Buying a New Construction Home: How it’s Different

Interested in buying a new construction home? The process is just a little different than buying a resale home. Read on to learn more about the differences!

The Process is More Complicated
Just as with purchasing a resale home, you’ll want to hire a real estate agent. However, you should hire a real estate agent who has experience with new construction. Builder contracts are different than what most agents work with on a typical basis, so this is important.

Since builder contracts outline every detail of the new build, like appliances and finishes, these contracts must be combed through meticulously. You may still end up paying more for additions, but by going through the contracts, you will know what to expect. The price of new construction often creeps over budget, so being aware of the numbers is extra important.

Construction Loans
You may need to get a construction loan when buying a new construction home. Many offer a set term, usually up to a year to allow time for the build – then the homeowner may need to refinance into a more traditional loan.

Banks are also choosy about who qualifies for a construction loan. A qualified builder must be involved and the lender will need detailed specifications on the home, such as floor plans and building materials. The home value may need to be appraised, and banks typically require a large down payment – usually 20 – 25% of the price of the home.

Listing Prices
It’s no surprise that builders don’t like to reduce their prices since it sets the bar for future home sales. Rather than drop prices, builders are more likely to offer incentives like paying for closing costs or offering design perks. While a resale homeowner might be willing to cut the price of their home to get it off the market quickly, a builder is less likely to budge.

However, you can still get deals on new construction homes that have been on the market for 45 days or more. Every day a builder’s home sits on the market is a day they can’t invest in building future homes.

The Best Time to Buy
Since many national builders are publicly-traded companies, they need to meet sales goals. As a result, builders can be more aggressive with sales incentives toward the end of a business quarter. With a resale home, prices historically tend to drop off during the winter months.

Are you interested in buying a new construction home and want some help navigating the unique process? Contact me today at 713-364-5883 or info@angelfultzrealty.com. Have questions or comments? Leave a comment below.