You asked, I’m answering. I put a question box up on Instagram offering to answer any questions there might be regarding building a new construction home. The questions submitted were great so I thought it would be most helpful to gather them together in one place. So let’s begin!
What is the timeframe for building a new construction home?
Timing is different with every builder. I believe most builders are giving a year for competition due to demand and COVID delays. For the actual building process, it takes roughly six months from start to finish once construction begins until the moment they hand you the keys. This obviously varies based upon the size of your home and details within. Another thing to consider is that for those of us living in the North/Upper Midwest we have to work around Winter, which can cause delays as basements and foundation can’t be dug and poured during the freezing months. We signed our purchase agreement in September 2020 but they couldn’t get us on the building schedule until the beginning of April. They dug in April and finished in September, giving us roughly a five month building time.
What is the most difficult part of the building process?
I’d definitely say the wait was the hardest thing. It’s hard to be patient when you’re so anxious to be in your new home. Also deciding on the design elements was definitely overwhelming at times. Thankfully builders commonly offer the help of an interior designer to assist in decisions.
Can my realtor be involved in the process?
Each builder is different in what their rules are regarding this. Our realtor was involved in the process and was very helpful. If you haven’t been working with a realtor yet and are already familiar with what builder/neighborhood you’d like, you wouldn’t necessarily need a realtor to be involved. The builders have their own consultants that’ll walk you through the entire process, start to finish. We found our realtor to be very helpful in the negotiation process and it helped having someone in our corner for the tough discussions.
Do you have the pay the builder prior to completion?
Yes, as with any purchase agreement signed when buying a home you’ll be required to provide earnest money. Each builder varies in how much they require for earnest money. Our builder required 10% of our total home price as earnest money. Half of the earnest money was required at the time of the purchase agreement being signed, the other half was required just prior to the dig date.
How much should you estimate to spend on design upgrades?
This varies depending on the house size and the builder. We selected a builder that offers homes that come with upgrades built into the base home price. For instance, hardwood floors were included in the base price of our home. Some builders will only offer lament as included in their base price, meaning if you’d like anything different you’ll have to pay for that.
Our builder said on average people spend 1-10% of the price of their home at the design studio.
My advice is to select a builder that provides higher quality material as included in their base home price. This will prevent you from being surprised at the design studio with a $30k+ increase in your home price.
Is there an additional cost for the land?
For the most part, yes. Each builder is different in this but commonly you will pay anywhere from $2k-$50k for just the lot. This is in addition to the price of the house. Each lot varies in price based on size and location. I’ve seen some builders have a few lots without a premium but I wouldn’t say that is easy to come by. Usually if you find this those lots will be the least appealing lot in the neighborhood, which might be why the builder offers them at a discount.
What is a builder’s option book?
The option book is one of the first things you’ll do once you sit down with a builder and start discussing the process. You’ll pick out the floor-plan and lot you’d like. Then they’ll walk you through their option book. The option book is exactly what it seems, full of options that you can add into your home. These options would include things such as a larger kitchen island, freestanding tub, hardwood floors throughout, staircase upgrades, tiled shower, etc.
What is the best advice you would give someone who is thinking about building?
Do you research. Building a spec home is much different than building a custom home. Determine which you’re up for and go from there and either way do your research on the builder. I’d suggest visiting 5+ builders in the area and pay attention to the details of the home. Sit down with a few different builders and put together a pricing sheet. This is super helpful in determining which builder has the best price based on what upgrades are included.
I hope you found this Q and A helpful and makes you feel more informed as a buyer.