Buying a brand new construction - what to look out for?

[Safire]

Hi,

We are in the process of buying a brand new build. The home will be finished in Jan with a closing date also in January. The seller / builder also offers financing through their lending subsidiary and is offering an interest rate at a whole 1% less than market rate but then so is another builder we checked out. Should we assume that we really will get this rate aka "trust" the builder/seller?

We're first time buyers (although older) and need to know if there's anything to look out for when buying a new construction / house in the process of being constructed? We are definitely getting a real estate attorney involved in going through the purchase contract and the terms of financing (which they will immediately turn around & sell to either Fannie or another large bank) but are there any questions we should be asking from the builder / seller, anything to watch out for, etc?

They offer a 1 year standard warranty (nothing beyond) and also no real customizations. Am I able to buy extended warranties with other companies? Also, when we do get a home inspector involved in this purchase if we sign a contract in September but the home is not done until January? Is there anything else I should be aware that I haven't asked here or even thought of? The builder's realtor claims that "no one really inspects a new home" but nah........I will. We just need to know WHEN we should schedule this inspection?

TIA for any and all feedback / advice / suggestion / criticisms you could give me. Much obliged. It's a huge purchase for us (on a limited income) but it's time. Still really nervous and can't shake off the feeling that with our inexperience we can never get too much advice and support.

 

[Brat]

Hire an independent home inspector. Interview a couple and choose the one with the most knowledge making sure that the inspector knows that YOU are the client. Visit the home with the inspector several times starting now as some deficiencies can be identified early and are easily addressed during construction. Take pictures. Let the inspector that you want a report after each of those visits.

It isn't enough that the building meets code...

 

[Safire]

Hire an independent home inspector. Interview a couple and choose the one with the most knowledge making sure that the inspector knows that YOU are the client. Visit the home with the inspector several times starting now as some deficiencies can be identified early and are easily addressed during construction. Take pictures. Let the inspector that you want a report after each of those visits.

It isn't enough that the building meets code...

Hi, could you elaborate more on the "it's not enough the building meets code"? Are there specific things that can meet code and still be problematic? (No construction background so appreciate your feedback a lot)!

 

[cbo111]

If it's not too late, sit down with the contractor and discuss all the appliances. "Builder Grade" appliances (dishwasher, fridge, stove, washer/dryer,etc. They are frequently poor quality by design, because they are cheaply made and cheap for the builder to install. Even the AC unit might be a low grade model, despite having a name-brand logo. A few years after you move in and the warranties expire, things will start failing, and you will be left with the repair bills.

 

[Safire]

If it's not too late, sit down with the contractor and discuss all the appliances. "Builder Grade" appliances (dishwasher, fridge, stove, washer/dryer,etc. They are frequently poor quality by design, because they are cheaply made and cheap for the builder to install. Even the AC unit might be a low grade model, despite having a name-brand logo. A few years after you move in and the warranties expire, things will start failing, and you will be left with the repair bills.

It's not too late. I thought I should post here before we signed on that dotted line! There is no washer dryer but I believe the fridge, stove and microwave are included as is HVAC. Should we ask that they install appliances that we pay for even if it's a more expensive? Can they refuse to do this?

 

[Midpack]

Hire an independent home inspector. Interview a couple and choose the one with the most knowledge making sure that the inspector knows that YOU are the client. Visit the home with the inspector several times starting now as some deficiencies can be identified early and are easily addressed during construction. Take pictures. Let the inspector that you want a report after each of those visits.

It isn't enough that the building meets code...

+100. While an independent home inspector will cost you, that cost is nothing compared to your investment in a new home.

We had a house built in FL, and we will never do it again. The builder checked out perfectly, but we had all sort of problems. If I hadn't checked the site almost every day:

• we'd have had the shower in the master coming up directly into a glass partition wall (and in FL the plumbing is buried in the slab so rerouting is not as easy as a stick built home),
• ALL the insulation that we paid extra for would have been left off (I kid you not I caught them putting up sheet rock with NO insulation in ANY of the outside walls),
• and we would have shingles nailed down straight on deck board with no roof felt under it (they put down felt, left it exposed for almost two weeks during which time more than half of it blew off, and I caught them nailing down shingles without replacing the missing felt).
• We asked for white walls, they painted all the interiors walls an ugly beige. Looked horrible with white appliances and kitchen cabinets...

And that's just the big stuff I remember. Again, this was a builder who by all outside appearances was very reputable...

If you choose the right builder, and that's not impossible, you won't be disappointed - but it's easier to get a bad one than you might think. There has been a chronic shortage of qualified construction help for years now, and if reflects in the workmanship you can't see. Even good contractors are faced with taking a warm body over no one some times.

 

[Safire]

+100. While an independent home inspector will cost you, that cost is nothing compared to your investment in a new home.

We had a house built in FL, and we will never do it again. The builder checked out perfectly, but we had all sort of problems. If I hadn't checked the site almost every day:

• we'd have had the shower in the master coming up directly into a glass partition wall (and in FL the plumbing is buried in the slab so rerouting is not as easy as a stick built home),
• ALL the insulation that we paid extra for would have been left off (I kid you not I caught them putting up sheet rock with NO insulation in the outside walls,
• and I would have shingled nailed down straight on deck board with no roof felt under it (they put down felt, left it exposed for almost two weeks during which time more than half of it blew off, and I caught them nailing down shingles without replacing the missing felt).
• We asked for white walls, they painted all the interiors walls an ugly beige.

And that's just the big stuff I remember. Again, this was a builder who by all outside appearances was very reputable...

If you choose the right builder, and that's not impossible, you won't be disappointed - but it's easier to get a bad one than you might think.

Ohmigod. We live 4 hours away and cannot check daily. This is really anxiety provoking, especially as neither of us has any construction background or knowledge!

 

[Midpack]

Ohmigod. We live 4 hours away and cannot check daily. This is really anxiety provoking, especially as neither of us has any construction background or knowledge!

Another good reason to hire an independent home inspector of your own. He/she will do a better job of looking out for you than you can yourself anyway, though I would plan to be with him/her at least a couple of times early on to see how it goes.

 

[Safire]

Another good reason to hire an independent home inspector of your own. He/she will do a better job of looking out for you than you can yourself anyway, though I would plan to be with him/her at least a couple of times early on to see how it goes.

Will do. Thanks!

 

[COcheesehead]

Schedule a walk through days in advance of closing and get the builder to agree on a punch list of things that need to be fixed or corrected and then stay on them like a hawk until complete. This walk through would be in addition to a home inspection. An inspection will not usually cover cosmetic flaws. A walk through will.
Set another walk through 30 days out because you’ll miss stuff and then another at the 11 month point before the warranty is up. Trust me, things go wrong and you need to stay on top on the builder.
Get everything in writing. It’s not uncommon to have dozens of punch list items. Be picky now, rather than be disappointed later.
You are going to have builder grade finishes. Some are OK with that. We would not after owning numerous homes. Check to see if you can upgrade anything, counters, backsplash, floors, lighting, paint. Some things are more permanent than others in the house. Make sure you can live with what is there.
If you haven’t already, interview others who have used the builder. You’ll find out a lot. Ask if they would use the builder again - a big tell.
I used builder financing once. They saved us a little bit and then sold the loan shortly thereafter.
Lastly be prepared to spend a lot in the first few months you’re in the house. Home Depot will become your second home buying all kinds of things you never thought you’d need.

We are on our 8th or 9th home. The last one a custom build. We call it the house of lessons because we think(?) we finally did it right. LOL!

 

[SnowballCamper]

If you choose the right builder, and that's not impossible, you won't be disappointed - but it's easier to get a bad one than you might think. There has been a chronic shortage of qualified construction help for years now, and if reflects in the workmanship you can't see. Even good contractors are faced with taking a warm body over no one some times.

And once the drywall is up, there is a lot no one can see (this is why plumbing and electrical inspections happen before drywall). I wouldn't buy a new home built on speculation (meaning the builder starts it before it is sold) from a builder I haven't previously done business with. We did have our house built by a very good builder. Without any knowledge of what right looks like you're at a real disadvantage. This is why there are building codes, to set a minimum standard.

One of the comments my builder made that has stuck with me is that almost all builders are one house away from bankruptcy.

I'd suggest just lowering expectations... Hopefully this is more than just the *right* house. If it's *The* location in the right neighborhood for you then go ahead, but accept that the house might not be perfect, or the work to get it to perfect might be just too stressful. If it's not *The* location for you, maybe continue shopping and learn how you want to evaluate build quality before the drywall is up (through a home inspector, or whatever).

 

[Aerides]

Hi, could you elaborate more on the "it's not enough the building meets code"? Are there specific things that can meet code and still be problematic? (No construction background so appreciate your feedback a lot)!

This is going to depend on your area and the available upgrades from your builder. For example, in Florida, there are hurricane-impact rated windows. I think all new builds come with them now? But some are better than others. Same with doors, roofs, etc.

If you can pay more, you can see about upgrades. But unless this is a custom home build it might not be viable to you. And some municipalities/counties have pretty decide codes to begin with. It's a big country.

 

[COcheesehead]

Here is a local code that did not suffice for us.
We have a crawl space below our house, but the house is on a slope. So where you enter the crawl space is tall enough for a man size door which is really practical for putting things in storage. Nope. Code requires a 3”x 3” door into crawl spaces.
So the city allowed us a man size door, but we had to wall off and fire rate finish a room on the other side of the door and then put the 3”x3” crawl space door into a wall in that room. Stupid, yes.

 

[Dash man]

You are going to have builder grade finishes. Some are OK with that. We would not after owning numerous homes. Check to see if you can upgrade anything, counters, backsplash, floors, lighting, paint. Some things are more permanent than others in the house. Make sure you can live with what is there.
If you haven’t already, interview others who have used the builder. You’ll find out a lot. Ask if they would use the builder again - a big tell.

I disagree a little with getting too many upgrades. Builders tend to charge significantly more for an upgrade than you can have it done yourself. Wood floors for example, they’ll frequently charge twice as much with limited selections.
Cabinets may be worth an upgrade if they have a good selection.
Appliances I’d just donate the builder’s grade and buy what I wanted.

For the OP, don’t be surprised if they ban you from the property until walk through if you ask them for too many fixes or changes during construction. It happened to us [emoji23]. Of course, we ignored them and just didn’t report anything until the walk through.

The description by the OP sounds like Ryan Homes.

 

[Safire]

I disagree a little with getting too many upgrades. Builders tend to charge significantly more for an upgrade than you can have it done yourself. Wood floors for example, they’ll frequently charge twice as much with limited selections.
Cabinets may be worth an upgrade if they have a good selection.
Appliances I’d just donate the builder’s grade and buy what I wanted.

For the OP, don’t be surprised if they ban you from the property until walk through if you ask them for too many fixes or changes during construction. It happened to us [emoji23]. Of course, we ignored them and just didn’t report anything until the walk through.

The description by the OP sounds like Ryan Homes.

No, it's not. I can't say I am having a bad experience with them or got bad vibes or anything but the interest rate of the loan (they will eventually sell) sounds too good to be true. The homes also look quite good but as with other builders, the Internet has complaints from people who bought from them.

What's more frustrating is the lack of responsiveness from the builder's agent. I have a lot of questions to ask because not only am I a first time homebuyer but also completely inexperienced in construction / new home builds. But so far, here's NO response. Now, granted it's the long weekend so maybe I will hear tomorrow or later this week but it is frustrating when I think of how eager and solicitous she was when we first went for our "tour".

 

[tfudtuckerpucker]

I've had several homes built, and sold many homes. The suggestion to hire an independent home inspector is good, but make sure you find one who is competent. I have hired independent building inspectors- some good, and some quite incompetent and lazy. They missed problems. They didn't know what they were doing. They would fail to inspect items, or would erroneously claim a problem that doesn't exist. I can share examples for all of these. The bar is apparently quite low to becoming a home inspector. Independent inspectors have limited liability, meaning if they miss something, only their fee is at risk. I don't know how you find a competent inspector, other than word-of-mouth. If you know a retired home builder who now inspects, maybe that could be good.

Also, make sure you understand as much as possible about materials for the house. Review and approve all paint colors, floor coverings, cabinets, plumbing/electrical fixtures, etc. Check them out, and don't let yourself be surprised after it's built.

If I were to build another house, I would really do my homework on the builder. Talk with previous customers. A good home builder is worth his/her price, so don't pick the cheapest.

 

[COcheesehead]

I disagree a little with getting too many upgrades. Builders tend to charge significantly more for an upgrade than you can have it done yourself. Wood floors for example, they’ll frequently charge twice as much with limited selections.

Do you really want to move into a new home and rip up the floors? We looked at upgrades based on what would be hard to change. So floors, counters, cabinets, tile, but our last home was custom, so in the end everything was an upgrade.

 

[COcheesehead]

No, it's not. I can't say I am having a bad experience with them or got bad vibes or anything but the interest rate of the loan (they will eventually sell) sounds too good to be true. The homes also look quite good but as with other builders, the Internet has complaints from people who bought from them.

What's more frustrating is the lack of responsiveness from the builder's agent. I have a lot of questions to ask because not only am I a first time homebuyer but also completely inexperienced in construction / new home builds. But so far, here's NO response. Now, granted it's the long weekend so maybe I will hear tomorrow or later this week but it is frustrating when I think of how eager and solicitous she was when we first went for our "tour".

Red flag.

 

[Fermion]

+100. While an independent home inspector will cost you, that cost is nothing compared to your investment in a new home.

We had a house built in FL, and we will never do it again. The builder checked out perfectly, but we had all sort of problems. If I hadn't checked the site almost every day:

• we'd have had the shower in the master coming up directly into a glass partition wall (and in FL the plumbing is buried in the slab so rerouting is not as easy as a stick built home),
• ALL the insulation that we paid extra for would have been left off (I kid you not I caught them putting up sheet rock with NO insulation in ANY of the outside walls),
• and we would have shingles nailed down straight on deck board with no roof felt under it (they put down felt, left it exposed for almost two weeks during which time more than half of it blew off, and I caught them nailing down shingles without replacing the missing felt).
• We asked for white walls, they painted all the interiors walls an ugly beige. Looked horrible with white appliances and kitchen cabinets...

And that's just the big stuff I remember. Again, this was a builder who by all outside appearances was very reputable...

If you choose the right builder, and that's not impossible, you won't be disappointed - but it's easier to get a bad one than you might think. There has been a chronic shortage of qualified construction help for years now, and if reflects in the workmanship you can't see. Even good contractors are faced with taking a warm body over no one some times.

There are so many other things you can add to that list. Screws driven into waste pipes and/or electrical wires, roof flashing installed improperly or even missing, it goes on and on.

As big as a pain as it has been building our house ourselves, it is comforting to know we have none of these issues as we walk on our 1"1/8" sheathed floors that have been both glued and screwed to the joists.

 

[ivinsfan]

No, it's not. I can't say I am having a bad experience with them or got bad vibes or anything but the interest rate of the loan (they will eventually sell) sounds too good to be true. The homes also look quite good but as with other builders, the Internet has complaints from people who bought from them.

What's more frustrating is the lack of responsiveness from the builder's agent. I have a lot of questions to ask because not only am I a first time homebuyer but also completely inexperienced in construction / new home builds. But so far, here's NO response. Now, granted it's the long weekend so maybe I will hear tomorrow or later this week but it is frustrating when I think of how eager and solicitous she was when we first went for our "tour".

When did you actually contact the builder's agent? Also just from posting here I notice sometimes you often ask a lot questions at the same time. When contacting someone like this it's best to ask maybe one or two important questions at a time... once a conversation starts more questions can be added.

If you sent an email with lots of questions the agents gonna call others first that's the way it works. You aren't the only one she's working with and sometimes a girl has to make choices.

 

[pb4uski]

There are so many other things you can add to that list. Screws driven into waste pipes and/or electrical wires, roof flashing installed improperly or even missing, it goes on and on...

My niece recently moved into a new home and the ceiling leaked with the first rain. It turns out that they forgot to put on the roof cap. Not confidence inspiring! How the heck does that happen? How the heck does it not get caught on inspection?

 

[Aerides]

I have a lot of questions to ask because not only am I a first time homebuyer but also completely inexperienced in construction / new home builds. But so far, here's NO response. Now, granted it's the long weekend so maybe I will hear tomorrow or later this week but it is frustrating when I think of how eager and solicitous she was when we first went for our "tour".

If you have more than one or two questions, then your real question should be "When can we set up a meeting for 30 minutes so I can go over some things?"

Have you list ready and written, and go from there. Otherwise you're probably asking more than she can answer at once anyway.

Is this a solo build or a development - you are one of many or just one? If it's a a development,the agent is there basically for sales.

 

[eytonxav]

Aside from independent inspection visits during the construction process, I would make sure your construction contract includes a spec sheet that sets forth all the materials, fixtures and appliances to be included. I would also ask for an extended warranty for windows and major systems like HVAC and slab if its slab built. I would also make sure they install a system return in each large room for the HVAC system.

 

[DrRoy]

Midpack covered everything so well.

 

[ls99]

I watched a few new constructions of houses, condos in nearby town. Also a few in another town where a farm is paved over for condos. None would I ever buy. They would need to pay me a lot of $$$ to live in them.

I'd say hire an inspector at the beginning of the construction and have them watch the process. And require corrections.

After it is built, the hidden shortcuts and cheap materials are not observable.
Good luck.