Should you choose new construction, it is important to note that purchasing a new construction home is vastly different compared to buying an existing property. However, having full control of the customization of the property means you can create your dream home. And because there is no previous owner, you do not have to deal with the “horror stories” that are typical with used home purchases.
Buying a new construction home? Here are some tips for buying new construction homes for first-time buyers.
Not all home builders are the same, so choosing the right home builder for the type of new construction home that you want will make explaining the things you want easier. A good builder will be able to build the home the way you want it, while bad ones will give you unsatisfactory work and high costs. For this reason, you need to shop around and look for the right home builder for the job.
When buying new construction homes for first-time buyers, you should create a list of potential builders by getting some referrals from family and friends or searching online for recommendations. Shorten your list by looking for online reviews or talking to previous clients. Most importantly, choose a home builder who is licensed, bonded, and insured. The license ensures that the home builder has the expertise to work on your home, while insurance protects you from potential liabilities.
The sales representative for the new construction home may seem nice and helpful, but that doesn’t mean you should close the deal right away. Don’t be intimidated by their high-pressure tactics to get the sale.
Remember that the sales rep works for the builder and thus protects the developer’s interest. You need your own real estate agent who will look for your own interests and check the fine print to get you the best deal.
As your representative, your real estate agent is responsible for telling you the benefits and risks of the transaction. They will read the builder’s contract carefully to clarify the legal terms and point out the things that you may have missed. You also don’t have to worry about compensation, as it is the builder that pays the agent’s commission.
Related: How Hiring Real Estate Agent Can Save You Money
Visiting a builder’s showroom will give you an idea of how your finished home will look like. However, not all the amenities and features that they are showcasing will be available in a basic home. That is why it is important that you check the feature sheet of the sample homes you are interested in and identify the features that are for the basic home and those that need to be upgraded.
Extra upgrades will incur more costs and the markups tend to be huge. It may be possible for you to hire a contractor and build the upgrades after the home is finished to save money. Your real estate agent may also negotiate with the developer to get you discounts if you really want the upgrades.
While getting upgrades with your builder tends to be expensive, it is still more convenient to get upgrades straight from your builder. Here are some things to keep in mind when getting new construction home upgrades.
A home inspection is not just for pre-existing properties but for new construction homes as well. Just because a home is newly built doesn’t mean that it is free from defects. There are plenty of things that even seasoned builders miss or build improperly. Also, make sure you check if there are any pending liens and other issues with the contractors who built the house. For this reason, you need to perform a home inspection after the job is done.
Issues such as leaking plumbing, structural defects, as well as HVAC and electrical issues can be easily noticed by an expert home inspector. Additionally, you may protect yourself further by getting a builder’s warranty that covers at least one year after moving to your new home.
Before signing any agreement with a builder, it is essential to thoroughly review the builder’s contract. Unlike a standard real estate purchase agreement, a new construction contract is typically drafted by the builder’s legal team and is written to favor the builder.
Key terms and clauses to pay close attention to include the purchase price and what is included, the projected closing date and any provisions related to delays, the builder’s right to make changes to materials or plans, and the conditions under which either party can cancel the contract. You should also look for clauses related to earnest money deposits and whether they are refundable, as well as any arbitration agreements that may limit your legal recourse. Having your real estate agent and, if possible, a real estate attorney review the contract before you sign can help ensure your interests are protected and that you fully understand your obligations and rights throughout the building process.
One of the earliest and most important decisions you will make when buying a new construction home is selecting your lot. Not all lots within a community are created equal — factors such as location within the neighborhood, views, size, shape, and proximity to amenities or green spaces can all affect desirability. Builders typically charge a “lot premium” for lots that are considered more desirable, such as those on a cul-de-sac, backing to open space, or offering a water or mountain view.
These premiums can range from a few thousand dollars to significantly more, depending on the community and the specific lot. Before committing to a lot, consider how the premium fits into your overall budget, whether the lot’s characteristics align with your lifestyle needs, and how the location may affect your home’s future resale value. Discussing lot options early with your real estate agent can help you make a well-informed decision.
Financing a new construction home is different from obtaining a mortgage for an existing property, and it is important to understand your options before you begin the process. Depending on the stage of construction and the type of home you are purchasing, you may encounter several different loan types. Some buyers use a construction-to-permanent loan, which covers the cost of building the home and then converts into a traditional mortgage once construction is complete. Others may use a standard mortgage if the home is already built or nearly finished by the time they purchase it.
Builders sometimes offer their own in-house financing or have preferred lenders, which may come with incentives such as closing cost credits or rate buydowns — though it is always wise to compare these offers against options from independent lenders. Getting pre-approved for financing early in the process will help you understand your budget, avoid overextending on upgrades, and demonstrate to the builder that you are a serious buyer. Speaking with an experienced mortgage lender who is familiar with new construction transactions can help you navigate the financing process with confidence.
Most new construction homes come with some form of builder’s warranty, which provides protection against defects in workmanship and materials for a specified period after closing. Builder’s warranties typically cover different components of the home for varying lengths of time. For example, coverage for workmanship and materials defects may last one year, coverage for mechanical systems such as plumbing, electrical, and HVAC may extend to two years, and structural defect coverage may last up to ten years.
It is important to carefully review the terms of the builder’s warranty before closing so you understand exactly what is covered, what is excluded, and how to file a claim if an issue arises. In addition to the builder’s warranty, some builders participate in third-party warranty programs that offer additional protection. Knowing the details of your warranty coverage can give you peace of mind and help you act quickly if problems emerge after you move in.
One of the realities of buying a new construction home is that the process rarely follows a perfectly predictable schedule. Construction timelines can be affected by a wide range of factors, including weather conditions, supply chain disruptions, labor shortages, permit delays, and changes made to the home’s design or specifications. It is common for new construction projects to experience some degree of delay, and buyers should plan accordingly when making arrangements for their current housing situation, moving logistics, and rate lock periods on their mortgage.
When reviewing your builder’s contract, pay close attention to the projected completion date and any provisions that address delays, including whether the builder is required to notify you of changes to the timeline and what remedies, if any, are available to you if the project is significantly delayed. Maintaining open communication with your builder and real estate agent throughout the construction process can help you stay informed and manage expectations as your home takes shape.
Buying new construction homes for first-time buyers is a challenging undertaking. There will be delays, a change of plans, and other unforeseen circumstances that you need to take into account.
But by choosing the right team of expert home builders and agents, as well as planning your home upgrades carefully, the entire new construction home building process will be easier. Keep these tips in mind, and you will be a step closer to your dream home. Good luck!
If you’re in need of a mortgage, Sammamish Mortgage is here to help. We serve clients across Washington, Idaho, Colorado, Oregon, and California. Since 1992, we’ve been providing several mortgage programs and products with flexible qualification criteria to borrowers across the Pacific Northwest, including our Diamond Homebuyer Program, Cash Buyer Program, and Bridge Loans. Visit our website to get an instant rate quote or to use our online mortgage calculator. Or, reach out to us if you are ready to get pre-approved for a mortgage.
It depends — new homes offer modern features and warranties, while resale homes may have mature landscaping and established neighborhoods.
Yes, but builders are often less flexible on price and more open to offering upgrades or closing cost incentives.
Getting pre-approved is definitely recommended, as it helps you understand your budget and strengthens your offer with the builder.
Yes, extra costs tend to include upgrades, lot premiums, closing costs, and taxes, which add to the final price.
Generally, the structure, basic finishes, and standard appliances are included. Any customizations and upgrades cost extra.
Yes, most builders offer customization options, especially if you buy early in the construction phase.
This refers to buying a home before it’s built or taking over someone else’s purchase contract before closing.
Pay attention to upgrade costs, completion dates, cancellation clauses, and warranty details.
Ask about construction timelines, included features, warranties, HOA fees, and future development plans.
Having your own real estate agent is strongly advisable. The builder’s sales representative works in the builder’s interest, while your agent reviews contracts, negotiates on your behalf, and is typically compensated by the builder.
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