Building a new home is very different from a resale purchase, and we help guide our clients through this process. One of the most important things to note is that with new homes the base price can go up quite a bit depending on what features are added to the home. Each builder goes about pricing a different way, with some including more standard features than others. Each builder will also have different amounts of upgrades available in order to customize your new home (some builders will be able to customize more than others).
Since pricing can vary, we usually ask the builder about the standard amount of upgrades for a particular community. If the base price of a new home is $300,000 and the average amount of upgrades is $30,000 then the buyer can reasonably expect to pay around $330,000. It's also possible to get some idea by having the builder price certain items out, to see what the total cost would look like. Many builders have a design center where the buyer can go to choose their selections, and the people working there can price upgrades as well. Examples of selections include flooring, countertops, cabinets, and fixtures (faucets and lighting).
Another important note is that every builder's contract is different, although a few use the standard North Carolina forms. Before signing it’s important to go over the contract, and in particular we like to see what time frames the builder allows for the loan approval and closing. Typically buyers have a week or so to get a pre-qualification letter from a lender, and a month or so to get the loan approved. Also, most builder deposits will be nonrefundable unless the buyers run into loan issues etc.
In preparation for buying a new home it's a good idea to get a pre-qualification letter for the loan. By talking to a loan officer you can get an idea of what your monthly payment will look like, as well as different loan options. If you talk to one loan officer you don't necessarily have to go with that lender, especially if the builder is offering a great deal with their in-house lender. In-house lenders for builders will sometimes offer to pay a portion of the buyer's closing costs associated with the home purchase.
One final thing we recommend to clients is to get a home inspection even though the home is new. There are so many different subcontractors that worked on the home that it is good to have an independent analysis just to make sure everything checks out. The home inspection is typically scheduled a few days prior to the home orientation, which is the builder walkthrough after the home is built.
Example Building Process after the Contract is Signed:
1. Meet with the builder to double check floor plans and selections.
2. Next is a pre-dry wall walkthrough once the framing is up to check placement of outlets and light fixtures (especially if you changed a few of them from the initial floor plan).
3. After the home is complete is a good time to do the home inspection. This occurs right before the ‘home orientation meeting.’
4. The home orientation meeting is at the end of the process to go over your home and proper maintenance for the home's systems. The builder will walk through the home with the buyer and explain everything over a couple hours. This is typically when the buyers will mark cosmetic touch ups with blue tape, and discuss any home inspection repairs that need to be made before closing.
5. The last step is a final walkthrough right before closing (usually the same day) to make sure any minor cosmetic repairs or home inspection items are complete before heading to the attorney’s office.