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5 Tips for Navigating the New Construction Home Buying Process

Have you been watching the housing market, but you haven’t found the perfect home? You have another option. Build the perfect home! This undertaking is exciting, but understanding the new construction home buying process is crucial to having a successful purchase.

If you’re thinking about a move, give Julia Monaghan Real Estate a call. We are here to help you with all of your home buying and selling needs. With education and advocacy, we serve clients throughout the Portland Metro area. Reach out today to get started. 

The New Construction Home Buying Process Is a Unique Journey

If you’ve previously bought a house that existed before you came along, you’re probably familiar with all of the homebuying steps. You watch the market, walk through homes, and make an offer when one grabs you. 

Then, you’ll have an inspection and a bit more negotiating before you close and get the keys to your new house. This process is typically quite straightforward, and once a seller accepts your offer, things move quickly.  

Buying brand new construction is very different. And it’s not the same in each situation. 

The new home construction buying process is a big undertaking.

In general, when talking about new construction, we’re discussing one of three options:

  1. A New Development – In this situation, a developer plans, designs, and builds several homes in one area. These may be small or large developments. Occasionally, it’s just one home. Generally, buyers do not make decisions about the style, decor, or layout of the house. The developer or builder has already done that. For those in the Portland, Oregon area, the annual Street of Dreams is a high-end example of this type of new construction. 
  2. New Home Kits – Some builders offer pre-made plans that they build on your lot. You choose the layout and make some design choices, and they construct it for you. Buyers generally get to make decisions about things like paint colors, finishes, flooring, and lighting.
  3. Custom Build – For buyers who want to make all the decisions about their new construction, a custom-built home is the way to go. Working with an architect and builder, you end up with a house that is exactly the way you want it to be. And it comes as no surprise that this option is generally the most expensive.

Buying New Construction Requires Diligence and Knowledge

Searching for just the right house on the market can be frustrating and overwhelming, especially if inventory is low. Buying brand new construction is often the perfect solution. But it is a unique process, so knowing these five tips will help make the journey smoother.

1. Bring Your Own Real Estate Agent

Do not try to buy new construction without a realtor on your team.

Before you set foot in a model home, have a realtor on your team. The builder will likely have an agent on-site who will be happy to help you. Spoiler alert: they work for the builder.

However, as in any other real estate transaction, you should have a buyer’s agent dedicated exclusively to you. They will focus on making sure you get a good value and that your needs are met. Make sure your representative has experience with the new construction home buying process.

Your agent can walk you through negotiating upgrades and customization. They may also have helped other home buyers work with your builder, which can be a tremendous advantage. 

And along these same lines, find a lender who works with new construction purchases. Again, do not rely on the builder’s recommendation. Do your due diligence to choose a lender who fits your needs.

2. Ask a Lot of Questions

Not all builders have the same policies. Be sure to get answers about the details of your purchase before you agree to the process. You cannot “over-ask” in this situation. Ask anything that pops into your head, and keep all the answers in a notebook.

Here are some crucial questions to go over with the builder:

  • Is there a home warranty? Is it prorated? How do they handle claims? 
  • How long will it take to build the new house? 
  • Is landscaping included? 
  • Is the lot included in the price? 
  • Is there an HOA? You’ll want to know about any rules you’ll need to follow.
  • What items or finishes are standard? 
  • Does the builder provide credit for items you supply yourself?
  • Is there the option to add upgrades into the total cost and loan? 
Be sure to ask a lot of questions before signing a contract.

Another crucial piece to ask about is if they have a cost escalation clause. If this is in your contract, it allows the builder to pass along unexpected costs when building your home. If the price of building materials goes up during the project, your final price will also increase.

3. Talk To References

Not all builders are created equal. Take time to walk through several of their builds, not just the model home.

Talk to previous customers and ask if the company’s work met their expectations. Find out if the builder stayed on budget and if they completed the home on time. And be sure to check their CCB# for complaints or lawsuits.

4. Determine a Realistic Timeline

It’s exciting to have a new house built just for you. But it also takes time to build a home from scratch. Custom builds tend to take longer than “kit” homes from builders such as Renaissance Homes.

If you have a set timeframe that is non-negotiable, make sure your builder can meet this deadline. At the same time, you need to be aware that the builder can only control so much. Supply chain issues and weather delays are all but guaranteed to happen in a new home build. 

Make sure you have a realistic timeline established with your builder.

Your builder should share their projected timeline for your home construction. Depending on your particular situation, the plan is likely to include the following:

  1. Pre-construction –  Before any construction happens, financing and permits need to be in place. 
  2. Preparing the lot and building the home’s foundation – The ground where your home will sit needs to be level and free of any obstructions. This step can take a month or more.
  3. Framing and roofing the house – The bones of your new home can take at least a month to build, depending on weather and the size of the construction crew.
  4. Wiring, plumbing, and HVAC – After finishing the exterior, the builder will focus on utilities. This step can take another month or so.
  5. Finishes – Drywall, flooring, paint, and other finishes will make this house feel like a home. Completing these details generally takes at least two months.
  6. The punch list – When the construction phase is complete, your builder will walk through the house with you and your agent. This home is brand new and should look like it is. Unlike when you purchase an existing home, you can point out minor flaws or concerns at this point. This process also goes by the name of “blue-tape inspection” because each area of concern gets a piece of blue painter’s tape stuck to it. This visual reminder helps everyone know what still needs attention.

Your closing date will depend on how well the building schedule holds. The new construction home buying process requires patience.

5. Have an Independent Inspection

Mistakes happen, even in new construction. Hire a home inspector to go through the house at a few critical times in the process:

  • After framing is complete
  • Before drywall goes in
  • Upon completion

Being thorough and proactive ensures you have a new home that will not cause you headaches as soon as you move in. It’s important to note that there is a fee associated with each inspection. You also need to make sure the builder knows you are scheduling these so that they can accommodate the inspector’s schedule. 

Are You Ready for Your Dream Home?

If you want to explore new construction or other real estate plans, contact Julia Monaghan Real Estate today. We are here to chat with you about all your options in the Portland Metro real estate market. 

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