8 Tips For Making an Offer on a New Construction Home (And How Your Agent Can Help!)

You’ve decided it’s time to buy a new home — and by new, you really mean new! Rather than buying a pre-existing home, many buyers decide to go with new construction. The idea of moving into a brand-new home, with the opportunity to customize it to suit your own taste, and only you and your family will be making the initial footprint, can sound very appealing. But what a lot of buyers don’t understand is that new construction isn’t quite the same as buying a “used” house, and there are a host of different things to consider … not to mention several requirements that go beyond the standard homebuying process.

We’ve investigated the ins and outs of new construction and talked to real estate experts about just how making an offer on a new construction home works, and how buying new construction is different than buying an existing home. If you think new construction might be for you, take a look at these tips on how best to navigate finding, financing, and ultimately enjoying your new construction home.

A bulldozer preparing foundation for a new construction home.
Source: (Shane McLendon / Unsplash)

1. Find an agent who specializes in new construction

Real estate agent Max Devries, who is based in the San Francisco Bay Area and has more than 20 years of experience in the industry, says that finding an agent who understands the new construction process is crucial.

“New construction can often sell out quickly,” he says.

“If you have a good agent, they can keep you up-to-date on availability and get you on waiting lists with specific builders.”

Because the process is so different from buying an existing home, finding an agent who has experience in making offers on new builds will make everything easier for you as a buyer. Agents who specialize in new construction should have a working knowledge of the builders in your area, their price ranges, and when these builders might be starting a new development, as well as an understanding of negotiating upgrades or other add-ons.

2. Learn about builders and their developments

Do your homework on builders in your area.

You can start by driving through some of their older neighborhoods and seeing what the homes look like, how they’ve held up over time, and what kind of designs each builder uses. This will help give you an overview of which builder might be best-suited to your needs.

You can also research various builders online and see what kind of reviews their business has, as well as make sure there aren’t any complaints on the Better Business Bureau website.

Devries says the difference between individual builders and what they offer can be vast.

“Here in the Bay Area, we have specific builders who we consider better than others. There are builders that are more affordable, but they also might not offer the same level of upgrades,” he explains.

These upgrades can mean the difference between, for instance, a hollow interior door and a more expensive solid one, or customized cabinets as opposed to the standard builder’s grade.

A living room in a new construction home.
Source: (Gamze Moustafa / Unsplash)

3. Visit some model showrooms

When you start researching builders, visiting their model homes can help you see what kind of home plans you’d have to choose from, as well as any specific customizations that can help make your home more unique. Just remember — model homes usually have high-end upgrades that aren’t going to be included in your new home’s price, and tacking on endless upgrades can add thousands to your overall cost.

It’s also a good idea to know which floor plans the builder has available, so that when you’re touring their model homes, if they don’t have a model home for a specific floor plan you want, you’ll still be able to imagine what it might look like based on the homes you do get to see.

4. Decide which development, lot, and house you want

Once you select a builder, then you can start looking at their developments, available lots, and house styles.

“It’s important to know exactly where the house will be built,” says Devries. “Some buyers might want the home to face in a specific direction for religious reasons, or want to know they’ll get afternoon sun in their backyard.”

He adds that finding out information on whether or not there’s a homeowner’s association (HOA) and what the dues are, how much landscaping is included as part of the purchase, and whether or not an HOA might require additional landscaping within a certain amount of time are also important factors when considering a new build.

“These are things you might not think to ask, or a builder might leave out of the discussion,” he says.

If there are a limited number of lots to choose from, or if construction has already started on the lot you want, this also might be a good time to ask about a discount because you weren’t able to customize where the home sits on the lot.

Your agent will also be able to talk to the builder about whether or not there is a waiting list for a home in their development, get you pre-registered with the builder, and discover just how long it might be before your name makes it to the top of the waitlist.

5. Shop for a mortgage

One big difference between new construction and buying an existing home is that with new construction, the builder can provide financing. That doesn’t necessarily mean you should use a builder’s financing, however — nor are you required to.

Devries recommends that buyers still shop around for a mortgage because mortgages can be as competitive as any other facet of the real estate industry. The builder does, however, usually offer what is often the better deal.

“Truth be told, it can be difficult to beat the builder for financing,” he says. “Builders have a lot of incentives they can offer, which can add up to tens of thousands in savings for the buyer.”

These incentives can come in the form of upgrades, warranties, help with closing costs, or even special financing options.

A kitchen in a new construction home.
Source: (Sidekix Media / Unsplash)

6. Ask for upgrades

Once you and your agent have discussed all the terms you want to bring to the table with your offer, your agent will write up an offer and submit it to the builder.

One thing to keep in mind is that pricing on new construction is often non-negotiable. According to Devries, the prices for new construction are usually pre-determined and are already agreed-upon between the bank funding the project and the builder.

“Builders are usually very committed to their pricing, as it’s based on a current market analysis that is done prior to each new phase of a neighborhood being developed,” he says.

This does not mean there is no room for negotiation, however, and when you make your offer, you’ll have the opportunity to ask for upgrades you might want, for help with closing costs, that the builder cover your first year of HOA dues, or maybe for a home warranty.

Devries adds that while the price of a new construction home is usually set in stone, sometimes builders are willing to offer deals on their model homes — especially if they’re getting ready to move onto a new phase of development and no longer need to use the model homes to showcase a certain neighborhood.

While you won’t get to pick out the layout or design of the home, you’d still be getting a brand-new house in the neighborhood you want!

7. Understand the timeline

Rome wasn’t built in a day, and your new house won’t be, either.

While your builder will give you a timeframe of when the house will be move-in ready, that isn’t always a hard-and-fast date. According to Devries, buyers should expect delays.

“If you’re working with a financially stable builder, you can anticipate from the moment you get your lot assigned to your move-in date to be about six months,” he says. “But there are almost always setbacks.”

New construction timelines can be interrupted by myriad issues, from problems with the various inspections, supply shortages — even weather can sometimes cause delays. Your agent should be there during this process, helping you keep in touch with the builder during inspections, and troubleshooting any problems that might arise.

A woman signing an offer on a new construction home.
Source: (DocuSign / Unsplash)

8. Get everything in writing, and read before you sign!

The paperwork involved with a new construction home can seem daunting. Prior to signing, you and your agent will want to sit down and review it all.

“One thing that often happens to a buyer is they come to the table and see an enormous stack of papers, all tabbed and ready for signatures, and they’re supposed to just sign off on it,” says Devries. “You need to make sure you’ve read and understand every piece of paper, because once you sign it, you are committed.”

This is where having a good agent comes in, because they will read the contract for you and go over everything with you before you sit down with the builder to sign.

You’ll want to make sure any verbal agreements between you and the builder are documented, that any contingencies such as inspections (still important with new construction, as new doesn’t always mean flawless!) are included — and that all information, such as the legal address of the property, lender information, and (of course) the purchase price, are correct.

With help from an experienced real estate agent, making an offer on new construction doesn’t have to be difficult. And while it might be slightly more complicated than buying an existing house, you’ll also end up with a house that is customized and as unique as you are!

Header Image Source: (James Feaver / Unsplash)