Housing inventory is tight these days, and more buyers are starting to consider new construction as their best option. Building can be a tedious process, however, and it's important to educate yourself early on the ins and outs of building a new home.
Have you missed out on other resale homes and are tired of the constant multiple offers and competition? Are you interested in having a 100% move-in-ready home, with absolutely no project list after you move in? Do you want to have the flexibility of choosing all of your finishes to your liking? If so, building a new home could be a fantastic option for you!
We've gone through our fair share of building with our customers, and we want to break down 5 tips you should consider if you are thinking of building your next home.
1. Prepared homesite vs raw land. What are the pros and cons of both?
It's important to determine whether you will be building your new home in an existing community, with a builder who has already developed the land, or will you be building on piece of raw land that you purchase yourself? When you build on a prepared homesite in a development, often your utilities, access road, and land disruption fees are included in the purchase price and lot fee of your homesite. However, when you build on raw land, you will need to handle these items on your own. Utility tap in fees, land clearing fees, and the cost of running utility service to the property could end up in the 10's of thousands of dollars, so be sure to look at this early.
2. Use a team of professionals - realtor, designer, and builder.
Unless you build homes for a living, we recommend having a team of professionals in place to assist with all of the details. Your realtor is a valuable asset during this process who can help you identify and interview potential builders, lend perspective in choosing upgrades and finishes, and handling any problem areas as they arise.
It's also important to choose a builder with a solid reputation, and happy past customers you can talk with to determine their level of satisfaction, not only with the finished product, but about customer service and communication.
Lastly, it may seem frivolous, but hiring an interior designer to assist during the building process can be a smart move. You may know the overall look and feel of the home you want, but a designer can step in and make sure that your dream is executed through the hundreds of design decisions involved in the building process.
3. Delivery times can vary - so prepare in advance!
In a typical real estate transaction on a pre-existing homes, it takes roughly 45 days from contract to close. All in all, it's a fairly short process. With new construction, however, these "delivery" times can be much more lengthy. Many builders deliver their homes in 5 or 6 months. However, if you are building a custom home on raw land, we need to factor in additional time for your water and soil testing, land clearing, etc. Delivery time on these types of homes can easily be 12-18 months.
4. Analyze cost in advance, and allow room for upgrades!
It's very important to understand in advance the amount of home a lender will approve you for. New construction loans are different than typical home mortgages, so be sure to meet with a reputable new construction lender before starting to look at property. In addition, once you start meeting with builders and taking a look at floorplans, be sure to analyze the cost of all of the upgrades you would like in advance. Even though the sign in the community states that the homes start at $450,000, the finished product will likely be much more expensive. Sit down with your realtor and the builder's representative, to get an idea of the floor plan you like with all of the upgrades that you would like to have, so that you can analyze everything and remove unnecessary items.
5. Don't forget about resale value - don't OVER spend.
Most Americans only stay in their homes 7-9 years on average, so there is a chance the home you are building is not going to be your forever home. Be aware of what properties are selling for in your neighborhood when you are selecting upgrades for your home. It is easy to get caught up in the excitement of upgrading and customizing your new home, but if you DO have to sell in a few years, you want to be able to recoup what you've spent.
These are just a few tips to help you with the home building process. Of course, building a home is a complicated process, so if you have additional questions, please feel free to leave them in the comments down below!