11 New Construction Home Buying Tips: How To Buy a New House

Posted by Ryan Fitzgerald on Wednesday, July 1st, 2015 at 3:47pm.

You asked. We listened. We answered...

Last week we wrote an article on how to buy a house for first time home buyers. The feedback we received was incredibly gratifying, overwhelming and unexpected! We received a question from one of our readers, Jerry, regarding how buying an existing home compares to buying a new construction home, asking for both the similarities and differences.

We took Jerry’s question and thought others may be wondering the same thing...

How Do I Buy A New Construction Home?

New Construction Home and Community Raleigh, NC: How to Buy

With that being said, if this article reads with familiarity, that’s because there are similarities between buying an existing home and buying new construction. If you haven’t read the most recent guide to buying a home article yet, stop and read that first. It’s filled with great information from some of the best Realtors®. This article is intended for people who have built their educational foundation with the prior read to help them take it a step farther when buying new construction.

Knowing how to buy a house is going to help you significantly in your new construction home buying process.

Buying a home is one of the largest financial transactions of one’s life and it can be intimidating for anyone. It’s important for buyers to educate themselves to protect their equity. In our market here in Raleigh, new construction homes are popular due in large part to our growth rate of 62 new people per day.

By the end of this article you will learn: 

  • How to buy a new construction home
  • Questions to ask your builder
  • Things to know when buying a new construction home
  • Do I need a Real Estate Agent to buy a new home?
  • How to make an offer on a new construction home
  • New construction home buying process
  • How to identify a good builder for new construction 
  • What to look for in New Construction and New Community future plans 

If you’re buying new construction and want to learn more about the process, this guide will offer 11 tips to start you off. We will also be linking to some incredible content on the web. With so many articles out there it’s important to read what’s going to help and avoid reading what isn’t.  

Buying a new construction home is an entirely different dynamic than buying a home someone has lived in. You will be buying directly from a builder who has built the home with the sole purpose of selling it at a profit. This builder needs to move the new home so he can move on to his next project. In order to understand the best strategies for buying new construction you need to be able to put yourself in the shoes of the builder.

So without further ado, here is a guide to follow when buying new construction! 

Educate Yourself on the New Home Buying Process

You’ll probably notice from our infographic that the first 3 steps are the same in the new construction home buying process. Like so many things, it pays large dividends to begin with an education.

This guide is to help educate consumers on how to buy new construction homes from builders. Not having a strategy, the right team, and the right education could cost you tens of thousands of dollars in the purchase process. 

New-Construction-community-future-plans-what-to-look-for

Understanding neighborhood details and future plans will help you determine which community is right for you. His list is in no specific order as it really matters what your own priorities are.

Equally important as the new community details is the research you do on the developer or builder.

The most important part of buying a new home is the education, and you should start there. Once you educate yourself, it’s time to find money.

Team up with a Lender on a Mortgage

Any time we talk to someone who is going to buy a home, or even considering buying a home the first thing we recommend to them, after education, is to go shopping for money. Literally.

A fraction or two of a percentage point can save you thousands and thousands of dollars per year. 

The most important part of the home buying process is to find the right team to work with and the first teammate you should find should be a mortgage lender. If you’re new to buying a home we recommend you check out 

A lot of our clients ask us ‘What do I need to know about mortgages when buying a home?’ With so many different options out there, what one makes the most sense for me?

There’s a lot that goes into choosing the right mortgage and the right lender, that’s why it’s important to shop for money early on.

With the start of any home purchase, the first thing a buyer needs to do is shop for a lender. Raleigh Realty recommends buyers ask at least 5 lenders for their rates and options.  Even the slightest difference over the course of 30 years could save you upwards of $20,000 total.

You Will Want a Realtor When Buying New Construction

Let's start this section off by making one thing clear:

Builders pay the Agent's commission!

That's right, the builder will pay your Agent to represent you and to negotiate a better deal for you. Why wouldn't you want an Agent to represent you and ensure you receive the best deal possible?

Finding a top local Realtor® who is experienced in negotiating with builders is going to be one of the most important things you do in the home buying process. You must make sure that your Realtor is someone who is going to work well with you. Don’t be afraid of Realtors® who are transparent. You should embrace these Realtors® because they’re going to tell you the truth whether it’s pretty, or ugly.

You’re also going to want a Realtor® who is going to explain everything including the working with real estate agents guide. Every Real Estate Agent is different, and it’s important that the Realtor® you’re working with one who can help you the most in the home buying process.

Once you’ve selected a Realtor®, it’s time to develop a plan. What criteria are you looking for in your next home? Your Real Estate Agent will be able to help you figure out your wants and your must have’s. Now that you have your team together, it’s time to begin researching different builders in your area.

It's important to understand that looking at homes online versus in person is a completely different experience. For new construction, this article rings true because chances are the pictures you're looking at are of a home that hasn't even been built yet!

So if your buying a home that hasn't been built, what's the most important next step?

Research the Builder when Buying New Construction Homes!

Research-Best-Builders-When-Buying-New-Construction-Homes

Raleigh new construction is different than new construction in other parts of the country. The builders here cannot build fast enough to keep up with the consumer demand which poses a new set of challenges when negotiating the best deal with builders. That’s why it’s important for you to ensure you’re working with a top local real estate agent. They will make sure your new home is the best deal possible.

You want to find the very best builders BEFORE you go out shopping for custom homes. Our friends at Foley Homes, a top custom home builder in Northern Virginia, put together a great post on 5 things to look for in a builder.

Researching the best new home builders and new home communities in the area is not the most fun. It's super important though. It's a lot easier than you think too. We recommend our clients start with a google search for 'best new construction builders in Raleigh' or 'top new communities in the Triangle area'. The time and effort your spend researching the best new construction homes will pay off in the end!

Look online for reviews, testimonials and any news you can find on each development you’re interested in. If you can connect with current residents online, through social media, you will have great informational resources to make an educated decision. Plus you want to learn about your potential neighbors as well!

Don’t be afraid to ask the builder a lot of questions (there’s a good chance he is going to have a lot for you as well). One good question to ask is ‘what are the future plans for the new development?’

You and your Realtor® will put a list together of the top new communities, and the top new homes that you want to see. Then it’s time to go hunting. 

Creative Negotiations When Buying New Construction

New-Construction-Home-buying-process-Lowball-Offer-
You want a Realtor® representing you during negotiations for your new construction home. You might think that by cutting out a Realtor® you’ll receive a better price, however builders are highly unlikely to budge on price. This is why you need an expert to work for you during negotiations. Someone who knows the ins and outs of securing you the best deal possible. 

You want the best deal possible right?

Everyone wants the best deal possible and sometimes that doesn’t necessarily mean a lower price. This is especially true for when you’re making an offer on new construction homes. Often times buyers, will assume the best way to negotiate with a builder is to have them drop the price. This is not the case. The best way to negotiate with builders is upgrades!

Builders are reluctant to drop their prices because they need to maintain a certain value for their neighborhood, and future buyers. This doesn’t mean they wont drop the price because they often will, it just means that you will get more from negotiating upgrades. Giving upgrades to consumers is an easy way for them to maintain the value of the neighborhood while giving the customer a deal in a fashion that won’t upset the neighbors (who probably just purchased a home). 

Make Sure Everything is in Writing

New-Construction-Home-Buying-Process-get-it-in-writing

If you’re working with a respectable builder there is a good chance they will honor what they say, however they may truly forget the promises they made to you. 

‘Words spoken fly through the air, words written are forever there’ - This is something my Grandma taught me from a young age, and it’s a pretty catchy phrase that has a high importance message! Anything that is verbal is not a guarantee, that’s why you must have everything in writing or it’s in no way shape or form binding.

Working with a builder without a Realtor® could cost you thousands of dollars because they know how to negotiate.

An experienced Realtor will ensure that everything is in writing and will make sure the documents are signed. 

You're Buying a New House, not the Model Home

Typically the model home that builders have their prospects walk through are full of all the upgrades and amenities so it’s important to understand what your model comes with and what your model doesn’t. You can sometimes offer to buy the model home if that’s the one you’d like to purchase.  

When you see a car on display it’s always the upgraded version, new construction homes are the same.

Model-Homes-Versus-New-Construction-Houses-Building-Raleigh


As the tip before this one said, and it’s something we can’t stress enough - Make sure it’s in writing! Our suggestion is to write everything down that you like about the model home, even the colors so that the builder is fully aware of what your interests are. A home that hasn’t been built yet can be customizable to a certain degree, however the builder is going to have limitations on what he or she can and can’t do. Ultimately, the cost will change as you begin to add things you want so be wary of price as you start asking the builder for features in your new home.

New Construction Home Guarantee

When you buy new construction real estate, you’re sometimes buying something that doesn’t exist yet. As mentioned above, and it deserves repeating, make sure everything is in writing and that your builder will give you a guarantee. Having a strong Realtor is important to make sure you’re covering all of your bases - you wouldn’t go to court without a lawyer, and buying new construction is no different.

An example of one thing you’ll want to have guaranteed by the builder is a completion date, especially since you may have to make living arrangement until the new home is built. A home warranty is another important question to ask which we will cover later on in this article.

Do I need a home inspection on new construction home?

Yes. People make mistakes and it’s possible a mistake was made in building your new construction home. Inspectors can find many things the builder may have forgotten to do, or even potential problems that could be caused down the road. A home inspection is someone who is coming in to review the work done on your home, you’ll want to make sure they give you feedback.You did just make a large financial purchase after all. 

What's Covered In A New Construction Home Warranty?

So you’re almost ready to pull the trigger on a new home and you’re wondering what’s covered in the warranty. Typically builders will have a home warranty they can give you however it’s not uncommon for a builder to have a third party involved in a home warranty.

Coverage for new construction real estate varies from builder to builder. You’ll want to ensure you have a proper understanding of what is covered by the builder or other companies that were involved in the creation of your new home. Sometimes you can negotiate the warranty in to the deal or add provisions to cover things the warranty may not normally cover.

A final walk-through is necessary before you complete the purchase, so make sure it's something you plan for, prior to closing on your new home. 

The Future of Your Neighborhood Is Important

One important step that a lot of people may forget is that you’re going to move into this home to live there. What does the future of the new community look like, how about the future of the city? Are there certain priorities you have in a neighborhood you’re going to live in amenities wise? There are a lot of neighborhood details you should consider when buying a home.

Final Thoughts:

New-Construction-Home-Close-The-Deal-On-New-House

Buying a home is a complicated process, and buying new construction is both similar and different to existing homes. Some of the similarities regard the purchase process, while the differences can be found largely in negotiations, research on the builder, and looking towards the future for the new community neighborhood plans.

New construction homes in Raleigh, NC are plentiful as they are in our neighboring cities like Durham, Cary, Chapel Hill and even smaller towns like Apex or Holly Springs. The reason for the large number of new communities being built is the large number of people moving here. Each day 62 new people join our community and right now rent is sky rocketing. The reason for the growth here in the Triangle is largely due to Raleigh being ranked the number one city for jobs. With a $110 million dollar investment in a new campus MetLife, moved their technology headquarters to Cary creating even more jobs.

If you’re thinking of buying a new home make sure you cover all of your bases so you have a successful real estate transaction!


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Ryan Fitzgerald Raleigh RealtyHi there! I'm Ryan Fitzgerald, a REALTOR in Raleigh-Durham, NC and the owner of Raleigh Realty. Chances are you and I share a similar passion, Real Estate! I also have a passion for technology, sports, and people. Would love to hear from you. Drop me a note in the comments section below and feel free to share this article socially!

 

23 Responses to "11 New Construction Home Buying Tips: How To Buy a New House"

Correy Smith wrote: The tip that mentioned about having a realtor to buy a new home construction is one that sounds interesting. Well, it's something that my wife and I are deciding on doing since she did find a home that she liked. If we are to buy the new home construction, would we also need to do some type of inspection on it as well?

Posted on Tuesday, October 6th, 2015 at 4:29pm.

Dee Francis wrote: Your tip to make sure that all of the details of a new home transaction is in writing is really important for buyers to be aware of. I would want to make sure that everything that I think I'm getting in a home is in the paperwork. Since those details are important to go over, I'll be sure to do that in case there's anything that I need to add to a contract now that I'm buying a new house.

Posted on Friday, February 5th, 2016 at 3:41pm.

Perumahan baru di pondok cabe wrote: Wow, very helpful article. thank you

Posted on Thursday, February 18th, 2016 at 2:04am.

Johan Michal wrote: Some home owners purchase additional coverage on their own from third-party warranty companies to supplement the coverage their builder provides. These add-on service contracts are commonly called warranties.

Posted on Friday, February 19th, 2016 at 2:32am.

Jason Strong wrote: That amazing and scary time in life has come for my wife and I to finally buy a home. Since we are new to this process, we honestly have no idea what we are doing and how to go about buying a new home the correct way. We already have a budget and the money aspect figured out, at this point we just need to educate ourselves on what kind of home we want and can afford, and then find a good contractor to help us begin planning this all out.

Posted on Thursday, February 25th, 2016 at 2:34pm.

Rockford Johnson wrote: Great post! My family and I are looking to buy a new house so reading this has helped a lot. I really like how you stated that "With the start of any home purchase the first thing a buyer needs to do is shop for a lender." We have never bought a house before, so knowing that hiring a lender will help us to buy the best house out there is really helpful.

Posted on Thursday, March 3rd, 2016 at 6:36pm.

Andre Beluchi wrote: Making sure that is everything is in writing and researching the builder are some smart tips to know about. It would be something for me to write down and use for next week. My plan for next week is to find a home that my wife pointed out that was on sale.

Posted on Tuesday, March 8th, 2016 at 5:29pm.

Patricia Andrson wrote: Wow I can't believe that only a fraction of a percentage point can save you thousands of dollars per year. That must be how they get you. They offer something at a small percentage rate but then over time the money adds up! I'm glad I'm learning this now before we hire new home builders and a lender. Now I'll be more prepared to compare rates, thanks for the heads up.

Posted on Monday, April 11th, 2016 at 9:48am.

Marie Watson wrote: Ryan, thanks for explaining some of the details involved with buying a new construction home. You make a good point about how important it is to work with a realtor even if you are buying a new home. I would think that it is important to make sure you are informed during the building process so you have a good idea of how your home is being constructed.

Posted on Tuesday, May 3rd, 2016 at 12:10am.

John Carston wrote: This advice will be very helpful to me as I close on a new home. I think it's great advice to have a home warranty to have everything covered. I like the advice to make sure the neighborhood has a bright future as well. Thanks for the important new home info.

Posted on Friday, May 6th, 2016 at 10:24am.

Jessie Harrison wrote: We are looking for a new home, but like you said the neighborhood is important. I have two little kids, so I want a place that they feel safe in. Thanks for sharing those neighborhood details, maybe they will help me narrow myself down to a few houses.

Posted on Friday, May 13th, 2016 at 6:00pm.

Evelyn wrote: Hie,
Very well explained. 3 main OPTIONS to be considered and discussed before you make the BIGGEST decision of Life that is buying your HOME.
1. Location & Livability
2. Project or Product you are buying
3. Price Factor

Posted on Wednesday, June 1st, 2016 at 1:57am.

Luke Yancey wrote: Your roadmap is extremely useful to someone who is hiring a construction company to build for the first time.The most important step of it is to educate yourself. My family built our house when I was still in high school and the big mistake they made was not educating themselves before they began the process. They were looking for something much larger and elaborate than what was in their price range. Because of this, the process took a lot longer than expected. I would recommend asking around and getting different price quotes from different contractors before building.

Posted on Wednesday, July 6th, 2016 at 9:48am.

Forestwood Residences Condo wrote: If you are purchase a house without taking a home loan, then you should ensure that your financial balance has enough cash to provide food for the whole home purchasing process. Having cash in your record likewise expands your odds of securing a home loan from your bank.

Posted on Thursday, September 8th, 2016 at 1:29am.

Mark David wrote: These points are really important while going to buy new home. Sometime broker or agent are fraud.

Posted on Sunday, September 11th, 2016 at 9:59am.

Jack Mulligan wrote: I feel like having an agent help you to get the best deal and find the right place for you is very valuable. You're investing in a home that you might live in for the rest of your life. It's nice that the builder will pay the agent's commission, but the work the agent does for you would be worth every penny even if you were paying.

Posted on Thursday, September 22nd, 2016 at 3:59pm.

Kenneth Gladman wrote: I like that you mentioned getting everything in writing. That infograph has a lot of important steps that you should take. I would also look into getting an experienced agent to work with you. They can help with negotiations.

Posted on Wednesday, January 4th, 2017 at 4:19pm.

Douglas Zermeno wrote: Thank you very much and its beautiful page,we liked it.

Posted on Wednesday, April 12th, 2017 at 7:00am.

Leviticus Bennett wrote: I like your tip to research the builder when buying. It's also a good idea to research the neighborhood you're looking at. If you have a children, you'll want to consider the school district too.

Posted on Tuesday, May 16th, 2017 at 3:59pm.

Alice Jones wrote: My husband and I want to move into a new home, before I have my baby. We decided that we needed to look on your blog post so that we're prepared to find a new home to live in. Your tip about researching the building before buying the newly constructed home is important to consider. We'll follow your advice and find the very best builders, before we buy a new home.

Posted on Tuesday, June 6th, 2017 at 4:54pm.

gloria durst wrote: I appreciate your tip on finding what kind of warranty a home builder will provide. It would seem smart to find someone who offers a good warranty because this would show they are professionals. I'm looking for a custom home builder, so I'll have to follow your advice and find one with a good warranty.

Posted on Wednesday, June 7th, 2017 at 2:38pm.

Ryan Byrd wrote: Love the infographic. The information is easy to digest and in the correct order. There are several home builders out there and each option comes with their own pros and cons. When it comes to choosing a home builder, I recommend choosing America's #1 home builder, D.R. Horton. With years on top of the home building scene, they must be doing something right!

Posted on Wednesday, June 7th, 2017 at 10:41pm.

Amanda Drew wrote: It sounds like a good idea to do one final walk through before you buy the property. My husband and I want to buy a new home for ourselves and our new baby daughter. We will have to do what you say when we look at properties.

Posted on Friday, June 30th, 2017 at 4:33pm.

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