The process of getting a newly constructed home is totally different from that of buying an existing home in an established neighborhood. There are a couple of important factors that need to be considered, as there are various things that make the process different. For example, the financing options for an existing home is different from that of newly constructed homes. So, to guide you through this process, we have put together some points to consider.
- 1 Getting Started
- 1.1 Carefully consider the decision to go with new construction, instead of an existing home
- 1.2 Look for a real estate agent with construction experience
- 1.3 Meet with a loan specialist about construction loans
- 1.4 Carefully choose your builder
- 1.5 Decide on a location
- 1.6 Negotiate terms, features, and price
- 1.7 Have everything in writing
- 1.8 Schedule home inspection
Carefully consider the decision to go with new construction, instead of an existing home
Before you buy any newly constructed home, you should be absolutely certain that this is what you want. The building process can be overwhelming, you would have multiple meeting with your contractor all through the process and make decisions on so many things. So, before you settle on this option, be absolutely certain that it is a commitment you can take on.
Look for a real estate agent with construction experience
If you are going for a newly constructed home, the real estate agent you should hire should have experience with constructions.
Meet with a loan specialist about construction loans
The first thing to note about construction loans is that they are usually short-term. The rates on these types of loans are also typically higher than the interest rate on a mortgage for an existing home. However, like existing home mortgage applications, the homebuyer would have to provide the relevant documentation.
Some of the documents that would be required by a lender include – a realistic budget, construction timetable, offer documents/add one addendum, and building plans. If the loan is approved, a schedule that follows the construction timetable will be drawn. On the completion of the construction, and after the certificate of occupancy is issued, construction loans are rolled into a traditional monthly mortgage.
Carefully choose your builder
Before choosing a home builder, you would need to research local construction firms. Thanks to the Internet, reviewing local companies has been made pretty easy. Be sure to get reviews from homeowners who have used a particular construction firm. Most construction firm websites would feature customer reviews.
Decide on a location
Some homeowners prefer to buy a standalone piece of land and have their property built on it. However, the better option is to buy a lot in new construction development. Please note, these developments are typically built by the same construction firm/developer -they can be anywhere between a few dozen to a couple of hundred lots. Please note, you would often be required to use the same construction firm/developer that handles the rest of the lots. You might also be required to use a particular style on the outside – however, you should still be able to have custom specifications on the inside.
Negotiate terms, features, and price
To get the best deal possible, you and your resistor need to get creative with negotiations. During negotiations with the builder is a great time to get unique specifications included or upgrades added, it should, however, be expected that these inclusions will come at a price. Some builders will have fixed prices for this type of upgrades but in most instances, price is negotiable.
Have everything in writing
There are a lot of moving parts involved in new home construction, therefore, it is imperative that all agreed upon upgrades, designs, price points and the estimated time of completion, be written down and signed by all parties. This is to ensure that only what is agreed upon is featured at the end of the construction. All the details regarding the construction need to be agreed upon by all parties and made legally binding before any work even begins.
Schedule home inspection
Even though it is new construction, scheduling a home inspection is still essential. There are some common construction mistakes that happen, sometimes they may not be a major issue – however, having a home inspection done after construction has been completed will ensure that you are not left to fix mistakes made by the construction firm that could potentially set you back hundreds or thousands of dollars.
Some other things that would have to be considered include – cost, construction timeline, the flexibility of the title, company and lender, customization options, and developers and builders in your area. To be sure, constructing a home can be draining in all aspects. However, more often than not, it is a rewarding endeavor as you will end up with a home you are a hundred percent satisfied with.