Don’t believe Mick Jagger — if you’re embarking on a journey to buy and build a new home, you can get what you want in your dream home.
The key is to do your homework first — and then to plan and organize your shopping process to ensure that your journey is rewarding, concise — and most of all, enjoyable.
Builders and consumers who’ve bought and built a new home agree it’s fun, exciting and rewarding. Our goal is to demystify the new home shopping process so you know what to expect.
The key is simple: Ask plenty of questions. As you do so, you’ll learn which type of home, neighborhood and mortgage are right for you and better understand the exciting choices you’ll make — including which new home community, builder, and lot is right for you — and choices you’ll make to personalize your home.
When you’re looking at new homes, you’re in good company. According to the 2012 Profile of Home Buyers and Sellers from The National Association of Realtors, the majority of consumers considering another home consider new homes. That’s not surprising, since new homes offer:
- Open floor plans that reflect the way we live today, especially family rooms that open to the kitchen
- Bedrooms with larger closets and larger, more luxurious master baths
- Ceilings and countertops that are often higher
- The latest advances in energy efficiency and significant cost savings compared to homes built just a few years ago
- Your new home and the products it contains are brand-new and under warranty, meaning more time to enjoy your home, not work on a fixer-upper used home
Many buyers also value the ability to personalize their new home to reflect your tastes in many ways, such as selecting your favorite colors and styles in cabinets, countertops, appliances, flooring and carpet, tile, kitchen and bath faucets and fixtures and more.
Given the many advantages of new homes, it’s not surprising they’re on the list for most home shoppers. And shoppers not looking at new homes may have a misperception.
“We find some people don’t even consider new construction because they mistakenly think it’s automatically more expensive or more complicated [than buying a resale home],” says Kevin Oakley, director of marketing for Heartland Custom Homes in Pittsburgh. “People tend to shop by excluding things, but they may miss out on a chance to own a home that’s perfect for them.”
For new home shoppers, here’s a roadmap of what to expect:
STEP 1: Calculate how much home you can afford.
We’ve anointed this as the first step, but there’s room for disagreement on whether the mandatory opening move is to determine firmly how much a lender says you can afford.
“I think it depends on the price point. If it’s a first-time buyer situation, (financing is) a great starting point,” explains Angie Colston, vice president of sales and marketing for Ryland Homes in Orlando and Jacksonville, Fla.
That said, some first-time buyers find that visiting model homes before nailing down financing is a reasonable alternative starting point because Colston’s company, like many builders, will help consumers calculate a realistic price point.
In Colston’s experience, people who have already owned a home — known in real-estate parlance as “move-up buyers” — possess a certain savvy about their price range and can go ahead and begin the shopping process, then arrange financing as they go along.
But Oakley of Heartland Custom Homes is more convinced that getting a grip on affordability is the first step.
“People tend to pre-approve themselves for a mortgage without talking to a financial expert, and often they limit themselves unnecessarily,” he says. “Don’t limit your considerations by ruling out something because of financing matters that you might not understand.”
Generally speaking, builders seek a 20 percent down payment and may require clients to pay for the house in installments as construction progresses. Some builders offer mortgage financing, but as with any loan offer, it could pay to comparison-shop.
Adam Koos is a financial planner in Dublin, Ohio. He tells his clients that as a rule of thumb, a mortgage payment shouldn’t exceed 25 percent to 30 percent of monthly income and they should have a general idea of the cost of insurance, taxes, utilities, etc.
STEP 2: Define your needs before embarking on your hunt.
Creating a wish list that outlines your preferences — and indulging in a little honest soul-searching before you start your house hunt — will both pay big dividends with a more focused and shorter search.
As you think about your wish list, it’s very helpful to separate your must-have features from the nice-to-have features that you’d like in your new home.
Think about your lifestyle. Are you into large lots, wide-open spaces and hiking trails? Or are you the high-rise condo with balcony type? While that’s a pretty extreme difference, it helps to think about ideal commute times, schools (better schools add value at resale, even if you don’t have children) and what types of infrastructure (shops, museums, restaurants, libraries and hospitals) you’d ideally like close at hand.
These factors should help you narrow down to a specific part of town. Next is to define the basic attributes of the home you desire. These include more than just the number of bedrooms and baths you want. Do you love to entertain or cook? Perhaps a large family room open to the kitchen is best.
Do you want a home office? A media room? Space for hobbies? All are vital questions to ask before you start your search.
Don’t forget to think about the future. The average buyer lives in a home at least five to seven years. Many people stay far longer. Think through how your needs will change over the time you’ll be in your new home: Children may come, grow, or leave the nest. Post-college kids may boomerang back home for a time. Will a parent live with you at some point? Will you tire of climbing a staircase? If so, a master bedroom on the first floor may best meet your needs.
Dennis Webb, vice president of operations for Fulton Homes in Phoenix, says his average homebuyer spends at least four hours online. That’s smart. Today, you’ll find photos, floorplans, home and community amenities, videos, virtual tours and a whole lot more online. Your initial online search will save you loads of time — and help you select the new homes that most closely match your criteria to visit in person.
STEP 3: Start your search on the web.
A so-called aggregator website, such as NewHomeSource.com, is a great place to start. With more than 80,000 new homes, builders and new home communities across the nation, NewHomeSource.com is the largest new home resource in the world. That breadth of new homes for sale allows shoppers to quickly get a feel for many new home communities and active builders in a given area.
While searching, keep your wish list handy. Eighty-thousand–plus listings may seem like a goldmine, but it can get daunting when a simple search in a market (Houston, in this case) nets you 9,221 new homes in 638 new home communities across several hundred square miles.
Fortunately, major real estate sites like NewHomeSource.com offer built-in filtering tools so you can refine your search based on your wish list. Filtering for your criteria (number of bedrooms/baths, minimum/maximum price, and features of your new home will allow you to quickly focus on homes that meet your needs. You can also filter for a specific school district or search for amenities of the new home community (such as a community center or pool and hiking trails) to further refine your search results,
So, you’ve narrowed down your search. What’s next? A great next step is to request information from a builder. Look for key facts on a specific builder’s homes in a given new home community. Other helpful info includes driving directions, contact information for the builder or community, a link to the builder’s own website and more.
Having defined your wish list, narrowed your search results, and focused on the new homes and communities that most closely match your criteria, it’s time to hop in the car and go visit model homes in person.
While shopping online is an ideal way to narrow down your search, there’s simply no substitute for an in-person visit to the homes that match your needs. A home is the largest investment most people make. You need to go see it.
When visiting model homes, don’t overlook the time-honored advice of asking around about builder reputations. When visiting new home communities where buyers have already have moved in, don’t be shy about speaking to residents you happen to meet. Recent buyers are often happy to share their experiences.
Visiting model homes and builders’ offices not only can reveal a builder’s offerings, but a builder’s on-site staff can help you better define and refine your needs.
“We do a lot of investigative work upfront,” said Colston of Ryland Homes. “We sit down (with home buyers) and talk and figure out what their needs are and their time frame. We laser-focus on their information and point out things in the models that are important to them.”
STEP 4: Working with a real estate agent.
If you’re shopping for both new and resale homes, odds are good you’re using a real estate agent. After all, only an agent has the code to open the lockbox that allows you and your agent to tour a resale home. A top real estate agent can add lots of valuable insight into the community and the process.
Terri Hunt, an agent with RE/Max Suburban in Schaumburg, Ill., states that an independent real estate agent experienced in new construction can be a valuable ally.
“We bring a lot of knowledge of local builders’ reputations,” says Hunt. “We may have worked with a builder in the past and understand the type of construction he or she provides. We know the towns he or she is building in, the school districts, etc.”
Whether or not you work with a third-party agent, make sure to fully tap the considerable expertise a builder’s on-site sales team offers.
The builder’s sales consultant has deep knowledge and expertise in the stages of construction, the builder’s library of floorplans, the availability and price of specific lots, the availability of options and upgrades, the builder’s approach to construction and energy efficiency, warranties and a whole lot more.
STEP 5: Custom or production, which is right for you?
Homebuilding can be sliced into two very broad categories: production and custom. Higher volume or production builders offer a line of specific models (often referred to as plans) at base prices that include numerous specified materials.
In addition to the many standard features included with each home, most production builders offer a menu of product choices and upgrades. Buyers typically can expect to make product and design choices from a menu of options in categories such as appliances, cabinets, countertops, faucets and fixtures, flooring, lighting and more.
Many production builders also offer some variation in the floorplan. It’s often possible to add a bay window or upgrade to a three car garage. Other builders give you the choice of a linen closet or using that space for a larger walk-in shower in your master bathroom. Some builders even offer a bonus room. Based on your needs and desires, you can have this built out as an extra bedroom, a study or perhaps as a media room.
With the many choices production builders offer, buyers can easily personalize their new home in many ways. If you wish to design a home from scratch, a custom home is your best bet. Custom homes are one-of-a-kind. They’re entirely built to order, created by an architect, and constructed according to the customer’s dreams, wishes and desires. The limits to a custom home are very few: your imagination, your budget, and what a given lot and local zoning rules accommodate.
Speaking of land, custom homes are often built on the customer’s own lot, but some new-home communities are comprised entirely of custom homes. Some large new home communities include neighborhoods comprised of custom homes and neighborhoods with production homes. Both custom and production builders can deliver a high quality home, with the range of personalization and customization above. For more on choosing a custom or production builder, see the related articles below.
STEP 6: Go shop model homes that match your needs.
The fun part, at last! Walking through state of the art model homes furnished by top interior designers (AKA merchandisers in the new home world) offers some big benefits:
You get a free pass into an interior design showroom, with the latest home furnishing and design trends on display. Picture Crate and Barrel, Ikea and your local furniture, wall-covering, paint and appliance dealer showrooms all rolled into one. What’s not to like? If you’re lucky, you’ll also score a fresh-baked cookie, a free bottle of water or a pen with the builder’s logo, and a stack of glossy brochures to take home.
Most importantly, you’ll gain a vital (and no-obligation) sense of how it might feel to, well, actually live there.
One place you’re almost sure to visit? The builder’s sales center, which is often located in a garage of the model home that’s been all dolled up. (Look for the landscaped trees and shrubs where the driveway should be!)
A key feature of the sales center is the site map. Picture a large table the size of that ping pong table taking up valuable space in your basement. The site map shows the boundaries of each neighborhood within the overall new home community; such neighborhoods are often differentiated by price, as well as by the size of the home and lot. Individual lots (building sites) are shown in scale.
Here’s where the on-site team shows their stuff: You’ll learn what Phases (parts of the community) are currently for sale. You’ll also see lots (building sites) with a variety of sizes, locations, and in some case views. Not surprisingly, those lots on the ridge that overlook the nature preserve and river cost more than a smaller, interior lot.
When visiting the model home, you’ll also open up the world of options and upgrades. More on that later, too. Suffice it to say, selecting premium lots and options/upgrades will add to the price of your home. That’s a big reason why we recommended that you establish how much home you can comfortably afford and give thought to what features are most important to you and others in the home.
The goals for your model home visit are to gain a first-hand sense of the builder’s approach to design, construction, and energy-efficiency; to assess the quality of workmanship and design; and to compare and contrast the standard features and options of homes from your finalist builders.
Becky Bircher had an “aha” moment in 2011. She and her husband, Matt, were walking through model homes in Eureka, Mo., trying to decide whether to build or buy a resale home. The professional kitchen designer found herself scrutinizing the woodwork.
“The biggest thing for me was checking out the details in the model homes,” explains Bircher. “It wasn’t who had the prettier countertops. It was, do the door frames line up? Does the builder pay attention to the crown moldings? That was a huge thing for me, personally.”
The couple ended up working with Centex Homes, a production builder, and moved into their new home in December.
If you’re leaning toward a custom builder, keep in mind some custom builders also construct models. And many custom builders will arrange for you to tour previous clients’ homes, which not only offers insight into construction and design, but also a chance to talk to the homeowner about their overall experience.
Does it seem like you have a lot to look for in your model home visits? Definitely! And it can all start to blur together if you visit new home communities in quick succession.
To help keep track of what you see, jot down the most compelling details that jumped out to you. Make heavy use of your cell phone camera. Collect brochures and floorplans and make notes on them, too.
One “power tip” from a seasoned new home shopper: Take a photo of the outside of each model home as enter it. Try to include a sign with the builder’s name. You’ll know subsequent photos all came from that home until you scroll to the next home’s exterior.
STEP 7: What’s your timetable?
Good things take time. From the moment you sign a contract with a builder until the day you actually move in may be months or, for a large custom home, more than a year.
Obtaining construction permits may take two to six weeks, builder reps say.
“The build time for us is typically 90 to 120 days, depending on the plan,” Colston says. “Overall, (in a production home), it could be a five- to six-month process.”
For a custom home, the timeline is typically longer. Fulton Homes in Phoenix, Ariz., builds both production and custom homes, so they have experience with both timelines.
“Keep in mind that plans have to be drawn, and homeowners often revise them as they go along,” says Dennis Webb of Fulton. “And it has to go through city permitting. That might add five months to the process. I’d say to expect a year and a half to two years for a custom home.”
If you’re hoping to move in more quickly, a great way to do so is to buy a “spec” or inventory home that’s been partly or fully constructed prior to being sold. A completed inventory home may take only weeks to close. You’ll have all the benefits of a new home but won’t have the opportunity to personalize its features. It can be an ideal answer for a transferee or anyone who wants new construction and needs to move quickly.
Also look for inventory homes that are underway but still some weeks away from completion. A buyer may still be able to select some features and upgrades such as carpeting, tile, cabinets, etc.
One more choice: Buy a model home. When a new home community is close to sold out, most builders will sell the models, with a short-closing window likely. A plus to buying a model home is that it usually contains many extra features and upgrades.
STEP 8: When you pick a floor plan, think ahead.
While home-shopping, you’ll get lots of advice on square footage and home features to accommodate your lifestyle today. Keep in mind that your needs (or preferences) may change over the years or your household may grow in unexpected ways.
“I’ve had two houses built, myself, and I’ve built them thinking that there was a chance that I’d have one or both parents living with me,” said real estate agent Hunt. So she asked the builder to convert a first-floor powder room (situated near a bedroom) to a full bath so her parents wouldn’t need to navigate steps to an upstairs bathroom.
Many production builders offer floor plans that accommodate changes. Lennar, for example, recently introduced its NextGen — Home within a Home single-family home, consisting of two separate living spaces, with separate entrances, under one roof so that multiple generations can live together — but not too closely together.
Keep in mind that technology advances, as well. Many builders can take steps to plan for that, such as including conduit and robust wiring during construction. As technology, home automation and media rooms each evolve, you can more easily keep up. For more on this, see our article on future proofing your home.
STEP 9: It’s more than the new house — it’s also the lot it sits on.
Don’t forget the lot. Considerations in choosing a home site might include lifestyle: Do you want to back up to the woods? Perhaps you’d rather be away from a main road or it might be important for your children to be able to walk or bike to school.
Other factors are architectural — some home plans can be built only on certain lots that will accommodate them. A three-car garage needs its space, for example.
In addition to selecting a lot, you’ll often select what’s known as an elevation. These are variations on how the front façade of your home will look. The degree of difference between elevations can be pronounced — windows are moved or added and deleted, the gables (arched rooflines) will vary dramatically, and the exterior of the home can vary from brick, stucco, siding or stone.
Another thing to keep in mind is that nowadays, most developments prohibit building identical-looking homes side-by-side, across the street from one another or even within the same block. This is designed to provide a pleasing diversity of homes and designs, what builders refer to as a streetscape.
Then there’s the sun: “It’s hot here in Phoenix in the summer, and the orientation of the home to the sun can make a big difference in heating and cooling,” says Fulton Homes’ Webb. “A lot of people don’t like west-facing yards in the summer, but if they’re buying a winter home, a west backyard would be great.”
Last, consider where your home is placed in relation to intersecting streets. Some homes are positioned so that cars drive parallel to them. Other lots can be raked by the headlights of every car turning a corner. There’s a lot to consider (not just the view) when selecting a lot, too.
STEP 10: The world of options.
Builders in recent years have responded to consumer demand for “personalization” with a huge array of features that are upgrades from their basic offerings. Generally, consumers need to make many of these choices before signing a final contract, because it affects the price.
“There are three basic ways of doing it,” explains Webb of Fulton Homes. “A builder may sell options out of a space in their model homes, or they might send buyers to an outside flooring company or appliance company that the builder contracts with to handle the selections.
“Or, you can do what we do, and what many builders are doing, which is have a separate design center,” he says. “We created it because when we were working through a flooring company, we couldn’t sell everything there. They didn’t have sinks and ceiling fans and light fixtures, etc., so we decided to do our own design center to offer a one-stop shop.”
On one hand, it can be exhilarating to have a house that’s wholly personalized — that’s why some people build, after all — but watch not to overdo it.
Choices that delight you today may lose some appeal over time — or not be to everybody’s taste if you later decide to sell the home. It’s wise to keep resale values in mind when you’re picking out features. If fireplaces are extremely popular in your market, it might be wise to invest in one, even if you plan to use it only occasionally.
STEP 11: Relax, and watch the show.
Whew! You did it! You completed your soul-searching. You made your wish-list, got pre-qualified for how much home you can afford, narrowed your options online and visited a lot of often stunning model homes. You selected options and upgrades, you considered lot selections and premiums, and you debated elevations and colors schemes.
You have chosen (and helped design) a home that’s uniquely you. It’s far more energy-efficient than a home built just five years ago — and light years beyond a 10-, 15- or 20-year old home.
You likely have an open floor plan that reflects the way we live today, higher ceilings, larger closets and the peace of mind that comes with knowing your new home (and the products it contains) are brand-new, never lived in, under warranty and poised to give you years of hassle-free time enjoying your home — not fixing one out of date or broken element after another.
Congratulations! You’ve successfully made the transition from the home shopping process to the home building process! And we’ll be doing our best to demystify what to expect while your home is being built in another article soon.
Meanwhile, as a buyer, you can count on a final walk-through of the house prior to the closing. There will likely be other opportunities to see how it’s going. Most builders allow buyers to visit the construction site, though often with some restrictions because of safety and insurance concerns.
Many companies keep their clients posted about what’s happening. Centex buyer Becky Bircher says her sales rep alerted her with photos and news at various stages.
“She would contact me by calling me, texting me, emailing me, even Facebooking me,” Bircher recalls. ”Sometimes we would walk through and we’d notice small things in the construction that concerned us, and she’d get them fixed immediately.”
The Birchers initially looked at re-sale homes, but she admits she’s glad she changed her mind and got past a bit of intimidation over all the decision-making.
“It was a tough but quick and fun decision to make.”