How To Find A New Construction (A New Build) Home For Sale?
Are you looking for a new construction home to purchase? If so, this article will explore a number of aspects relating to finding a new construction home for sale, including what you need to understand about these homes, finding a lender, and much more.
Understanding New Construction Homes
First off, you should know that there is a different dynamic involved than buying a home that has a previous owner like most conventional home sales. New homes are purchased directly from the builder responsible for the project. The builder constructs homes to appeal to buyers that are looking for a newly-constructed building that’s built with modern designs and adherence to current building codes. Builders can create one-off homes in an area or may build homes as part of a planned community, which changes
That being said, new construction homes are on the rise, with many builders not able to meet the current demand for these homes. It can be actually more difficult to find new homes and negotiate prices as you would with pre-existing homes.
Because the builder is in the business of turning a profit, new homes are typically sold to buyers through a model home before the actual home is even constructed. This can be a bit off-putting for many buyers, as there’s more reassurance to see a home that’s built rather than just looking at plans.
Another topic to understand about new construction homes is that because some won’t be built yet, it’s hard to conceptualize how the neighborhood will look when more buyers move into the area. Traffic, for instance, may become a problem for areas that accommodate commuters. There’s also the issue of an HOA (homeowners association) being created to preserve the quality of the neighborhood.
That’s why it is important to do your research and thoroughly understand every aspect of the home before deciding on purchasing a new construction home.
Finding a Lender for a New Construction Home Mortgage
The process for finding a new construction through a lender is basically identical to securing a regular mortgage through a lender. To secure a mortgage, you’ll have to present your credit history, a down payment, proof of employment, and other financial information. Depending on the down payment amount, you may be responsible for private mortgage insurance (PMI) until a certain percentage of the home is paid off.
Another thing to keep in mind is to get a preapproval letter from a lender stating that you have been approved for a loan ahead of time. This can be absolutely crucial when trying to beat out the competition for affordable new construction homes.
One tip that isn’t commonly discussed is working with a builder that uses the same bank or credit union to fund construction. Because banks/lenders are in the business of recouping their investments in the shortest time frame possible, you may be able to get approved for a mortgage quicker than by using unrelated lenders.
Finding New Construction Homes and Communities
Finding new construction homes is relatively easy. Begin by looking for listings on a search engine, typing in “best new construction builders in + [your location]”. This search will typically yield the top-results for companies, ads for new communities, and reviews for prominent builders.
Reviews are especially important, as you will want to see the long-term outcome of how builders create homes. Look through the 1-star negative reviews and see if there’s any truth beyond sour grapes. If you notice a recurring trend, such as electrical problems or substandard insulation, you may want to choose another company that is more thorough.
Don’t be afraid to contact builders directly to learn about their current and upcoming projects. You may be able to join a waiting list early to beat out the demand and get into a new home as fast as possible. Another good question to ask builders is “‘What are the future plans for the new development?” There may be some off-putting developments, such as knocking down adjacent woods that takes away from the appeal of the area.
Negotiating the Price of New Construction Homes
Because new construction homes don’t have wear-and-tear that other homes have, buyers aren’t in the best position to negotiate a price. Unless the location of the home is in an undesirable area relative to other new construction properties, buyers won’t have that much leverage for a price reduction.
However, there is one angle where buyers can get more value with a new construction home. This can be accomplished by asking for upgrades to the property, especially if it hasn’t been built yet. Providing upgrades to buyers is an easy way for builders to maintain the value of the neighborhood while giving the customer a deal in a fashion that won’t disturb neighbors (who most likely also just purchased a home).
Get Everything in Writing
As with any significant financial purchase, make sure everything is writing when dealing with new construction homes. This includes a guaranteed move-in date - very important for those that are transitioning from another living situation and don’t want to be forced to find temporary housing in the meantime. Most respectable builders build a reputation for honoring what they say, but having it in writing ensures that upgrades, move-in dates, home warranties, and delays are accounted for.
For example, if there’s an issue with the home construction process, you may be entitled to a discount or the ability to withdraw funding completely to purchase another property. Having this recourse makes the process easier and gives buyers peace of mind.