New Construction

What is new construction?

Updated March 8, 2022

New construction refers to structures that are brand new and have never been lived in. The allure of newly constructed homes is quite strong for some people. There are no worn-down parts in need of repair, and everything is shiny and pristine because no one has occupied the home previously. New homes are built to the latest code requirements and with the newest design trends in mind, and they are more energy efficient. 

Another plus in new construction is that builders don’t have any emotional attachments or memories tied to the homes they are selling. It’s a numbers game for them. The sellers of some existing homes can be difficult to deal with because they may be conflicted about selling and they want to recoup all of the time and money they have spent improving their house. They may have unrealistic expectations about what their home is worth.

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But new homes can have hidden costs that buyers don’t expect or plan for. In fact, buying new construction requires as much attention to detail as buying a used one. New roofs can be just as leaky as old ones, and the builder may have taken shortcuts that won’t be discovered until you’ve moved in. 

New construction refers to structures that are brand new and have never been lived in. Credit: Tobias/Unsplash

And in the case of homes in the country or suburbs, the attractive vacant land around the new home may be slated for the next phase or two of the development. 

And new developments can have a cookie-cutter sameness that may be unappealing to some buyers. 

Some new builds can be quite bare bones, without any of the amenities a buyer wants. If you need to pay for a deck, fencing, landscaping, a finished basement, window treatments and higher-end appliances, you may not be saving money when comparing new construction with an existing home. 

How can I build a new-construction house?

New construction homes can come about in a number of ways. A buyer may purchase a piece of land and start from scratch, hiring an architect and contracting with a builder to create a fully custom home. Many buyers have strong preferences about how they want their new home to look and feel, and they want to be involved in every step of the design and build process. 

Another option is for a buyer to purchase empty land from a developer and choose from a variety of existing home design plans and then hire a builder to construct the home. Or the buyer can build a newly finished spec home directly from a developer. 

Another option for buyers is semi-custom, in which the house or apartment is mostly built and the buyers can come in and customize it and pick the finishes. Many people have neither the time nor the inclination to make endless choices about design and materials, and this option might be best in that case.

In luxury apartment buildings in major cities, builders will sometimes semifinish a home to a white-box shell, allowing buyers to come in with their own architect or designer to customize the floor plan and all of the finishes and materials. Oftentimes the developer has its own full-time architectural and design staff to assist the buyer and their design team. Or the developer’s designers and contractors can work directly with the buyer to customize the raw space into a final fully personalized apartment.

  • Factor in Timing

Along with costs, another factor to consider with new construction is timing. Building from scratch and getting the necessary approvals and permits can take some time, and there are inevitable and unforeseen delays in the construction process. Buyers who are in a hurry should go with the semicustom or spec options.

  • Finding a Good Developer

Buyers should research a developer or builder’s reputation, along with the subcontractors they employ. 

Go online to find business reviews, feedback from the Better Business Bureau and any public records that might turn up lawsuits or fines. 

Interview a few builders and get references you can follow up with. Drive around and look at their completed projects.

  • Seeing Before Buying

In subdivisions and new planned communities, many developers build model homes so would-be buyers can get a feel for what their homes would look like and see and touch the finishes and materials. Often these models are dressed up with all of the available upgrades the builder offers, including stone countertops, hardwood flooring, custom cabinetry, high-grade hardware, extra windows and large primary bedroom suites. When viewing these model homes, buyers need to understand what is standard and what constitutes an upgrade they will have to pay for. The upgrades can add up quickly, putting the price well above the base price that was advertised and promoted. 

If you’re considering a new development or subdivision in a suburban or rural area, find out about the local homeowners association. There may be monthly dues, and some are quite restrictive, not allowing certain exterior paint colors or visible laundry or even vegetable gardens.

It is important for buyers of new construction to have their own real estate agent working with them to negotiate prices and upgrades and see the deal through to the closing. 

Remember that the builder’s agent represents the builder and is looking to make the terms of the sale advantageous to the builder, not you. Also, the seller pays the sales commission to your agent, not you, so it is in your interest to have your own agent. Have your agent accompany you to any visits to sales offices and new homes on the market. It is also important for buyers to shop around for a lender with the best and most appropriate mortgage offerings. Do not assume that the financing the builder is offering will have the best terms. 

Having a new home inspected by a licensed independent home inspector not affiliated with the builder is just as important as having an older home inspected. In fact, many experts recommend two inspections for new construction, one after the home has been built but before the finishes are put in and another just before the closing. And some experts recommend an inspection before the walls are closed up, so that the plumbing and electrical systems can be evaluated. Be there during the inspection—you will likely learn valuable tips about home maintenance and what to watch out for as the home ages.

It is also important to carefully evaluate any and all warranties that come with a new build. Different aspects of the home may be covered for different lengths of time. The HVAC and plumbing and electrical systems, for example, may be under warranty longer than the siding, doors and trim.