When purchasing a home, you have several options: existing homes, townhouses, condominiums, and new construction homes. While existing homes often come with upgrades and remodeling, new construction homes offer a fresh start with no previous owners. Understanding the new construction buying process can help you make an informed decision. Still have questions? Contact Berkshire Hathaway HomeServices at (310) 373-0021 for help.
What is a New Construction Home?
New construction homes can be initiated by either homeowners or developers. Homeowners looking for a custom-built home work with contractors to create a house tailored to their specifications on a purchased lot. While this approach offers complete customization, it generally costs more than buying a new build from a developer.
When buying from a developer, you can choose between tract homes and spec homes:
Tract Homes
Tract homes are part of new neighborhoods developed on land acquired by builders. These homes often have similar designs but may offer customizable floor plans and design options to suit the buyer’s preferences.
Spec Homes
Spec homes are move-in-ready new builds with little to no customization options. These homes are ideal if you need to move quickly and prefer a brand-new home without the wait.
Components of New Construction Homes
Building a new construction home involves four main components: land, labor, materials, and regulation. Builders combine these costs to set a selling price, taking into account local real estate market trends. Market conditions can influence these costs and impact builders’ decisions to continue construction. Staying informed about the housing market can help you understand the availability and pricing of new construction homes.
Pros of a New Construction Home
- New materials, appliances, and fixtures
- Customization without remodeling
- Less maintenance than older homes
Cons of a New Construction Home
- High costs for custom homes
- Move-in dates dependent on builder’s timeline
- Market conditions can affect prices and production
Financial Preparation for Buying a New Construction Home
The financial steps for buying a new construction home are similar to those for purchasing an existing home. Start by getting pre-approved for a mortgage and formulating a saving strategy for your down payment.
Negotiation and Offers
Negotiating the purchase price of a new construction home is often more straightforward than with existing homes. Work closely with your agent to understand the best offer strategy. Discuss with your agent whether a home warranty is included and its cost structure.
Home Inspection
Even though new construction homes are brand new, it’s wise to have a home inspection. This can uncover any necessary repairs and start a dialogue with the builder to address these issues before you move in.
Determining Affordability
Knowing what you can afford is crucial when buying a new construction home. Use tools like a Home Monthly Payment Calculator to estimate your monthly payments based on different down payment amounts and mortgage terms. This will help you and your agent identify the best properties within your budget.
Working with Berkshire Hathaway HomeServices
Navigating the new construction home buying process can be complex, but with the right guidance, it can be a rewarding experience. At Berkshire Hathaway HomeServices, we are committed to helping you find the perfect new construction home that meets your needs and budget. Contact us today at (310) 373-0021 to start your journey towards owning a brand-new home.