New doesn’t equal perfect! Buying new construction has benefits like smarter technology, energy-efficiency, modern design, and maybe best of all — moving into a pristine, clean home! While it is easy to get wrapped up in the excitement of selections and color schemes, it is extremely important to stay focused on your budget and timeline. Hidden costs could be an unpleasant surprise at the end, putting a damper on your overall experience and bank account. Learn more about common mistakes other buyers have made and how you can avoid them.
5 Costly New Construction Mistakes
1. The Construction Timeline Impacts Buying Power
One of the biggest–if not the biggest–mistake homeowners looking to build their own homes make is a loss of buying power as a result of long new construction timelines. Before starting the new construction process, it’s important to make sure you understand how a long timeline can impact whether you can afford your new home in 12-18 months. Delays in construction projects can occur for a variety of reasons, including availability of resources, change in project scope, and more.
2. Not Having Your Own Representation
It might seem like a sensible solution using the on-site agent, but it actually be the biggest financial mistake you make during your build. Why? Because the on-site agent represents the builder, not you. Your investment is best served by having your own advocate to help with research, negotiations, contract protections, deposits, and mitigate any situations that may arise.
3. Not Having Your Own Inspection
Having your own independent inspector can provide reassurance your home is truly free of any defects and safely constructed. It is advised to have your new build inspected prior to sheetrock installment and once again prior to closing. A good builder uses quality subcontractors and avoids cutting corners to deliver a well-built home to their customers.
“A good framing crew can produce a work of art.”— John Battaglia, Owner & Code-Certified Master Inspector of At-Ease Inspections
With hundreds of home inspections across the metro area, John’s insight on common defects and code violations further validates the need for an inspection prior to closing, saving many new owners from blind defects.
4. Not Comparing Lenders
It may seem like an added benefit to use the builder’s preferred lender because of the potential incentives offered, but what price are you paying to receive those incentives? Have you compared discount points, fees, and interest rate? Whether new construction or a resale, shopping your options will save money by finding the best interest rate and mortgage fees in your area. Most lenders are competitive and want to earn your business. A lower interest rate could be a wiser long-term investment as opposed to opting for upfront incentives offered by the builder’s preferred lender.
5. Not Understanding Builder Pricing & Warranty
Pricing varies between the builder’s standard base model and upgrades. More than likely, the model home you visited was upgraded with all the bells and whistles. Be sure you have a clear vision of the standard base model and pricing. Every upgrade comes at a price and should be in writing if you are making any adjustments to the original agreement. When you sign the original agreement, the builder’s warranty should be included in the terms and conditions. Different timeframes typically apply to systems and structure coverage. Read thoroughly and make sure you have a clear understanding before committing to the agreement.
Bonus Tip: Get Everything in Writing
Have a clean paper trail of all documents that are related to the build of your new home. These include:
- Original Agreement with Pricing
- Choices/Selections with Pricing
- Upgrades with Pricing
- All Deposits
- Changes in Timeline
- Builder’s Warranty
Don’t be caught off-guard with unexpected costs or defects. Knowing how to shop for new construction will only enhance your experience, Be sure to secure your team of experts to help you navigate through this exciting time of building a brand new home. If you’re ready to take the next steps in choosing your team, we’re here to help!
Updated October 2023.