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10 Steps to Purchasing a New-Construction House

by | Aug 8, 2023 | Blog, Buyers, Homeowners, News, Real Estate News | 0 comments

10 Steps to Purchasing a New-Construction House

Purchasing most things in life is usually straightforward – just add them to your cart and pay with a credit card. However, when it comes to buying a home, the process becomes understandably more intricate. This complexity is particularly true if you’re looking to purchase a brand-new home, as it involves a distinct set of steps and considerations.

While the process of buying a new-construction home shares similarities with purchasing an existing house, there are several notable distinctions. With new-construction homes now accounting for approximately one-third of the U.S. housing inventory, it has become an attractive option that many prospective buyers will undoubtedly contemplate.

To provide you with a glimpse of what lies ahead, let’s explore the step-by-step process of buying a new-construction home, along with valuable advice to ensure a seamless experience from start to finish.

1. Set a budget

Before diving into the process of purchasing a new-construction home, the initial and crucial step for any prospective homebuyer is to assess their affordability. This becomes particularly significant as new-construction homes generally come with a higher upfront cost, with the median price currently standing at $493,000.

Don Turner, the regional sales director of new homes at, emphasizes the importance of avoiding the allure of a home that surpasses both your needs and budget. He advises prospective buyers to be mindful of their income relative to their spending habits and establish clear guidelines to steer clear of this situation.

2. Get preapproved for a mortgage

Obtaining preapproval is a wise step to ascertain your purchasing capacity and effectively communicate this information to the builders you are exploring. Securing preapproval can be accomplished through various methods. One option is to apply online, where you can discover the loan amount you qualify for based on your present income and debt.

During the lending process, lenders will request financial documentation from you. Therefore, it’s essential to be prepared with your bank records and pay stubs ready to go. Having these documents readily available will help expedite the process and ensure a smoother experience.

It’s important to remember that obtaining preapproval from a lender doesn’t obligate you to proceed with them. On the contrary, it is highly recommended to explore different options and compare preapproval offers from at least three lenders. This way, you can ensure you are securing the most favorable terms and the best overall deal for your situation.

3. Choose a location

Selecting the ideal community and location for your new-construction home is a critical aspect of the process, as not every community will be a perfect fit for every buyer. It’s essential to carefully consider your preferences and needs to ensure you find a community that aligns perfectly with your lifestyle and requirements.

For instance, if you have a young family, your criteria for a new home will undoubtedly differ from those of a homebuyer in search of a 55+ neighborhood with HOA activities tailored for retirees. Each buyer’s preferences and priorities will shape their quest for the ideal home and community.

Landers proposes a helpful exercise called the “what matters most” ranking, which assists in refining your area search. In this exercise, prioritize the following factors from one to twelve based on their significance to you, and utilize the list as a guiding reference for making informed location decisions:

  1. Travel/commute times
  2. Distance to family/friends
  3. School district quality/higher education
  4. Access to nature/parks/lakes
  5. Availability of community clubhouse/social areas
  6. Walking trails/sidewalks
  7. Outdoor recreation (e.g., tennis/pickleball courts, playgrounds)
  8. Neighborhood pool
  9. Fitness center
  10. Pet friendliness
  11. Proximity to shopping/dining/entertainment
  12. Nearby health care/medical facilities

4. Hire a real estate agent

While it’s technically possible to acquire a new-construction home without representation, having the right real estate agent can prove to be an invaluable asset. They can provide you with crucial guidance and support, helping you identify the perfect fit in a new home and community that aligns with your preferences and needs.

It’s essential to remember that the on-site agent you encounter at a new-construction office represents the builder’s interests. As a savvy homebuyer, it’s prudent to engage your own agent to join the process. Having your agent by your side will enable you to negotiate effectively and ensure you have proper protection throughout the transaction, safeguarding your best interests.

An excellent buyer’s agent possesses the ability to thoroughly review contracts before you commit, ensuring you don’t unknowingly agree to terms that solely favor the builder. Additionally, in numerous instances, the builder will cover your agent’s commission as an expression of gratitude for directing your business to them. This arrangement can be highly advantageous, providing you with professional guidance and protection throughout the buying process at no direct cost to you.

Landers advises that before hiring an agent, it’s essential to conduct thorough due diligence.

5. Shop home builders

Just like when selecting a real estate agent, it’s crucial to find a homebuilder with a strong reputation. Take the time to review their online feedback and testimonials. Additionally, closely examine the floor plans they provide. Ensuring that the builder offers floor plans that align with your family’s current requirements and future growth needs is essential for making a wise decision.

There are other important factors to consider as well. Given that finances often play a significant role for new-construction buyers, it’s essential to thoroughly compare and contrast the builder incentives that are being offered. Taking the time to evaluate these incentives will help you make a well-informed decision that aligns with your financial goals and priorities.

It’s advantageous to find a builder that provides buyer incentives, such as special financing deals or assistance with closing costs. Additionally, if you come across a builder offering complimentary upgrades in the home, such as upgraded cabinets, appliances, or improved flooring, these perks can be significant wins for the customer.

Consider posing the following questions as well:

  • What are the HOA dues? Are they monthly or annual? What do they cover as far as amenities, activities, and programs?
  • Can guests use the community pool, fitness center, and other amenities?
  • What is the community pet policy?
  • Do you offer a new home warranty? If so, what does it cover?
  • What are the average utility bills and other associated costs of home ownership in the community?

6. Decide whether to build or buy move-in ready

Spec homes are constructed, or at least initiated, without having a buyer contract in place and can be found in different stages of construction. When the home is completed or nearly finished, it may also be referred to as “move-in ready” or “quick move-in” (QMI), usually available for occupancy within three months. However, it’s worth noting that each builder may have its own interpretation of what “quick” entails.

“Build from scratch” entails commencing construction from the ground up after you finalize the contract. Generally, the process of building a home from scratch takes around 6.5 months, though this timeline can significantly vary depending on the builder. To gain clarity, it is essential to inquire about the specific timeline from the builder you are considering. Buyers who can patiently wait during this period may enjoy the advantage of having more control over various design decisions. This control may encompass aspects like the home’s layout, finishes, and other personalized details, making it a potentially rewarding choice for those seeking a customized living space.

To avoid any confusion, it’s crucial for homebuyers to recognize the significant distinction between a build-from-scratch home offered by a production builder in a planned community and a “custom home.” In the case of a custom home, you take on full responsibility for every aspect, which includes purchasing the land, engaging an architect, obtaining construction loans, handling city permits, and more. Building a truly custom home can be a lengthier process, sometimes taking up to two years to complete due to the extensive level of personalization involved.

7. Sign a builder contract

Based on the type of home you select, the subsequent step involves signing a contract. If you opt for a move-in-ready home, the sales process will resemble a typical real estate transaction for an existing house. You make a down payment, move in, and commence with monthly mortgage payments.

On the other hand, if you lean towards a build-from-scratch situation, the financing process will differ. When you sign a builder contract, there will likely be a required deposit, typically ranging from $1,000 to $2,000. The good news is that “most builders use this deposit as a credit toward the purchase price of the home,” according to Turner.

Within the contract, the projected completion timeline should be specified. This is also an opportune moment to seek clarification on how unforeseen issues during construction will be handled. For instance, what recourse do you have if supply chain delays impact the construction schedule, and how will any changes be communicated to you?

To ensure you’re protected, it’s advisable to have your real estate agent review the contract. Additionally, seeking legal counsel to review the agreement and all addendums before signing can provide an added layer of protection.

8. Prepare to move in

If you plan to sell your current home before moving into your new build, it’s essential to seek advice from your real estate agent regarding the optimal timing to put your current home on the market. Waiting too long might result in a situation with dual mortgages, so proper planning is crucial. However, in the event that you sell your current home before your new-construction home is completed, you may need to arrange for interim housing and storage for your belongings during the transition. This aspect adds an additional consideration to the purchase of a new-construction home.

Furthermore, prospective buyers should refrain from making significant purchases like buying new furniture or a car during the interim period while their home is being built. Such actions can negatively impact their credit score and potentially jeopardize their mortgage approval. Practicing financial caution during this time is essential to ensure a smooth and successful home buying process.

9. Have your new home inspected, and do a final walk-through

Despite something being new, it doesn’t guarantee absolute perfection. Even if your new-construction home comes with a home warranty, it remains essential to conduct an inspection before officially taking ownership.

Throughout the construction process, new-construction homes undergo inspections by local municipalities, and before move-in, these groups provide a final certificate of occupancy (CO) to ensure compliance with regulations. However, it’s advisable to hire your own home inspector to ensure that everything meets your standards.

Before moving in, you should also be granted the opportunity to perform a final walk-through of your home. During this walk-through, you can create a “punch list” of items for the builder to address, typically consisting of minor issues such as paint drips and scuffs on floor tiles, ensuring that your new home is in pristine condition.

10. Close on your mortgage and move in

Once your new-construction home is finally complete, the builder will likely be eager to close the deal and have you move in swiftly. This is one reason why many builders prefer when homebuyers work with their preferred lenders; it helps ensure a smooth and timely transfer of ownership.

When you receive the go-ahead to proceed, be prepared to act promptly. At that stage, you’ll be expected to make the full down payment (minus your initial deposit) and commence making monthly mortgage payments to your lender moving forward. Being prepared and responsive will facilitate a seamless transition into your new home.

Experts in Residential Real Estate in Orlando

If you are BUYING or SELLING real estate it’s quiet often the single most important financial decision you make. For the last 30 years we have helped clients buying and selling property in Orlando and the surrounding areas. Put simply, this means the knowledge and expertise accumulated over this time ensures our clients get the best representation possible.

Our experienced agents will help and guide you through the entire process providing valuable support every step of the way.

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