Last spring, for the first time in almost 3 decades, my folks moved. They left the 1960s split-level I grew up in, and moved into a brand new home surrounded by open spaces and friendly neighbors. I'm glad they're in a safer and happier neighborhood! But buying a new construction home was a bit different than your typical existing home real estate transaction.
I asked my Mom, Debbie, what the process was like when she bought her new construction home.
Q: What made you consider new construction?
A: Trying to find an affordable home in a seller’s market is no easy task. After several frustrating months looking at possibilities and seeing them snapped up in bidding wars, we decided to look at new construction.
Q: What was the first thing you did when you started looking?
A: We found a great real estate agent and it was well worth it. You can find someone reputable using the internet, or getting recommendations from friends. Our agent took us to see three homes in a new subdivision and we put down earnest money on one of them that day.
Q: Did you buy a lot or a home already under construction?
A: It can take a year for a home to be completed on an empty lot. We couldn’t wait that long, so we chose a home already under construction.
Q: What’s the loan application process like for new construction?
A: The application process through closing is about the same. But obviously, buying new means everything has a warrantee. It can take longer to complete the application process for new construction. Buying an existing house means you get what you see.
Q: What kind of paperwork is involved in new construction?
A: We had to provide all taxes, pay stubs, bank statements and other financial information. Be prepared to provide more than you think you need to, even a divorce decree; they’ll probably ask! Patience is a big virtue here.
Q: Was it hard to wait for your home to take shape?
A: I looked at the house every weekend and thought that was excessive, but apparently, some people look at their house every day. The builders and salesperson will keep you informed of progress and will readily answer questions.
Q: Did you get to customize the look of the home or pick fixtures and appliances?
A: We chose some upgrades, like stainless steel appliances. That’s the beauty of buying new; you can make the home yours.
Q: What’s the inspection process like?
A: We had three inspections, all done by the builder’s own inspectors. The first is usually plumbing, ducts, and electrical, before the walls are finished. Our second inspection took place once the inside was almost complete. Be sure to check details: the wood floor is clean with no chipping, the paint is neat with no drips, drawers move smoothly, etc. Make a list! A week before closing, we had our final inspection that included exterior, landscaping and interior supervisors. Even after closing and moving in, if anything was missed during inspection, we had a year to document any issues, and the builder took care of it.
Q: What’s left after the final inspection?
A: Assuming the inspection goes well, you’ll be ready to sign the final paperwork. The agent and loan officer will go over everything you are paying for and everything the builder will cover. Don’t be afraid to ask questions! You’ll sign a lot of documents. Then, just when you feel the paperwork will never end, the stack is gone and you get your keys.
Q: What surprised you most about buying new vs. existing?
A: That a new house was cheaper than the existing ones we looked at! I personally loved buying new.
Q: Was there anything you would have done differently?
A: We didn’t start out pre-qualified, which was a big mistake. It’s very important to do this. Your agent can help you with this process, as you’ll need to qualify with a lender.