Buying a New-Construction Home: What You Need to Know

Generally speaking, a new-construction home is a home that has just been built and has not had any previous owners. This can include custom-built homes as well as properties constructed by builder/developers and then sold for the first time. For first-time homebuyers, the appeal of a new-construction home lies in the attractive options it offers - from low-maintenance living to high-quality, modern design, possibly on a piece of land you have handpicked. However, the process of buying a new-construction home from builders differs from the typical homeowner-to-homeowner transaction. Understanding these differences can help you prioritize what matters most in your first-home purchase, especially if you anticipate changing housing needs in the future.

Key Takeaways:

First-time homebuyers may opt for a new-construction home for low-maintenance living or customization.

Be prepared for new-construction homes to be pricier than resale homes and for loan closing to take longer.

Ensure you conduct a home inspection on a new-construction property to guarantee the developer fulfills their promises.

What Is a New-Construction Home?

A new-construction home is a property that has been freshly built and has not been previously owned or inhabited. These homes can be sold in various ways, from custom-designed properties on separately purchased land to homes built as part of a developer's planned neighborhood and then sold individually. When purchasing a new-construction home, you will typically work with the builder's sales team or a representative from the developer. While having a real estate agent is not always necessary, you can still enlist one to assist you in a new-construction purchase if desired. The process includes finding financing, getting the property appraised, and reviewing purchase contracts to understand the value you are getting for your investment. As new-construction homes may still be under construction, you might have the chance to personalize some design elements during the buying process. It's also crucial to have a home inspection done before closing to ensure the property meets safety and construction standards.

Pros and Cons of New-Construction Homes:

Pros:

Potential for low maintenance for several years.

Customization options might be available.

Insight into the future neighborhood amenities.

Cons:

New homes may come with a higher price tag.

Possible issues with construction materials and methods.

Not having a real estate agent could put you at a disadvantage.