Four Considerations when Buying New Construction

“We’re looking to buy a home. Do you guys help with new construction? How does that work?”

That’s a common question when we meet with new home buyers.

And, yes. Yes, we help buyers with new construction.

The process is a bit different than a more traditional resale transaction, the timing is different, and many of the questions along the away are different - so, it’s helpful to have guidance from a RAGE agent along the way.

Consideration #1: How long will this take?

There are two major timing components to consider - first, the timing of your home’s construction and second, timing of the entire community. In most cases, new construction homes take 8-12 months to complete from the day the builder breaks ground.

When considering timing of the community, it depends if your home is one of the first homes being built or one of the final homes. Early home sales in community are often more affordable than later home sales because the idea of muddy streets being full of trucks, nails, and building materials is less than desirable. Additionally, days filled with the sounds of hammers and concrete mixers can be a bit of a turn off.

Consideration #2: What will the finished product be like?

As with the timing consideration above, it’s important to know the projected final product of both the home and the community. For the home, what customizations options does the builder offer? Some builders offer select all-inclusive design packages (this helps keep costs done and speeds up construction) while other builders allow more customization options for elements like flooring, counters, cabinet design, lighting, and color schemes.

Once the home is completed, what important elements will remain the homeowner’s responsibility and how particular are HOA guidelines regarding these decisions? Most new construction homes include front yard landscaping and sprinklers, but rear landscaping and fencing must be completed by the owners and sorted out between the neighbors (e.g. splitting fencing costs 50/50 with a neighbor).

For the community, it will be helpful to know if the neighborhood will offer a pool, a clubhouse or parks, or more negatively, if future home construction is planned that might block your mountain views or other desirable features about your home’s location.

Consideration #3: What is the warranty process?

With every new home built, there will be a list of items needing to be completed or touched up after closing. The builder normally works hard to make homes as close to perfect as possible, but as the new owner, you’ll want to know the process of finishing up those punch list items. This punch-list warranty normally lasts for a year, while an extended 10-year warranty is commonly offered in the case of structural problems that might arise.

Consideration #4: What happens if I lose my ability to buy the home?

Despite everyone’s best of intentions, sometimes a buyer loses their ability to close on the purchase of their new home. This could be due to financial reasons (like climbing interest rates pushing the monthly payment out of their budget range) or life circumstance (like a job transfer out of state). It’s important to know at the time of signing a contract what the financial consequences will be should you as the buyer need to back out of the contract at some point.

For buyers, there is normally no cost for having RAGE represent you through the new construction buying process. We have done it dozens of times and appreciate the opportunity to ensure you have an advocate in your corner from start to finish.

We're always here and happy to help. Hopefully this post serves you well!

- Josh & The RAGE Team

This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for tax, legal, or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.