Are You Considering a New Build?
Are you considering buying a new build? What are the pros and cons of buying or building a new construction home?
There are 2 types of new construction: spec homes and custom build homes.
This past year I helped several families buy homes that were new construction. All of them were spec homes in new neighborhoods - meaning that the builder built them with little to no input from the buyer. I have also helped clients find the land they want to build their custom build dream homes. Below are some things to consider when buying a new construction home and figuring out if spec or custom is better for you or if buying an existing home is the route you would like to go.
What’s the difference between a custom build and a spec home? Control and choices.
When you decide to build a home the process is completely different than going into a neighborhood and buying a home from a builder. Builders commonly state that new construction buyers will be making anywhere from 1000 to over 3000 decisions over the course of building your custom home! Even if you are a quick decision maker, that’s a LOT of time. You can hire a team of people to help you navigate the choices but you need to add that expense to the estimated cost of $150 a sq. ft (see Forbes article, How Much Does it Cost to Build a House in 2024?). That cost does NOT include the cost of land or the cost to get the land ready for a home to be built (grading, utility connections, septic systems, etc.). It also is assuming that you are picking finishes (such as cabinet pulls, light fixtures and flooring) on the middle to low end of the cost spectrum. The finishes you choose can end up dictating 50% of your total costs. I know from renovation projects how easy it is to think that picking that slightly more expensive tile isn’t that big of a deal until suddenly all those “not that big of a deal” choices are multiplied by 1000 and you are way over budget!
For some people though, building their own home is exactly what they want and need. Maybe you have some family land to build on or have always dreamed of the privacy of not being in a neighborhood. Maybe you really dislike the current trends that builders are putting in spec homes and have a unique layout that will work for your family. I have clients that want to build because as empty nesters they don’t need a lot of bedrooms but they do want a large kitchen and living space. They would also like a massive laundry room with room to store all of their household linens. Those features are really hard to find in an existing home. I helped them find land last year and they are honing their designs and choices over the next few years before they start construction.
Here are some other things you need to consider before starting a custom build:
You’ll need to find a reputable builder that has time for your project.
You’ll need to find land that you like and understand the zoning codes of the area you want to build.
You’ll need to be prepared for overages as building costs may fluctuate during the course of your project.
If you need the cash from your current house to finance the build, you will need a place to live while your home is being constructed.
If you have a partner, you will need to make sure that you both are on the same page with regards to design and budget.
So what about buying a spec home?
Lots of people really like moving into a home that no one else has ever lived in. Right now a lot of builders of spec homes are offering incentives such as lower interest rates or seller paid closing costs. You will also often have the most on trend finishes and layouts. So what’s not to like? The biggest drawback I’ve experienced with new builds is the contract you HAVE to sign if you want to buy a home in that neighborhood. They are 100% in favor of the builder. There is even a clause that says if the builder’s expenses go up, they can increase the price of the home even after you are under contract. I actually had that happen to a client a few years back! In my latest new build experience, the builder got to pick the closing time and walk through times with zero consideration of my clients’ schedules. It didn’t matter that they were relocating to Watkinsville from out of state and would need to purchase plane tickets to participate. The builder stuck to the letter of that contract and didn’t schedule anything until a few days before it happened. We found a creative work around but it added some undue stress for my clients.
A few other details will depend on whether or not you are buying an already completed spec home or if you are coming into the process before or during construction. The great part of going under contract at the beginning of the process is that most builders will let you have some input on finishes such as one paint color, cabinet colors, and flooring. Make sure you find out exactly what you can or cannot pick before you go under contract. You will also need to be prepared for delays which can be tricky if you are navigating the sale of your current home. There is absolutely no penalty for a builder to delay closing (by months even). If you as the buyer want to push closing, you will likely be paying hundreds of dollars A DAY for the privilege. We can certainly come up with strategies but you need to plan for this eventuality.
I highly recommend that you do research on any builder whether a spec home or a custom builder. Read reviews. Try to find some people willing to talk to you about their personal experience with that builder.
Buying a spec home or building a custom home can be a really good choice. You can have the latest trends, the house of your dreams, guarantees for your first year if there are any issues, and it is truly the only time that you get to have almost perfect walls with no holes are scratches. If you go into the new build process knowing the potential problems, a lot of frustration can be avoided and overcome.