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If you've spent some time checking out the real estate market but can't find a previously-owned home that reflects your needs and personal style, you might be better off purchasing a newly built home.
Buying new construction isn't as simple as looking at a floor plan or model home and signing off on it; there are a lot of details that the builder and lender need to cover, and you could endure some delays.
Here's a look at how you can purchase a newly built home that will suit your needs.
What Types of Newly Built Homes Can You Buy?
Your role in the construction and design of a newly built home can range from purchasing an open spot of land and helping to manage the entire project to buying a townhome, condo or home in a neighborhood planned and constructed by a builder with limited options.
There are three major categories of newly built homes, including:
- Custom. If you can afford the time and money to custom build your home, it will allow you to have a say in just about every aspect of the planning and construction. You could start by buying the empty lot and hiring a builder and architect. Then, you would consult with the builder and contractors on the size of the structure—as long as local officials approve it—as well as the exterior and interior details.
- Semi-custom. With a semi-custom home, you're likely buying into a higher-end neighborhood owned by a developer and will have some leeway on what the home will look like. Your choices will be more limited than a complete custom build, but you would have more say than if you were buying a production home.
- Spec or production. If you'd like a newly built home but don't want to take the time and/or don't have the finances to buy and help design a custom or semi-custom dwelling, one that's almost pre-built might be best. You can likely choose among a few colors of paint, types of add-ons and design models.
6 Steps for Purchasing New Construction
Buying a newly built home is similar to the process of purchasing a previously-owned property, but there are important differences. Here are the six most significant steps when purchasing new construction:
1. Get Pre-approved
A common step for prospective home buyers is to secure preapproval from at least one lender. Mortgage preapproval represents what a lender is willing to offer you based on financial circumstances and specific terms, including your credit, employment, income, assets and/or tax returns.
After you receive your preapproval letter, you are not limited to that one lending option. You are still able to obtain a loan from a different lender if you find a more favorable option.
Although builders may offer their own lender to finance your home, but it's always a good idea to shop around.
2. Hire a Real Estate Agent
If you're not sure if you want a new construction home and are still considering previously-owned homes, or if you just prefer to have a representative looking out for your interests, hire a Realtor. You'll want to double-check that the builder will pay the fee for the buyer's agent; they most likely will.
A real estate agent is most valuable when you're looking to buy production or semi-custom homes, where you'll be negotiating with a sales representative from a builder. You might want to skip this step if you're working on a custom home, although an agent with new build construction experience could assist with negotiations on financial details, timelines and other contractual issues.
3. Know Your Timeline
The more custom your home is, the less likely of a reliable timeline of completion. That creates a ripple effect if you're trying to sell your current home and need to figure out where to live between that sale and the new home completion. You'll need to work with the builder, your Realtor and lender to determine how to manage the situation because you can't close on the home loan until you are able to move in.
4. Research Builders and Neighborhoods
Builders can range from locally-owned operations to major national corporations, and there are plenty of ways to find out about their track record, including online reviews and Better Business Bureau ratings. What's more, it's a good idea to drive around the neighborhoods that most interest you, look at the amenities, talk to current homeowners and review the homeowner's association rules and costs.
5. Negotiate and Review Your Options
Before you settle on a final sale price, you'll need to review your options. For custom and semi-custom homes, you're going to have waves of interior and exterior items to consider, from the type of roof and siding to the size and design of the kitchen. The choices for production homes are much more limited but will still affect the final price.
6. Schedule Inspections
The builder will conduct inspections throughout the building process, but you'll want your own independent inspector to be sure everything is built as promised, safe and in good working order. Also, be sure to review your new home warranties so you know what it covers and for how long.
Pros of Buying New Construction
- You can get your dream home: Whether you're heavily involved in a custom build or love a new home built in a tract development in an attractive area, you're more likely to get exactly what you want in a new home. In a previously-owned home, you might need to embark on a major renovation to get a home just the way you want it.
- Includes the newest technology: A newly built home is more likely to be fully wired for smart technology and include all of the most up-to-date energy efficiency features than an older home.
- Lower maintenance and fewer surprises: Right after you move into a previously-owned home, you're hoping the appliances won't fail and the roof won't need replacing for a few years. You shouldn't have to worry about these issues for a while in a newly built home, and a warranty should cover any unexpected problems.
Cons of Buying New Construction
- It can be expensive: You might not like the idea of paying more for a new home than a similarly-sized older home, but you'll need to decide if the tradeoff of new vs. previously-owned works for you. When you add features—such as upgrades in flooring, carpet and counters—the cost can climb, and there isn't much room for negotiation.
- Your home might not go up in value: This is the case with any home you buy. But your ability to provide a meaningful upgrade that will affect the home value to a new home is limited in the first several years, while you could provide immediate valuable upgrades to a lower-priced older home that boosts the sale price. You'll need to hope the market prices in your neighborhood and community stay strong.
- Your budget might get blown out: This is most likely with custom-built homes, especially if the cost for raw materials, labor and other home building products rises beyond your expected cost and/or you encounter issues with zoning, inspections or weather.
Buying a new home is an opportunity to get a fresh start in what could be your dream home. The key is preparing for the unexpected twists and turns that make this different than buying a previously-owned home.
Posted by: maurovirage0209545.blogspot.com
Source: https://www.forbes.com/advisor/mortgages/new-construction-home/
