FINDING YOUR PERFECT HOME
Buying a New Construction Home
An option some home buyers consider is buying a newly constructed home instead of one that's being re-sold
Brand new homes have some benefits such as typically being more energy efficient than older homes and the maintenance costs are less because everything is still new and under warranty.
3 Types of New Construction Homes
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Spec Home
A single home that was constructed without a buyer. It's developed by a real estate investor and then put up for sale.
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Custom Home
A single home that was newly constructed for a specific buyer. The buyer chooses the home builder and buys the land. The builder builds the home on the land.
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Tract Home
A single home in an entire neighborhood of newly constructed homes. The tract home builder builds groups of homes in phases and pre-sells them.
For purposes of this article, we'll be talking specifically about tract neighborhoods.
The home builder will build a few model homes and hold them as continuous open houses during typical business hours. Tour them whenever you want and spend as much time inside each one as you like.
Built in phases
The builder will build groups of homes in phases. As each newer phase is offered, the prices of the homes typically go up. This means that the same home model offered in an earlier phase will have a higher price in a later phase for the same home. There could also be additional costs if you choose a premium lot such as a large corner lot or one with a view. A few builders include upgrades in their base price but most charge extra.
The fun is at the Design Center
No matter what phase you purchase, one thing buyers love most about new construction is personalizing the home to meet their tastes. This includes choosing colors, countertops, flooring, and other design and construction options. Another fun favorite is seeing the house being built from the ground up.
Do you know this?
One thing a lot of home buyers don't realize is that they're allowed to have their own buyer's agent for new construction. You get a second set of eyes and it's free for you because your agent's fee is paid by the builder.
If you choose to have your agent represent you on new construction, be sure your agent accompanies you on your first visit to the model homes. They'll need to register you and your agent together.
The builder's preferred lender
It's likely that the builder will have a preferred lender and provide some financial incentives for you to go that route. Keep in mind that many other mortgage brokers, banks or credit unions may be able to provide the same or similar terms, even without the builder incentive, which is why we recommend talking with a few before making a decision.
Where to find new construction?
Not every area will have new construction homes available for sale. Since most tract home builders list their properties with the Multiple Listing Service, the homes are distributed to home search sites like Zillow, OCAreaHomeFinder.com and others.
One disadvantage:
Higher property taxes. The higher taxes come from additional costs for the county to install new roads, sidewalks, signs, street lights, power lines and sewer pipes into a new neighborhood. By charging that neighborhood's homeowners, the county pays for it at the expense of the new homeowners only, not the entire county. (The good news? The additional tax eventually goes away.) The builder or your agent can provide you with the tax rate. Be sure your home loan quotes use the correct tax rate and it's included in your monthly payment.
We hope this information helps you buy the home you've been dreaming about
You may enjoy some of our other home buying special reports
Here's some great news
If you enjoyed this article, then you'd really enjoy The Home Buyer's Kit. Whether you're buying your first home or your 101st, the home buying process can be tricky.
One wrong move in the home buying process and you lose the perfect home to another buyer, pay too much, or get stuck with a house that's falling apart.
The Home Buyer's Kit helps you navigate the buying process. It shows you what steps to take, where to turn, and which pitfalls to avoid. For FREE and with no obligation.
What to do next
If this sounds interesting to you, we've posted a short description of The Home Buyer's Kit here: TheBuyersKit.com. Check it out and let us know.
Karin Aguilar & Brian Smith
Karin and Brian have more than 38 years of combined experience in real estate and mortgages. They founded Showcase Agency, Inc, a real estate and home loan company, in 2017. They live in Irvine with their two daughters.
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