In Denver’s hyper-competitive real estate market, the decision to purchase a “new construction” home from a builder can be a welcome and appealing option. When I say “new construction” home, I’m referring to purchasing a brand new home that is built from the ground up from the big builders like Oakwood, Lennar, Richmond, DR Horton, etc, and the smaller local ones as well. There are many advantages to taking this route to home ownership if it works for your particular situation. Besides, what’s better than being the very first owner of a particular home?
I recently had the pleasure of helping a few buyers through the process of purchasing brand new homes from builders in the Denver area. Overall, the process went smoothly and my clients are now in beautiful brand new homes. If you’ve never been through the new construction home purchase process, here are a few things to know:
1. You can have a Buyer’s Agent help you in your new home purchase at no charge to you. I’ve never come across a builder that didn’t offer a broker co-op. That means a buyer can have representation without charge. Due to the complexity of the transaction and friction points that may arise, it’s smart to have an agent looking out for your interests and helping you work through the process. Your agent can provide you consistent communication with the builder/sales reps/superintendents to make sure certain items of concern are being handled properly, especially since builder office hours are typically during the standard business day while you are at work. Even more, your agent can help with negotiations when necessary. Don’t do it alone.
2. The builder’s purchase contract is different from the standard Colorado state form. Where the Colorado purchase contract is designed to protect the buyer, the builder contract is designed to protect the builder. Many of the typical rights of a buyer in a resale transaction are not included in the builder’s contract. Additionally, each builder’s contract is going to be different from the next. This isn’t necessarily a bad thing, but just something to be aware of. You’ll want to do a thorough review of the contract with your agent and your attorney.
3. The timeline to close can be much longer and is always subject to change. While the typical resale transaction can close in 30-45 days, the typical new home build can take 8-10 months to close when starting from the ground up. Although a builder will be able to give you an estimated home completion date, many factors play into the actual completion of the project, including subcontractor scheduling/availability, weather (especially in the winter), inspections/permitting by the city or county, and material availability. When you sign your builder contract, you are agreeing to this fact. Make sure know what the actual “no later than” date is.
4. Know what your purchase price does or doesn’t include. This will vary from builder to builder, but is something to ask about. Landscaping, fencing, and sprinklers are often not included in the purchase price. Also, you’ll most likely visit a Design Center where you will choose colors/paints/flooring/cabinet options and upgrades – be careful as the price can increase! Also, your closing costs may be a little higher since you’ll most likely be responsible for covering the cost of a title insurance policy.
5. The new construction process will include a “Pre-Drywall Walk” and a “Home Orientation” tour. During the pre-drywall walk, you’ll be able to walk the home with the builder and see where the electrical, plumbing, and water lines are being run as well as see the mechanical systems. This is also a good time to review what was agreed to in the contract regarding placement of certain elements of the home such as the wiring for an upgraded sound system or placement of can lights. Once the home is complete (or nearly complete) you’ll do a home orientation tour with the builder to review the home and talk through all of the elements of the home (how to change the furnace filter, for example).
These are a few things to know to if you decide to purchase a new home from a builder. I hope you’ve found it helpful. Let me know if you have any questions about these comments or want to dive into anything in more detail. Here to help!
And remember, if you walk into a builder’s model home, decide that you love it and want to buy it, stop what you are doing and call your agent immediately! Don’t sign anything with the builder until your agent is on site with you.
Thanks for reading!