Building your own home can definitely sound appealing at first blush. My husband and I just completed our own personal new construction house and we are very satisfied with the end result. However, with all major decisions and purchases one should proceed with full transparency and a solid understanding of what you are committing too.
Although some local builders might meet with you personally from the get go, other larger home building companies may have you meet with the builder’s sales representative first, but either way these initial meetings are your opportunity to ask all your questions regarding building a new home. Make sure you cover costs, labor, and other essentials that might pop up before signing any contracts. Write down your questions before you meet with the builder or representative so you are sure not to forget anything important. Don’t be shy about rephrasing the question multiple times if you are not getting the answers that you need. This is a major purchase, and you do not want any surprises later. It is also advantageous to have a real estate agent representing you throughout this transaction. A wonderful resource for finding a builder in the Houston area is The Greater Houston Builders Association (GHBA). Additionally, I suggest driving through neighborhoods you like and checking out homes currently under construction to find local builders. Their information is typically on the yard signs and you should be able to reach out to the company directly. Once you have identified a builder you might like to work with, these questions will help get you started when considering a new construction purchase.
Is the lot cost included?
I feel like in the West Houston area, and likely other parts of metroplex cities, properties available to build on are hard to come by. It may take buyers some time to locate the right lot. Once you purchase the land in a typical property resale transaction you can reach out to the builder. However, that is not always the case. Another situation would be when the builder has previously invested in a great opportunity and will resell the lot as part of the home building process when they secure an interested home buyer. When you are exploring new construction options, you will see that each builder will provide a base cost. This is the cost of the structure itself, as well as base interior and exterior features. What may not be included is the cost of the land, so make sure to ask if the lot amount if factored in. You want to get the full picture of your expenditure.
If you are building in a master planned community, and the lot cost is included, ask if there are premium costs for specific lots. It is possible that the base cost does include the lot, but that certain lots in the development have added costs for specified features that you are not permitted to opt out of. Examples of these might be look-out windows in the basement or wider yards. Make sure you factor in all the pieces of the puzzle when calculating the base price for the house.
How long will building take?
It is important to know what length of time you are committing too with a new construction build. The building duration could impact the timing of when you need to sell your existing house or if you will need to temporarily rent somewhere to bridge any gaps. While the building process is prone to delays and you most likely won’t be able to get a finite schedule for how long the build will take, you will be able to get a general idea of what you can expect and can plan accordingly. Be sure to also ask if the build time includes the time it takes to get the permits, since those seem to be on major back log and are currently taking months to obtain. Using this link you can check the status of your permits and see what previous permits have been pulled for a particular property.
What warranties are provided with the house?
Just because a home is brand new does not mean that it will be free of any issues or problems. Thankfully, most new construction homes come with one or more warranties that protect you in the event of an unexpected mishap early in your ownership. Ask the builder about a short term, whole-house warranty and any longer structural warranties available. You will want to know what the various warranties include and when they will expire. Set reminders in your calendar to renew before the end date to ensure you do not lapse in protection. While you can always buy your own home warranty, you should expect that the builder will cover you to some extent for at least the first several years.
What are the standard finishes?
Does a base cost look too good to be true? That might be because the builder is expecting you to invest more when it comes to finishes such as flooring, lighting, plumbing and countertops. You should ask what types of finishes are included, ask for brand names or pictures of previously completed homes. The best option would be to go through the model unit or homes the builder has recently completed that are inline with your budget. Have the builder or sales representative point out what is considered standard and what would be an upgrade. You likely will not select all your finishes until after you’ve gone under contract, so it is important to determine from the beginning what level of finishes and/or appliances you can expect to be included in the home’s base price. Even little things like cabinet knobs can add up quickly.
Are you allowed to purchase your own appliances or materials?
What are your options if you have had your heart set on something specific for your home, but the builder does not offer it? You can ask if it is possible for you to purchase certain items or materials yourself and still have the builder install them. I have worked with clients that have connections to wood flooring vendors or window suppliers and they could financially benefit from tapping into those personal relationships. Many builders likely have their own connections with various suppliers and therefore may not let you purchase your own materials, but they might let you bring in your own appliances. If the answer is no to purchasing outside of the builders connections, consider what included items are less eye catching or meaningful; think sinks and toilets. This could be an area to save money if you would rather keep those details to a standard level vs an upgrade. It never hurts to ask and is always smarter to know the answer upfront. Keep in mind that, in terms of appliances, you will likely still have to make some personal purchases, in terms of washers, dryers, and refrigerators.
If you can bring in your own materials or appliances, will you get credits?
Your builder may allow you to purchase some materials on your own, but how is that financially handled. If the base price of your new construction home includes a kitchen sink that is worth $200, but you would like to upgrade and purchase a sink on your own that costs $400 – will you get $200 off the final purchase price? Or vice versa, if you find an area to save some money, can you apply that same value to another area of your home? Some builders offer credits for any upgrades or self-purchased materials or appliances, while with others you will just have to eat the cost of the originally included item. Credits are a nice and can help you truly customize your home, but that may not be the standard practice. Make sure to get a firm understanding if there is any give and take permitted. This may vary from builder to builder so make sure and clarify. It is also a great time to get an understand of why or why not they permit this. There might be a very logical reason and they could suggest other areas to apply a checks and balance system towards.
Is landscaping included?
Depending on the size of your yard, landscaping – including dirt work, sodding, plants and somewhat mature in trees, can set you back thousands of dollars. Is landscaping a cost you need to factor in on top of the home purchase? Some builders include your basic yard work, while others leave you with unfinished land that becomes your responsibility to landscape. Grass is required to pass a final city inspection, so don’t get caught up thinking you will install it after you move in. Ask whether landscaping is included, and if so, what all does that entail. It is also helpful to know if there is any sort of guarantees on the materials. If your newly sodded grass doesn’t take root, will they replace it? We had a the coldest freeze in over 20 years, two days after our new landscaping went in. Thankfully our builder took precautions and securely covered our plants. However, the plants that did die were replaced a few weeks later at no charge.
Does the contract include a cost escalation clause?
New builds are notorious for last minute surprises, but you don’t want to be on the hook financially if it happens. A cost escalation clause allows the builder to charge you for any unanticipated costs that arise as a result of necessary labor or materials. As you are probably aware, lumber prices have significantly gone up recently. You need to know what the results would be if the builder quoted you on wood flooring six to nine months before he purchased the materials. In the event of an unexpected delay, are you on the line if that results in higher materials or labor costs? If you would rather not deal with the stress of unanticipated costs, you will want to find a builder that eliminates a cost escalation clause from the contract.
Are there any homeowners rules or regulations?
If your property has a homeowners association, make sure to check all the details of your home’s architectural plans with the existing rules. Building set backs and height requirements can vary even within a few blocks of other homes. The HOA building review committee will likely give you the final green light, but submitting an error free initial set of plans will speed things along. If there is no homeowners association for the development, the builder still may set some guidelines as far as what is or is not allowed on your property. For example, you may not be able to use a particular type of fencing or install a shed in your backyard. It is better to ask this question up front and know what to expect rather than to move in and find out that you can not fully execute certain plans you had for your space.
Are there any financial incentives for using the builder’s preferred lender?
Some builders offer discounts on closing costs if you obtain your mortgage through a company that they have a previous relationship with. It could be a strong financial gain to ask if these sorts of financial incentives are offered. However, don’t make your final decision about where to get your mortgage based on the discounts alone. You may still be able to find a better deal through other lenders. Although it’s smart to shop around, it is still helpful to be aware if there are any benefits to working with the builder’s preferred mortgage company. If your dream is to build a new construction house, go into the process with an open mind and a clear idea of what you can expect. It is an exciting process, but the more questions you can ask in the beginning, the less surprises you will potentially face in the future. If you are still a bit nervous you may have overlooked some areas of concern, read this article on how to avoid ten common mistakes when building. As with any home purchase, feel free to have an attorney read over your contract so that you can be sure everything is fair and equitable. Additionally, many buyers of new construction homes prefer to have a real estate agent attend the sales meetings as well. Any of the agents at Meadows Property Group would gladly guide and assist future buyers with a new construction purchase. Be smart, ask the right questions, and at the end of the day (or more likely, a year) you will end up with a beautiful home built just for you. Good luck!!