A new construction home — yours from the ground up, with no prior owners — sparkles with possibility. From the fresh paint to the shiny flooring, it’s a blank slate to make your own without dealing with any inherited problems or repairs… or so you hope.
“Unfortunately, I’ve become involved in numerous new house horror stories, most due to poor workmanship or builders that failed to follow up on warranty work as promised,” said Matt Steinhausen, an independent home inspector since 1999 in Lincoln, Nebraska, who holds an A+ rating from the Better Business Bureau.
Here, we’ve put together some key questions to ask when buying a new construction home to help you avoid costly problems and make a smarter purchase.
1. What previous homes and subdivisions have you built? Do you have references from recent buyers?
Whether you’ve found your home in its early stages or you’ve seen the finished product, you’re wise to talk to other buyers.
“That would be first and foremost: Get references from the builder as to any other properties that they’ve built prior to this property,” says Michele Friedler, a top real estate agent serving the Boston, Cambridge, and Brookline areas in Massachusetts.
“Maybe even visit one of those properties so you can see the finished product.”
Even if your real estate agent or the builder provides references, you might want to poke around on your own to get a random sample of opinions. Drive through a recently built subdivision on a weekend, when homeowners might be doing chores outside.
Introduce yourself, say you’re considering buying a home from the same builder, and ask if they’re happy with their home. If people aren’t pleased, they’re usually not shy.
Did they have any problems? Were these fixed properly and promptly? Would they buy another home from this builder? Don’t be afraid to take a few notes so you can review any questions you have later.
2. Do you offer a warranty program? What are the specifics?
Most home builders issue a limited warranty on their work, either within the sales contract or purchase agreement, or as a separate document. The type of work determines the length of time: typically one year for labor and materials; two years for defects to systems such as heating, plumbing, and electrical; and 10 years for structural defects.
Some warranties are part of state law. For instance, Massachusetts has a one-year builders’ warranty that covers a certain amount of labor and materials for anything that goes wrong or needs adjusting in the first 12 months after purchase, Friedler said.
That said, some builders’ warranties don’t cover everything — for instance, landscaping. What happens if the plants die within a year?
Read through any warranty paperwork with an attorney so that you understand its length, what’s covered, what’s excluded — and who is responsible for what problems. Some builders may have third-party insurance for particular items or will defer to a subcontractor who handled certain jobs.
These are the most common new home construction defects, according to the Lyon Firm, in Cincinnati, Ohio, which has handled product liability cases since 2006:
- Improperly installed roofing.
For example, Steinhausen discovered that one builder had installed stone veneer and mortar on top of shingles without the proper flashing, i.e., sheet metal or other material to prevent leaks at junctions
- Inadequate electrical capabilities.
- Poor placement of downspouts and gutters.
This can cause water damage that affects a roofing warranty.
- Issues with exterior siding, bricks, and stucco.
Concrete poured in cold weather might not cure properly and could crack, chip, or delaminate.
You should beware of structural problems such as slanting or sagging floors, buckling walls, and doors that don’t open or close properly; these can be signs of foundation shifts.
Drainage is also a common new home construction problem.
“When builders re-grade lots, they often disrupt or re-route the natural drainage and runoff systems, which can lead to water problems, especially in homes with basements,” Steinhausen says.
Although you may be able to sue a builder for poor workmanship under your state’s breach of warranty laws, you’ll want to note any maintenance obligations that the builder says are your responsibility. Failing to drain your water heater, touch up caulk or grout, or clean your gutters could count as neglect on your part and negate anything that you think the builder should fix.
Also, check on any deadlines you’ll have to meet to notify the responsible contractors of any defects, such as within 15 days of discovering them and in writing.
3. What kinds of modifications can I make before closing?
In a custom-built home, you choose the way you want everything done and instruct the builder along the way. Expect to see plans, specifications, and itemized bids, so you know how much everything costs and can pay the builder only as much as he deserves as the project progresses.
“This can lead to upcharges, Friedler said, because certain changes can “alter the time that it takes to complete the house, or things may need to be undone in order to be redone the way somebody wants it.”
Other times, a builder will have floor plans with certain specifications where they’ve already obtained all the proper permitting, and you choose from among those plans.
Mattamy Homes, a privately owned home builder since 1978, builds communities with a product mix of mid-rise and high-rise condos, townhomes, and single-family detached homes in Canada and 10 markets in the United States, for example. You can choose your floor plan plus certain options, such as having a bath in the shower instead of a tub, or adding a 12-foot sliding glass door to a lanai.
Some builders also provide different choices for lighting fixtures, doorknobs, flooring, and countertops.
“It just depends on how expensive the house is,” Friedler said. “The more luxurious the property, usually the more finishes you get and the more choices you get.”
4. Can a home inspector examine the property before we close?
A lender typically requires a certificate of occupancy for a newly built home before you can secure financing. Your local building department issues this document (also called an occupancy permit) once it verifies that the builder completed the home’s wiring, plumbing, heating, and other specifications properly.
But a certificate of occupancy just means that a building is in “livable condition,” not that it’s flawless.
A home inspector should review the property before you close, real estate experts say, because a buyer loses some leverage to make the builder address certain problems after closing.
Many builders schedule two visits during your first year in a newly built home for non-emergency repairs and adjustments, according to the National Association of Home Builders (NAHB), but don’t expect them to dash out there right away if a nail pops through the drywall as the house settles.
Plus, it’s tough to prove after closing whether a gouge in a wall or countertop is the builder’s fault or the clumsiness of the buyer’s movers.
Instead, the NAHB recommends that buyers be thorough, observant, and ask tons of questions on their final walkthrough of the property. An experienced builder expects as much and prefers to remedy problems before buyers move in, when it’s much easier to work in an empty house.
A home inspector can examine the house before or during this walk-through. Most of the defects that Steinhausen finds in new home construction are problems of which the builder or general contractor wasn’t aware.
“A good builder should welcome an inspection prior to closing because it might save them some grief in the long run, and it might help them address things they can improve upon with future projects,” he says.
Problems can arise because of “subcontractors doing shoddy work, or a lack of coordination between different subcontractors,” sometimes when workers complete tasks out of order, he adds.
For instance, if workers install the roof before others complete the flue pipes, sewer vents or exhaust vents, a builder needs to determine how to install the flashing and shingles around these components.
The average home inspection will cost you about $315. Inspections of condos and homes under 1,000 square feet can cost as little as $200 while inspecting homes over 2,000 square feet can cost $400 or more. Nevertheless, an inspection can save you a lot of headache and hassle, not to mention money in repairs.
5. If I’m dissatisfied with any conditions, can I back out of the contract?
Admittedly, this is a question you want to ask early in the process — and before you sign anything.
In a real estate deal that doesn’t involve a new build purchase agreement, you can back out or renegotiate if, for instance, the house appraises for less than the sale price, or if the home inspection discovers significant problems.
Buyers also can terminate a deal throughout a contract period if they can’t secure adequate financing.
Talk to your real estate agent and perhaps an attorney about the contingencies in your new home construction contract, how to end the agreement — and when you’re locked in for good.
Brand new doesn’t mean problem-free — so ask away
Technically, a new home sale occurs when a buyer signs a sales contract or a builder accepts a deposit, according to the National Association of Home Builders (NAHB), a federation since the 1940s that represents more than 140,000 home builders, remodelers, and other specialists constructing new homes nationwide.
Sometimes that means the home is complete; other times, you might see just a foundation or framed walls. As of November 2019, there were 323,000 new single-family homes for sale in the United States, with 76,000 completed and ready to occupy, according to data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.
But remember — even if you feel like you watched your new home take shape — a new construction home can have more issues than first meets the eye.
“They may look pretty on the outside, but it may not be built well,” says Friedler. “The average layperson doesn’t know what’s inside the walls.”
Reputable builders and real estate agents both want their clients to be happy in their new homes, so if you’re uneasy about anything during this type of home buying process, don’t hesitate to raise your concerns.
These professionals expect plenty of questions, from “What will the estimated taxes be?” to “How is the school system rated?” and “Are there homeowners’ association fees?” So be courteous but persistent in getting the answers you need.
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