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new construction home buying guideBuying a new construction home is very appealing to many home buyers. Most times you have the chance to pick out your own custom additions to make the house unique to your personality. There’s also the allure of living in a home that no one has lived in before.

It can be a fun and rewarding experience building a home, but it’s important to understand the differences from buying a traditional re-sale home.

Why it’s important to work with an agent

It’s important to keep in mind that the builder’s agent is working on behalf of the builder and does not have your best interests at heart.  When hire a realtor, it doesn’t cost you anything additional because the builder pays the commission and you get the benefits of having someone fighting for your interests.

When visiting new construction homes, always be sure to tell the on-site agent that you are working with an agent.

What to expect during negotiations

    – In a sellers market, keep in mind that most builders are not going to negotiate aggressively on the price, especially when there is a shortage of inventory.

    – Lender incentives are sometimes provided by the builder if you use their preferred lender.

    – In a sellers market, upgrades are often not negotiable.

    – In a buyers market, we have more room to negotiate.

    – Refrigerator, Washer and Dryer are not typically included in the cost of the home.

    – When buying an existing home, we can often negotiate for sellers to pay your title insurance policy.  In new construction, builders almost always pass on the title policy cost to the buyers.

Overview of Builder’s Contracts

– Most new construction contracts are drawn up by the builders attorneys and are not the standard Tennessee Association of Realtors (TAR) contract.

– Builders will often provide a builder warranty that lists everything they will cover the first year you are in your home (A great realtor will review this prior to submitting an offer but it is your responsibility to review and address any concerns prior to signing a contract).

Builder Upgrades

Please note when previewing a model home that these homes are usually furnished with top of the line finishes that do not come with the standard purchase price.  It is important to know what the base listing price is as well as the standard features in the home in order make sure you are within your budget.

  – We suggest factoring in anywhere between 5K-20K in upgrades when looking at new construction properties.

  – Try to obtain a list of the upgrades prior to signing a contract.

  – You typically have a certain timeframe after signing a contract to select these upgrades.

  – Change orders are additional charges if you decide to make changes after you have made your final selections. This can get costly so make sure you are okay with the finishes you selected before signing a contract.

  – Change order monies as well as upgrade costs, are typically charged to you at that time and they cannot be rolled into the loan  

New Construction Build Times

Depending on square footage and the time of year, build time can be anywhere from 6 months to a year.  If you are looking at a spec home, the home will mostly likely be completed in less time depending on how far along in the process the builder is.

It is important to remember that builders are just providing a general time range and these dates are often pushed back several weeks or can be moved up if the builder is moving quickly.  We would not suggest scheduling any movers until the certificate of occupancy is provided and we have a finished product.

There are a lot of details that go on behind the scenes with new construction.  It may look like a builder is not moving quickly, but it is important to remember that they have to have building code inspections and certain approvals before they can move forward with the building process.

Home Inspections

You have the right to schedule an inspection. We suggest doing an inspection prior to your blue tape builder walkthrough so that you have a list of all items that need repair, improvement or need to be completed.  You can then have the home re-inspected for an additional charge after the builder completes the necessary repairs that they agreed to complete.

Please note builders often only complete repairs that are in compliance with building codes.  If the item is not a code issue they will more than likely not complete the repair.

Home Appraisal

An appraisal will not be ordered by the lender until the home is complete.  Some loan officers will order an appraisal prior to completion but you will be charged an additional fee for the appraiser to come out and do a second appraisal.  Final underwriting can not be completed until there is a final appraisal.  It can take 7-10 days after the appraisal has been completed to receive a clear to close.  

Blue Tape Final Walk Through

Builders will schedule a blue tape walkthrough and one final walkthrough with you and your agent prior to closing on your home. This walkthrough typically takes place 5-7 days before closing.  The builder will go over the inspection report with you, walk you through the home to show you how specific items in the home work and you will have the opportunity to tape off areas that are in need of improvement.

This includes taping off areas that need paint.  Please make sure you are diligent during the walkthrough as most builders will not repair additional items that are not covered in the builder warranty after the final walkthrough.

Post Closing

New construction is a great option.  However, please note that no one has ever lived in the home prior to you. You can blue tape problem areas during the walkthrough and inspection but there will always be additional items that may need repair.  Refer to the builders warranty as well as the builder to find out if they will repair these items after you move in and after your first year of occupying the home.


With this knowledge and the representation of a great agent to help you navigate throughout the buying process, you should be much better prepared for everything that comes your way should you choose to buy a new construction home.



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