As everyone knows, the real estate market has been crazy in 2022 so far! And many buyers are seriously considering building a new home, rather than getting into a bidding war for a resale home that may not be exactly like they want!
Building your own home, and getting it exactly as you want it to be, holds a lot of appeal to buyers - you are not in a bidding war with other buyers, you get the home you want, with the finishes you want and on the lot that you want. But the process of buying a new construction home is not the same as buying a resale home. So below, I have listed, in no particular order, some of the tips and questions to ask that I recommend. Please let me know if you have any other tips/questions!
Decide if you really do want to build a home rather than buying a resale! Ask yourself if you have the time to wait for new construction, if you want to live with construction that may be going on for a number of years after you have built your home and will your budget allow you to do as much customization as you want!
Hire a Realtor to assist you with your new home build! Many buyers don't realize that the person at the site that they are talking to is working for the builder, not them! You don't NEED to have a Realtor to help you buy a new home, but wouldn't you rather have someone on your side looking out for your interests first and foremost! A Realtor with new construction experience may be your best step yet!
Educate yourself by researching the neighborhood & builders! If you are thinking about new construction, make sure you research the builder as well as the development! Researching the builders may take a little bit of time but will be invaluable in the long run! So research the builders - whether large or small - by checking various sites: DPOR website for their license information, the Home Builders Association of Richmond website, do a Google search on them, check out the Better Business Bureau. Find out what neighborhoods they have already built in in the last few years and drive by those homes to see what they are like a couple years later!
Talk to a lender before going out to look! Most of the bigger builders will offer incentives to the buyers - but only if the buyer uses their preferred lender and/or preferred attorney to do the closing. Sometimes this is the best option for the buyers, but it may not always be! The other thing to ask is how quickly can they lock in their interest rate - important now because of the rapidly rising interest rates!
The model home isn't going to be your standard! Most models will have all kinds of upgrades in them and have been staged by interior designers! You will want to make sure that when you are walking through the model with the site agent what is an upgrade and what is standard in the house!
Know what features & standards are included in the base price! Walking through the model home with the site agent and your Realtor, and reading through the contract, should tell you just what is being included in the price you are paying for the house!
Find out what happens to the price of the house if the cost of materials goes up! What happens if, say the cost of lumber goes up! Is that cost going to be passed onto the buyer?
Find out what happens if there is a delay in the building time frame! We have recently been seeing a lot of delays due to materials not arriving on time. The builder should, hopefully, be keeping you updated on what is happening with any delays that come about!
Can you view the house during construction! Most builder contracts & addendums will prohibit you from just walking on the site during construction! There are reasons for this - liability issues, what happens if you injure yourself when you are at the house, disrupting the workers who are working on your house! If you want to view the house during construction, let your Realtor know and they can let the site agent know!
Decide if you want to do an inspection! I normally recommend that you have a home inspection done on the house before you close on it to add the findings to a punch list of things the builder should fix before closing. Remember, even the best builders out there can miss some things and this is a great time to make sure that anything missed will be taken care of before closing.
Aren't county/city inspections enough! Most builders will allow you to bring in your own inspection to look over the house before closing, but they will also let you know about the inspections that will be done by the county and city. Talk to the site agent about what inspections will be done by the county/city.
What is a certificate of occupancy! A certificate of occupancy (CO) will normally be issued right before closing by the county/city to show that the house is now ready for you to occupy it. This is needed before you are able to close on it. The lender and your settlement agent will definitely need this!
Pricing is not normally negotiable! The only time I have seen builders actually negotiate on price is when they have a "spec" house that is up and standing and finished and they need to sell it quickly. However, I have seen buyers be able to negotiate to have certain upgrades added to the home at no cost or a reduced price!
You need to understand the builders addenda/contract! Most builders in this area either have their own contracts or addenda that need to be attached to the standard contract we use, which are very long and have many pages to them. They are designed with the builder in mind and guide the building process as well. It is important that you understand these forms before you sign!
Find out about what warranties you are getting with the house! Under Virginia law, the builders must warranty their workmanship for a period of 1 year after closing! But after that, you need to know just what warranties are being provided and any paperwork to support those warranties!
The finished floor plan may not match exactly to what is on paper! Sometimes measurements end up being rounded up or down, sometimes that tub that was supposed to be oval ends up being square, sometimes electrical outlets get moved around!
Find out how changes are handled! Many builders have what are called "Change Orders" - and normally there is a cost associated with change orders. You should always try to minimize the amount of change orders you will be having!
You may not be able to change the floor plan if the county has already approved it! Sometimes the builder will go to the county/city to get a permit to build a particular floor plan on a particular lot, even before they have gotten a contract on it. If you come in and want to build a house on that lot, you may be limited to the house plan that has been approved by the county!
Be sure to take lots of pictures of the house as it is being built! When you do go out to see the house during the building process (make sure you have permission from the site agent first), take a lot of pictures. Not only is it wonderful to look back on how your house was being built, but if there is something that needs to be corrected before you close, you will have pictures to show the site agent just what it is!
Be nice to the foreman! If you do go out to the site while the workers are there, don't disturb them. And if you run into the foreman, and want to explain something that you think is not being done correctly, talk to the site agent, not the foreman. Talking to the workers and complaining to the foreman will tend to slow down the building process!
Be prepared for delays to occur! If a builder says that the house can be done in 3 months, you need to ask them how! Most new construction in this area seems to be taking closer to 6 months! But, given supply chain issues, it may take even longer than that!
Know the steps in the construction process! Get familiar with when certain things will be done - when the foundation will be poured, when the rough framing will be completed, when the rough plumbing/electrical/HVAC will be completed, when interior & exterior finishes will be started and completed, when exterior grading/driveways/walkways will be completed, when the walk through will happen! There is a process and you should be familiar with it, especially if you will be looking at the home as it is being built!
Have a plan going in and try to stick to it! I know that it may be hard, but know what your budget is before setting foot in the builder's design center and know what your priorities are! Design consultants can itemize everything for you, so if you go over budget, you can remove some upgrades!
Buying a home, whether it is a resale home or a newly built home, can be both exciting and stressful at the same time. But if you decide that building new is the way to go, you need to have a Realtor by your side to help you with the build! Find someone who is familiar with the area, familiar with the builder and familiar with new construction! You want someone representing you in the transaction! I have been a full time Realtor in the Richmond area since 1996 and have represented many buyers in new construction over the years. I am happy to help and to answer any questions. Feel free to let me know how I can help!