Buying a brand new home that no one has ever lived in that you can have built to your specifications and with the finishes you choose can be very exciting. It can also however be extremely stressful. I wouldn’t be surprised if you have even heard a few nightmare stories from friends or family who built a home.The biggest factor in making sure your dream doesn’t become a nightmare is having a buyer agent on your side who knows how to protect your interests throughout the building process from inquiry to closing. This is where a good agent is worth their weight in gold. Secondly education matters and there are certain parts of the process you should become familiar with to help you understand what is going on and to help you protect your interests. Below you will find some great information on the construction process, questions to ask, and things to watch out for.
Is a new construction home worth the price: New construction homes do cost more than traditional homes by quite a bit. New construction standards have made this price difference greater in recent years but there are a couple major reasons why the investment is worth it. First of all new construction homes have very little maintenance costs. Typically the first 10 years there will be little to do to the home where as an older resale home may have $2,000-$3,000 a year in needed maintenance and replacements. Secondly new construction homes are far more energy efficient than traditional homes to the point that often times the utilities will be $2,000-$3,000 less per year to run a new home. New home construction codes require them to be super tight and very well insulated which cuts down on operating costs significantly. These two reasons alone can create a $40,000-$60,000 difference over the next ten years bringing the overall comparison cost down to the point where it just makes financial sense to buy a new construction home.
Is a new construction home worth the price: New construction homes do cost more than traditional homes by quite a bit. New construction standards have made this price difference greater in recent years but there are a couple major reasons why the investment is worth it. First of all new construction homes have very little maintenance costs. Typically the first 10 years there will be little to do to the home where as an older resale home may have $2,000-$3,000 a year in needed maintenance and replacements. Secondly new construction homes are far more energy efficient than traditional homes to the point that often times the utilities will be $2,000-$3,000 less per year to run a new home. New home construction codes require them to be super tight and very well insulated which cuts down on operating costs significantly. These two reasons alone can create a $40,000-$60,000 difference over the next ten years bringing the overall comparison cost down to the point where it just makes financial sense to buy a new construction home.
Finding the right new construction home for you: There are several ways to go about buying a new construction home. You could search for a listed “to be built” home that is being marketed on a specific lot. You could find a lot first and then a builder and pick or design your home plans and have your home built using a construction to perm loan. You could also find a home under construction that may only be a few months away from completion that still has time to pick your finishes. You could also find a new development that has many lots and floor plans available that would allow you to customize a home in a development under construction. You could even find a finished new construction home that could offer you a lot less stress, that is more than 90% completed, and would allow you to close in 30 days. Bottom line there are many options to buy a new construction home and it all comes down to seeing what is available in the locations you are interested in and then exploring which route is the best for you based on what is available. Making these decisions can be tough but this is where your agent will help you make the best decision for you.
Things that should be defined during the inquiry phase: When you find new construction home options you are interested in its time to ask a lot of questions, gather information, and see if it is the right new construction home for you. From there you will make an offer and begin a a lot more due diligence but these questions must be known up front to help you decide if its worth taking the next steps.
Making an offer or placing a lot hold: Once you feel comfortable with the information provided during the inquiry phase and have a good level of comfort with the builder its time to make an offer. In many cases this will be a traditional offer much like making an offer on a traditional home. Your agent will use all the gathered details to make an offer with language spelled out clearly in the offer addendum as to what you are expecting for a finished product. In some cases for development projects you will place a lot hold deposit prior to signing a purchase and sales agreement. This will included little details about the home or price but will hold the lot for you fro typically 7-14 days to then be able to meet with the builder and come to a full agreement on what they would deliver to you upon closing. The reality of a newly built home is often the price is not negotiable. Builders are locked to pretty tight construction costs so there is not much room for typical negotiations. There are sometimes however opportunities to negotiate in some upgrade inclusions in the listed price. Your agent will feel this out during your inquiry and selection phases to see what might be possible.
To have or not to have an inspection: Often times builders are not all that keen on a buyer having an inspection clause to do inspections within a week or two of closing. The builder often feels they have to pass all building codes to get a certificate of occupancy so why would the buyer need an inspection. An inspector can however inspect the home to make sure the inspectors for the town building department didn’t miss something and to make inspections of a quality review nature to make sure you are getting a quality home. Negotiating an inspection clause into a new construction home will be up to your agent and by feeling out the builder. If you were able to look at other homes the builder has built or is building and have found a good track record on the builder then an inspection is less of a worry than if it is a new or newer builder with less of a resume of building quality homes.
Selecting finishes and upgrades: Once you have a lot hold deposit in place or an accepted offer it is time to make the exact selections for your build out. This is a critical phase of building a home. The last thing you want is surprises or change orders later on and or to feel like you did not get everything you expected in your new home. You will through one to several meetings with the builder make selections for all the finishes and upgrades you want in your new home. Usually the builder will have samples of the types of cabinets, counters, tile, hardwoods, carpeting, etc they are offering including color samples and quality levels. Some levels of each may be an upgrade from the base price and it is important to take good notes during this phase. Below are all the areas you will likely need to make selections for.
Signing Purchase and Sales Agreement: Once you have made all your selections its time to sign the purchase and sales agreement. This document will have every detail of what will be delivered in your new home. It is crucial that the exact selections you chose during the selection phase are listed out in detail on the purchase and sales agreement. It is crucial that you compare the P&S to your notes regarding the models of materials and colors you chose during the selection meetings. Sometimes there are mis understandings or things get forgotten in long selection meetings so it is important the P&S is very clear and matches exactly what you picked and expect. Any questions should be brought up now so that you are not disappointed down the road when you see something you didn’t expect installed. It’s far harder to deal with once its done in the home. Your agent will also help manage this phase and make sure everything is clear and matches exactly what you expect.
The construction phase oversight: Now that the p&s has been signed, and possible before hand depending on whether the builder started construction before you decided this was the one, its time for the construction phase. Below are the typical phases of construction that are important to the buyer when watching your new home get built. There is a lot more to it from the builders side but these are the points in time most buyers wonder what is going on. There will be times when it feels like nothing is happening and times when it feels like everything is happening. This can be for many reasons which are not always something to worry about. Your agent will help you determine what is going on through each phase and if it may have an effect on the finish date. Sometimes there are just things out of the builders control and even though they have every intention on keeping the schedule on track it can slip. Things that can effect schedule are weather, inspections, change orders, sub contractor scheduling, etc. Here are the most important phases to keep an eye on as your new home gets built.
Well that is it for now! Hopefully this information helps you get a better feel for what it will take to build a home. Is it a long process? Yes! Do buyers feel it is worth it when working with the right agent, lender, attorney, and builder team? Always! Its when the buyer doesn’t have the right team in place that they find it becomes a nightmare. Find the right team, determine your goals and what you want in a new home, and embark on the path to your new home with confidence!
Schedule your FREE in person or zoom Home Building Consultation by completing the contact form below. You can also call/text me anytime at (978) 400-1617 or email me at trbarber10@msn.com. If you would like to learn more about my 25+ years of experience and you can go to www.TracyBarberRealEstateExpert.com
View Current New home Inventory now CLICK HERE
(Want to here about off market new construction opportunities? Fill out the contact form below and check the box to receive updates on off market and coming soon listings)
Things that should be defined during the inquiry phase: When you find new construction home options you are interested in its time to ask a lot of questions, gather information, and see if it is the right new construction home for you. From there you will make an offer and begin a a lot more due diligence but these questions must be known up front to help you decide if its worth taking the next steps.
- What does the lot look like? Is it flat or sloped? Is it dry or does it have wetlands? Are the lot lines marked?
- How much of the lot will be cleared during the building process?
- How long will the driveway be? Will it be paved or remain dirt?
- How will the house be placed on the lot?
- What will the compass orientation be?
- Request and review copies of the floor plans?
- Request and review the specifications list and what is included in the sale?
- When can the builder deliver a finished home?
- Is it public water and sewer or private?
- Where will the septic system be and will it be raised or below current grade? Will it be a gravity system or pumped system? Is the septic design completed and accepted by the town? If not has the site been perc tested?
- What is current status of the home being built?
- Have the foundation footings and walls been formed and poured and backfilled?
- What will the elevation of the first floor be off current grade of the land?
- Will it be a walk out basement or bulk head or neither? Is the builder including a bulk head?
- Will electric service be above ground or under ground?
- Can you make minor changes to the floor plans if desired?
- Will there be other new homes built on adjacent lots and if so how close will they be to the home you are interested in?
Making an offer or placing a lot hold: Once you feel comfortable with the information provided during the inquiry phase and have a good level of comfort with the builder its time to make an offer. In many cases this will be a traditional offer much like making an offer on a traditional home. Your agent will use all the gathered details to make an offer with language spelled out clearly in the offer addendum as to what you are expecting for a finished product. In some cases for development projects you will place a lot hold deposit prior to signing a purchase and sales agreement. This will included little details about the home or price but will hold the lot for you fro typically 7-14 days to then be able to meet with the builder and come to a full agreement on what they would deliver to you upon closing. The reality of a newly built home is often the price is not negotiable. Builders are locked to pretty tight construction costs so there is not much room for typical negotiations. There are sometimes however opportunities to negotiate in some upgrade inclusions in the listed price. Your agent will feel this out during your inquiry and selection phases to see what might be possible.
To have or not to have an inspection: Often times builders are not all that keen on a buyer having an inspection clause to do inspections within a week or two of closing. The builder often feels they have to pass all building codes to get a certificate of occupancy so why would the buyer need an inspection. An inspector can however inspect the home to make sure the inspectors for the town building department didn’t miss something and to make inspections of a quality review nature to make sure you are getting a quality home. Negotiating an inspection clause into a new construction home will be up to your agent and by feeling out the builder. If you were able to look at other homes the builder has built or is building and have found a good track record on the builder then an inspection is less of a worry than if it is a new or newer builder with less of a resume of building quality homes.
Selecting finishes and upgrades: Once you have a lot hold deposit in place or an accepted offer it is time to make the exact selections for your build out. This is a critical phase of building a home. The last thing you want is surprises or change orders later on and or to feel like you did not get everything you expected in your new home. You will through one to several meetings with the builder make selections for all the finishes and upgrades you want in your new home. Usually the builder will have samples of the types of cabinets, counters, tile, hardwoods, carpeting, etc they are offering including color samples and quality levels. Some levels of each may be an upgrade from the base price and it is important to take good notes during this phase. Below are all the areas you will likely need to make selections for.
- Flooring types and quality?
- Cabinetry types and finishes in kitchen and baths?
- Cabinet pulls and drawer handles?
- Counter tops in kitchen and baths, faucets types and colors?
- Lighting/fans types, locations, finishes, and color? Or is builder offering a credit towards lighting and you will need to buy and deliver lighting?
- Cable TV coax locations in the home?
- Are recessed lights included? If not will you be adding some? Will they be on dimmers?
- Appliances included, type, and finishes and does it include washer, dryer, fridge, garbage disposal
- Trim details and finish? chair rails? Crown molding? Solid doors or composite?
- Interior and exterior door types and finishes
- Insulation type? Spray foam or Batts?
- Stair details? Wood or carpet?
- Closet organizers and hangers included?
- Types of windows and doors? Grills or no grills?
- Painting? How many colors included? Semi gloss? Flat? Gloss?
- Siding type and color? Shutters?
- Shingle type and color?
- Gutters and down spouts included?
- Garage door type, color, and are openers included?
- Heating/AC type and fuel source?
- Landscaping included? Seed or sod? Bushes? Mulching? walls?
- Driveway finish? Paving base coat and top coat or just base coat?
- Walk ways and exterior steps to doors? Built in place? Wood? Precast?
- Decks and porches types and finishes? Wood or composite materials? Painted or natural?
Signing Purchase and Sales Agreement: Once you have made all your selections its time to sign the purchase and sales agreement. This document will have every detail of what will be delivered in your new home. It is crucial that the exact selections you chose during the selection phase are listed out in detail on the purchase and sales agreement. It is crucial that you compare the P&S to your notes regarding the models of materials and colors you chose during the selection meetings. Sometimes there are mis understandings or things get forgotten in long selection meetings so it is important the P&S is very clear and matches exactly what you picked and expect. Any questions should be brought up now so that you are not disappointed down the road when you see something you didn’t expect installed. It’s far harder to deal with once its done in the home. Your agent will also help manage this phase and make sure everything is clear and matches exactly what you expect.
The construction phase oversight: Now that the p&s has been signed, and possible before hand depending on whether the builder started construction before you decided this was the one, its time for the construction phase. Below are the typical phases of construction that are important to the buyer when watching your new home get built. There is a lot more to it from the builders side but these are the points in time most buyers wonder what is going on. There will be times when it feels like nothing is happening and times when it feels like everything is happening. This can be for many reasons which are not always something to worry about. Your agent will help you determine what is going on through each phase and if it may have an effect on the finish date. Sometimes there are just things out of the builders control and even though they have every intention on keeping the schedule on track it can slip. Things that can effect schedule are weather, inspections, change orders, sub contractor scheduling, etc. Here are the most important phases to keep an eye on as your new home gets built.
- Perc Testing: If the septic system was not previously designed and approved by the town this is an important piece of the puzzle to determine where the septic system will be located, the size and design of the system, and the height of the system as compared to the surrounding grades. Why is this important? Have you ever seen a yard with a mound in the middle of the yard? This is why this is a critical step. Hopefully this has been already completed and a septic plan is in place however if you have bought or are buying a lot and using a construction to perm loan then this is a critical first step prior to closing on the lot to ensure the site can accommodate a septic system, determine location of the system, design a septic plan, and get it approved by the town. There are times where you just may not like the lot any more once a perc test is done and you find out where the system would have to go and what the install would look like.
- Septic location if applicable and height of finished septic grade: It is important to know where the septic system will be and the height of the finished grade after installation. Depending on the water table levels on the lot and soil absorption rates the system may end up having to be built up above current lot grades. While you may have asked these questions during the inquiry phase sometimes field changes take place that modify the design plans. It is important to coordinate this with the builder during installation as there are sometimes way to coordinate this install and the foundation install to end up with an even lot even if the system is higher than expected. Also location may be important to you for future considerations such as pools, decks, and sheds since you should never have anything over the septic field or piping that runs into the home under ground.
- Lot clearing and foundation installation: If your new home was not previously started and the lot has not been cleared yet and the foundation has not been poured and back filled then this oversight timeframe is critical. Often times what the builder expects to see and what the buyer expect to see is very different. It is critical that the buyer understand through meeting with the builder exactly how the lot will look once cleared, how the home will be situated on the lot, how far it will be from the street, and how high off the ground the first level will be. If the lot is sloped or the ground requires the home to be higher than expected it is important to understand how the home will look once back filled. For instance if the ground contains a lot of ledge or rock the builder may not be able to dig down 6-8 feet to keep the basement fully below the current grade without costly removal of ledge. If this is the case the builder may have to pour the foundation higher than expected and have to back fill up to the home leaving a slope around all sides of the house. This can be a shock to buyers and this may come as a shock to you too unless this is discussed before forming the foundation and ideally before you make an offer. That being said if the builder hasn’t done some excavation to see what is under the ground level the reality of what will be may not be known yet. Sometimes neighboring homes can offer some clue to the workability of the ground but not always. The perc test may also gives some insight but not always . Typically the builder will tape off and mark foundation corners prior to excavation which is a good time to review with the builder the homes location on the lot. Once excavation begins if the builder does run into ledge this would be the time to discuss possibly adding some change order cost to the project to be able to remove ledge so you get the finished lot and home you are hoping for. Communication during this phase most often eliminates disappointment later.
- Well location and installation: The location of the well should be coordinated and known to ensure once again you have considered future uses of the lot such as pools, decks ,sheds, etc. The well is also required to be certain distances from the septic system so coordination is critical. Sometimes this installation will result in change orders as well should they need to drill the well deeper than expected. No one knows what kind of supply you will get until the well is drilled. also once it is drilled and tapped it is always recommended to do a water quality test to make sure you will not needed certain filtration systems in your new home to address potential water quality concerns.
- Sealing and back filling the foundation: Once the foundation forming is in place and the footings and walls have been poured you may notice nothing seems to be happening on site. This is due to the fact that concrete needs to cue for a specific amount of time before it can be weather sealed and back filled. Backfilling too early can lead to foundations cracking and breaking under the weight of the earth being backfilled. Weather and temperature can effect the timing of the pouring and curing of the foundation as well as the ability to backfill, especially in winter months. Once the foundation is back filled you may feel like the grade is still lower than expected from the grade level to the top of the foundation walls. This may not be something to worry too much about since often times this grade will be covered with 6-12” of top soil towards the very end of the project when its time to do the landscaping and seeding. If you have any questions about this its always ok to ask your agent to check with the builder.
- Framing of the home: Once the foundation is cured, sealed, and backfilled its time to begin rough framing. The first step is build the first floor framing on top of the sills. From there you will start to see exterior and interior first floor walls beginning to go up quickly. Then the second floor followed by the second floor walls, then the roof structure. This phase starts to go pretty fast and you think to yourself wow we are almost there. The reality is there is a lot more to go. The reason rough framing goes so fast is the framers want to get the building weather tight as fast as possible so that the wood does not get damaged from rain and snow. You will see the first floor, second floor, roof, and sheathing go up quickly as well as the shingles typcially. Once the outside is complete if not already done all interior wall rough framing will be completed. This is a great time to do a walk through and get a feel for the layout in a way you have yet to get a good feeling for. If you wanted to make changes to walls, door ways, openings, maybe even window locations, etc. now is the time to do it. It may cost you a change order increase to make alterations now but it will cost you a lot less at this point than it would once the walls are wired, plumbed, insulated, and boarded.
- Weather tight: Weather tight is an important milestone for the builder. Weather tight means that rain and snow can no longer penetrate the structure and now temporary heat and electric can be made available in the home for construction crews to begin the next phases in a safe and conditioned work environment. Some rough framing may still be taking place even if to you it seems done. This is because there are a lot of little code requirements you may not know about such as fire blocking to prevent fires from spreading quickly through wall cavities. Once the rough framing is complete the builder will request a rough framing inspection with the town. Due to inspector schedules there can sometimes be a delay where work seems to have stopped while waiting for the inspector. This is for the reason that the next phases can’t begin until the framing sign off has been obtained. Sometime the inspector may find things not to their satisfaction, often times very minor in nature, which can delay sign off and can set the schedule back a few weeks. Sometimes these things are out of the builders control because building codes are often open to interpretation by the inspector.
- Rough Plumbing and Electric: Once the structure is weather tight the electrician and plumber will begin installing all the plumbing piping, heating ducts, and electrical wiring inside the walls and ceilings. Often times the electrician will allow you to do a walk through with them to pick outlet locations in each room and if included or available as a change order allow you to pick locations of recessed lighting. Your agent can help you through this process as well to make sure you are happy with outlet locations, cable tv locations, HDMI chases for wall mount TV’s etc. and help you think about furniture locations now so you don’t end up running a cable line across the floor or up a wall to your TV’s or internet modem. Once the rough for each trade is completed they will request a rough inspection from the town. Again it can seem like work has stopped until the sign offs are obtained. Also once again if the town requests changes or modifications it may delay work on the site as the next phase can not begin until the rough plumbing and electric are signed off.
- Insulation: Once the rough electric and plumbing sign offs are obtained the builder can now begin insulating the home. This typically goes pretty quickly. Once insulation is complete another sign off by the town is required before the walls and ceilings can be closed up.
- Boarding and plastering: Once the insulation sign off has been obtained its time for your new home to really start taking shape. It’s now time to start boarding the walls and ceilings and plastering the home. Typically once the walls are paint ready the painters will come in and spray prime the entire home and often times spray finish coat the ceilings and most walls. This may depend on the level of trim details are included in the home.
- Finish carpentry: Once the home has been plastered and painted to the first level the painter wants to complete the finish carpentry crew will come in and finish out all door openings, trim details, and window trim and any other specialty trim. They will install all the cabinets for the kitchen and baths and install vanity tops that are not being provided by the granite installers. Granite installers will then typically come in and field measure the counter tops and come back and install the counter tops later. it may seem like you are almost done but there is still a lot of work left.
- Flooring: Depending on the type of flooring going in some flooring may be installed now where coordination is required between trim installations and tile and wood flooring types. Carpet however is usually not installed until much later so they will not get stained or ruined during the remaining construction.
- Finish Electric, plumbing, heating: Once the home has been painted, trimmed out, hardwoods installed, tile laid and grouted, and all cabinets installed the electrician and plumber will come back and install all outlets, switches, lights, sinks fixtures, toilets, etc. If you chose to buy the lights, any faucets, shower heads, etc. in lieu of leaving these up to the builder then it is time to deliver these to the home well marked as to where they go.
- Landscaping and seeding: As you get closer to closing and as the activity around the house begins to slow the landscapers will come back and spread top soil over the roughly graded ground, compact as needed, then seed the lawn unless sod is being used. They will also plant and mulch any beds that were in the specifications. Note that typically builders do not do much in terms of landscaping and is typically left for the homeowner to do more extensive plantings. Make sure what is being provided is well defined prior to signing p&s. Also if your home is being finished in the winter months typically there may be a credit or hold back at closing to make sure the lawn and landscaping are completed in the spring.
- Punch listing: Once the home is 95-98% completed its important to do a walk through to punch list anything you see that you feel should be repaired or is not finished to your liking. Typically sticky notes are used to mark areas where paint needs to be touched up as well. Make note of everything that was in question and not to your satisfaction. Some builders want to delay this up until the week of closing but it is preferable to do this 2-3 weeks before closing so it will not delay the closing.
- Certificate of Occupancy: The certificate of occupancy is the most important last piece of the puzzle. Without it you can’t close, can’t get a loan, and cannot live in the home. While the house may appear done and you are like let’s close already the builder may still not have a certificate of occupancy. They may perform their final inspection and have further requests the builder will need to address that can delay the closing. Once again often times this is out of the builders control as they can not always read the mind of the inspectors who job is to interpret a written set of codes to their best abilities. Also often times depending on the town they will also have to obtain a separate smoke detector certification from the fire department once the certificate of occupancy is in hand or before. The builder will manage this process to hopefully keep the closing on schedule as best they can.
- Finally the closing: The day before closing it is crucial to do a final last walk through of the home to make sure everything is to your satisfaction, make sure all punch lists are completed, check to make sure the heat works, faucets run hot and cold water, toilets flush, etc. It’s also a good idea to review the p&s inclusions and make sure everything you paid for is there. If there are concerns they can be addressed with your closing attorney to determine how to handle anything that is not finished or below your expectations. Sometime hold backs are used to ensure the builder for example comes back to finish landscaping or will reseed if the seeding does not take hold. Write down any concerns you have and bring them to the attention of your attorney.
- Settling into your new home: Once you are closed and moved into your new home it is always advisable to understand it is a new home. There may be little things you notice that you didn’t before. Some may be warranty issues the builder will have to address. Bring these things to the attention of your agent and attorney so they can help you address your concerns. Over time you may see a crack here or there in your walls or ceilings. This is normal. It takes a home sometimes up to a few years to settling in while the wood structure continues to dry and age. Also the yard is often not to the level you may expect after a few months of the lawn growing in. No builder will ever guarantee you a perfect lawn. The best thing you can do is hire a lawn maintenance company to fertilize and help your new lawn grow and fill in but it may take a year or two to get to that perfect lawn. Our best advice is to bring anything of concern to your agent or attorney.
Well that is it for now! Hopefully this information helps you get a better feel for what it will take to build a home. Is it a long process? Yes! Do buyers feel it is worth it when working with the right agent, lender, attorney, and builder team? Always! Its when the buyer doesn’t have the right team in place that they find it becomes a nightmare. Find the right team, determine your goals and what you want in a new home, and embark on the path to your new home with confidence!
Schedule your FREE in person or zoom Home Building Consultation by completing the contact form below. You can also call/text me anytime at (978) 400-1617 or email me at trbarber10@msn.com. If you would like to learn more about my 25+ years of experience and you can go to www.TracyBarberRealEstateExpert.com
View Current New home Inventory now CLICK HERE
(Want to here about off market new construction opportunities? Fill out the contact form below and check the box to receive updates on off market and coming soon listings)