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Many home buyers hesitate to purchase a new construction home because they wouldn’t know where to start and the idea of the process seems daunting. It doesn’t need to be as painful as you think if you assemble the right team of lenders, real estate agents, builders, and contractors to support you along the way. Here is a quick overview of the new construction process and what you can expect:

1.Get Pre-Approved – The first step in any homebuying process is to find out how much you can afford based on what a lender will approve you to borrow. The builder you choose may have a preferred lender or their own lending operation but it is best to do your homework to find out how much you can borrow and what the interest rates are. Research lenders that specialize in construction or renovation loan programs. For more on types of construction loans see Renovation Loan Programs for Projects of Every Size.

2. Find a great Real Estate Agent – Before you meet with any builders, find a great real estate agent that will represent your interests. Builders sales agents are incentivized to sell quickly and may pressure you to sign a contract that does not serve you well. If you visit a builders site without an agent the commission could go entirely to the builder’s sales agent and the builder will refuse to pay your agent. By hiring your own agent, you will have someone negotiating on your behalf, answering your questions and seeing that you get the best deal possible.

3. Shop for a location – Your preferred location could dictate whether you buy in a new development in the suburbs or a vacant lot in the city. It is best to work with your real estate agent to decide what neighborhood or school district you want to live in and then start looking for lots within those boundaries.

 

4. Choose your Builder & Finalize Options and Floor Plans – Once you and your agent determine your location, start meeting with builders in the area. Ask about what options and upgrades are available and how much they will cost. Do your research on the builder’s reputation and his previous projects. Once you have hired a builder, be sure you are completely satisfied with the floor plans before signing off on them. You usually can’t make any changes after construction has started and if you can they are expensive and cause delays.

 

 

5. Consult with a Lawyer – Have a real estate lawyer review your purchase contract before you sign it. Make sure you understand what you are committing to and any contingencies or cancellation rights.

 

 

6. Start building! – While your new home is under construction resist the urge to visit the property. Apart from the safety issues of an active construction zone, your presence slows down the workers and interrupt their workflow. If there is a legitimate reason to go to the site you should schedule an appointment with the foreman and bring your agent.

7. Get a Home Inspection – Even if the builder tells you it is not necessary, hire an independent home inspector to check the plumbing, electrical work, roofing and drainage. If he finds any issues the builder should make repairs within a certain period after closing. Make sure your purchase contract allows third party inspectors and guarantees necessary repairs.

8. Move In!

NAIHBR is a not-for-profit trade association brings together homebuilders, contractors, real estate professionals, lenders and suppliers to simplify the new construction or renovation process. Our members have a strong interest in building value in their local communities. For more information or to join NAIHBR contact us at 855-733-8100.

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