Pros & Cons to New Construction

Marketers do a fabulous job at creating an idyllic picture of what life can look like in a brand new, never-been-lived-in-before home. Just imagine: you and your coolest friends swavely cooking a MICHELIN star meal in a chic open layout kitchen outfitted with beautiful chef-grade high-performance appliances, a seamless built-in fridge, impressive countertops and cabinets that amaze. Or perhaps your freshly manicured toes are tickling the water of a zero-entry pool as you enjoy a glass of chilled rosé while the kids frolic in the lush green lawn bordered by a dense canopy of mature trees. Maybe what appeals to you is the prospect of building a tight network of neighbors in a community that shares the same interests and values as you do. To top it all off, this custom experience is delivered to you on your preferred timeline and comes at a cost much less than any resale home you’ve ever toured. Sounds f*cking fantastic. Amirite?

Finding a situation like this is not impossible; however, if this is your expectation on day one of living in a new construction home, know that it’s very improbable. Still, buying a new construction home in a strategically located master-planned community could be a wise move–financially and to support the lifestyle you’re seeking. A satisfactory outcome just takes a bit of research, some flexibility, and a lot of patience.

What the hell do I know?

Fair question. I’m not only an Accredited Buyer Representative (ABR), I also have NHC designation. As a new home construction specialist (NHC), I’ve taken additional training specific to the new home builder and construction process. I’ve personally purchased new construction in both the suburbs and in downtown Austin, Texas. My clients have purchased from local boutique builders and from nationally recognized builders such as DR Horton, Taylor Morrison, Scott Felder Homes, and so on. My experience even extends to supporting custom builders on the sales side, which gives me an advantage in understanding the builder-seller’s mindset and goals.

So, I know enough to be a great asset to anyone considering the option of buying a new construction home.

The New Construction Home Buying Process

When it comes to purchasing a new construction home in Texas, the process is very similar to that of a resale home, but there are some important differences to consider.

Key Differences

• Resale purchase contracts promulgated by Texas Real Estate Commission (TREC) are designed to protect the consumer while new home builder contracts drafted by each builder’s legal team are designed to protect the builder.

• Compared to a resale purchase, the opportunities and timeline to change your mind and back out of a purchase are very limited: With a resale purchase there is a negotiable option period and over 32 buyer outs in the TREC-promulgated contract; with custom new construction contracts, I’ve seen builders only offer 48 hours to three days after signing a contract to change your mind, and there are no to little clauses allowing you to back out or get your earnest money back. So, once you sign that contract, you are essentially committing to the purchase.

• Timelines can be longer and dependent on supply chain and labor; closing dates and move-in timelines are not definitive. If you are not in a flexible lease or have an alternate plan, that could create some stress and discomfort.

In general, buying a new build will go like this:

1. You, and preferably with your REALTOR®/buyer’s representative, will first meet with the builder to go over neighborhood features, the construction phases and timeline, and that builder’s delivery process.
2. The builder will then often require you to become pre-qualified with their preferred lender; you do not have to work with their lender. There may be some incentives available to you if you do, however, it’s possible that other lenders may offer incentives for loans on new construction.
3. Select lot location and floor plan, review design packages and negotiate any items.
4. Sign the contract and provide an earnest money deposit. In some cases the earnest money deposit is a set amount of money; in other cases, builders typically require five percent of the base price. NOTE: When and if you opt for upgrades or modifications, builders often require that you pay for the cost up front.
5. Construction begins and the builder will notify you of building progress along the way. During this time, you will have have the opportunity to inspect the property. And I recommend that you do so (ask me why). You can have one inspection toward the end of construction, but I recommend a three-step inspection: at foundation pour, pre-drywall, and final.
6. A few weeks after construction kick off, you will have an opportunity to meet the builder’s design specialist to take a deeper dive into all the design upgrades available to you. At this time you will choose everything from door styles and door knobs to faucet finishes, countertops, flooring, and lighting fixtures.
7. As construction is nearing completion, the builder will schedule a blue-tape walk through with you. It is at that time when you should point out any egregious aesthetic defects and anything that is inoperable or missing. The builder will address these punch-list items and you will have an opportunity to re-inspect before closing.
8. After closing, you typically have one year to alert the builder to any issues that need to be addressed related to workmanship; home builders usually offer 10-year warranties for major systems like foundation and roofing

Pros & Cons of New Home Construction

PRO: You’re getting a brand-new, never-lived-in-before home.

CON: You’re getting a brand-new, never-lived-in-before home. You’ll be the testers for the first year, but you’ll also get a warranty.

PRO: You can customize some design features such as elevation (how the house looks like from the street), cabinetry, flooring, lighting fixtures and counters.

CON: There may be limited options that have been preselected by the builder OR there may be an overwhelming amount of options from which to choose.

PRO: new construction must adhere to the latest building codes and efficiency standards.

CON: No mature trees, and sometimes no grass as well.

CON: Driving through a construction zone… the sounds, the nails on the roads, etc.

CON: There may be additional property taxes in the form of a PUD or MUD.

CON: Additional after-closing costs like cabinet pulls, window coverings, and fans which are typically super basic or not included from the builder.

How I Help People Like You

• I offer strategic advice on which builders, areas and opportunities can best support your financial and lifestyle goals.

• I will serve as your advocate looking out for your best interests and guiding you along the new construction home buying process in Texas, reminding you of checkpoints requiring due diligence.

• I can provide recommendations for inspectors, real estate attorneys, and resources for aftermarket upgrades.

• If needed, I can support you in developing a contingency plan should the delivery of your new home take longer than expected.

So, should you buy a brand new or used home?

In reality, humans are such that we are always wanting more; meaning, whichever route you choose there will likely always be something you wish you could change about the your home. Working with an educated and experienced real estate professional in Texas (like me) can help you strategize about what makes the most sense for you based on your goals and situation, and help to set reasonable expectations.