortgage Q & A with Luke: Link
As you can see there are a ton of important questions to ask when buying a new home. Building a new home can be an exciting experience or your worst nightmare depending on the builder you choose.
Do your homework in advance and more than likely you’ll avoid most of the hassles found in new construction.
Hopefully, you have enjoyed these questions to ask a new home builder.
Resources: Max Real Estate Exposure