Buying With a Home Builder: 5 Questions to Ask

Buying With a Home Builder: 5 Questions to Ask

Buying new construction real estate When purchasing new construction, a buyer will likely go through a builder constructing a complex or subdivision of homes. One builder may have a very different style than others, so it takes consideration on behalf of the buyer to find a builder who suits their home-building needs. Here are five questions to ask before any buyer starts signing paperwork.

Do You Have the Appropriate Experience, Licenses and Insurance?

The first thing you want to know is if the builder has enough experience to handle whatever the project demands, and that they are approved to build in your state. Inquire about the builder’s experience and their criteria for subcontractors making bids on the project. Confirm that the builder has the proper licensing for construction work in your state, and that they carry insurance for anything that may go wrong during building. Find out what the insurance requires for buyers to visit the property before construction is complete.

How Is the Project Financed?

Builders often finance the building of homes or subdivisions through short-term construction loans. The loans usually last six months or a year and come due at the end of that term, if they are not refinanced. However, the terms of the construction loan make it necessary to have a solid estimate on construction costs. If the builder’s contractors underestimate by a large margin, the project may be put on hold while the builder seeks additional funding.

What Can I Expect From the Building Process?

Buying a home that has not been built yet involves several stages. If the home is part of a complex or subdivision, you may be instructed to apply for a specific phase of the construction and bid on a certain lot. The builder may offer its own financing program that you will need to apply and be approved for if you cannot guarantee mortgage pre-approval from a different lender. After initial approval, you will be given opportunities to make choices on designs for your home, or to add upgrades for an extra cost. Although completion of the home and the final walk-through may be delayed, the builder should give you an estimated timeline before you initially sign for the purchase.

Can I See Model Homes?

The best way to get a feel for the builder’s skill and style is to look at some model homes for yourself. If the building process for the neighborhood is already underway, there may be a few models built for you to explore. If not, take the opportunity to visit other subdivisions completed by the builder. Ask for references of previous projects, and talk to homeowners to see if they were satisfied with the process and the quality of the work.

How Do I Express Concerns During Construction?

A small builder may make it very easy for you to communicate with employees as you need to. The larger the builder, the bigger the bureaucracy. It is very likely that you will have questions or issues during the process, and you need to know that these concerns will be addressed promptly and accurately. Ask for a contact list for questions about construction, financing, upgrades and the final walk-through. That way, there's a lesser risk of being sent on a wild goose chase when you only want to know the status of your flooring upgrade.

Buying a home before it is built requires a higher degree of research and trust on your part. Speak to a real estate expert for questions on buying unbuilt properties to ensure that you go into the process with confidence and peace of mind.

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