Top 20 Questions to Ask Before Buying New Construction

Before you buy a brand new home from an Austin builder, take a minute to step back and ask yourself the following questions.

1. What is the Local Public Opinion of the Builder?

Public opinion of a builder will be very important when it comes time to sell your home. If you buy from a builder who has a negative public opinion, you are likely going to have trouble selling your home when the time comes. If you’re from out of the area, ask a local Realtor who can offer insight on local opinion. How people feel about a particular builder in your hometown may be completely different than how they feel in the place you’re moving.

2. Does the Builder Build a Quality Product?

You’ll want to do some research on the builder’s quality of construction. The more well built a home is, the less maintenance you’ll have to do and the more you’ll enjoy living in your home. Ask the builder to tell you about the quality of their construction and how it compares to city code. (Remember meeting the city code should be the minimum requirement.) Also, compare this builder’s construction to other builders.

3. Does the Builder Sell to Investors or Just Owner Occupants?

Usually, neighborhoods with a high turnover of tenants aren’t kept as nicely as neighborhoods with owner occupants who plan to stay for years. Owner occupants tend to take better care of their homes better and get involved in the community. If a builder sells to investors, ask them what percentage of home owners are owner occupants vs investors.

4. Do You Understand the Builder’s Contract?

Most builders in Texas choose to use their own contract instead of the contract put out by the Texas Real Estate Commission. You’ll want to make sure you read it very carefully and understand what it means. If you don’t, seek advice from an attorney specializing in real estate law. Often these contracts are very one-sided (favoring the builder), so you’ll want to understand what your obligations are before you sign it.

5. Do You Understand Your Cancellation Clauses?

Make sure to understand your right to cancel (if there are any) and how the cancellation process works. This is especially important if you are building a home contingent on the sale of your current home. If you don’t follow the rules, you could be stuck losing your deposit.

6. What Upgrades Can you Install After the Home is Built?

Upgrades are where builders get a lot of their profit. Ask yourself what upgrades you can install after your home is built. One of the big profit centers are outdoor kitchens. Ask the builder to put in the gas line on the patio and any other electrical or plumbing you would need. Then, hire a contractor to build out the rest.

You’ll want to make sure all of the electrical and plumbing you need is installed during construction. The rest you can do after building is complete for a lot less.

7. Will Your Lender Finance All Upgrades?

Some lenders won’t finance certain upgrades. Work with a knowledgeable lender who knows the loan program. Then, keep them informed at all stages of the process to protect against any unexpected surprises.

8. Will the Builder Allow You to Bring Your Own Inspector?

Ask the builder if they will allow you to bring in your own inspector at each stage of the building process. The inspector’s job is to look over the builder’s shoulder to make sure they are adhering to the construction standards they promised. A good builder should have no problem with a knowledgeable inspector checking their work.

9. Can You Tolerate Construction Trucks and Building for Months, Possibly Years?

Unless your home is the last home built in the neighborhood, you’re going to be dealing with dump trucks, cement deliveries, roofing smells, tool noises and traffic for several months and possibly years. Will the sound of pounding nails at 7am be a problem for your lifestyle? If so, consider buying in a new neighborhood that’s at the end of its construction.

10. How Long Will this Home Suit Your Needs?

Time makes money in real estate, not timing. The longer you’ll be able to comfortably live in a home, the higher likelihood you’ll have equity when you sell. Try to anticipate any family size changes, kids, older parents living with you and plan for it. Don’t just buy a home with exactly the number of bedrooms you need today. Give yourself room to grow into it.

11. When Do Builders Complete Build Out?

Some neighborhoods (Belterra, Circle C, Steiner Ranch and Rough Hollow) will take over a decade to complete and some even longer. When it comes time to sell, you’ll be competing with a builder who has deeper pockets and can cut prices a lot further than a single homeowner should they need to move their inventory.

12. Will My Current Living Situation Accommodate Construction Delays?

Try to get a reasonable estimate from the builder for total build time. Ask the builder if their build time includes a reasonable amount of time to select finishes and if it factors in a buffer for weather or supply delays. Give yourself some extra time with your current living situation to cover any other unexpected delays or make arrangements to stay with friends or relatives ahead of time. Buying a new home is stressful enough without compounding the problem with having to find temporary housing.

13. Will the Builder Allow You to Communicate with the Superintendent?

The Superintendent is the person who is in charge of overseeing the construction of your home. Ask the builder if they will allow you to communicate with your Superintendent during the build process. A good builder will put you in contact so they can coordinate the build process directly with you.

14. Does the Builder Provide a Warranty? What Does it Cover?

Get the details of the home warranty in writing, before you sign a contract. Know what it says and what it covers. New homes are not without problems and inevitably something will break. Know how long the builder covers the systems and components in the house and the process for getting something repaired.

15. Will the Builder Provide Local References?

Ask the builder if they have any current homeowners they could put you in contact with. Then, knock on a few doors and ask them about their experience with the builder. Explain you’re considering buying the neighborhood and wanted to know how they like it. You’d be surprised how much information you’ll get by simply asking neighbors.

16. Is There an HOA? If so, What Rules and Restrictions are Imposed?

The Homeowners Association (aka HOA) can impose rules and restrictions for homeowners for just about anything. Though the rules have their advantages in keeping neighborhoods uniform, some don’t like being told how they can use their property. Get a copy of the HOA’s rules and restrictions and honestly ask yourself i you can live by them.

17. What are Similar Homes in the Neighborhood Selling For?

Have your Realtor prepare a market analysis showing what homes in the neighborhood recently sold for. Are homes selling for around the same price as the builder’s inventory or is there a big difference in price? If so, why?

18. Are there any Bank Owned Homes in the Neighborhood?

Bank owned homes (foreclosures) are something you’ll want to pay close attention to. Foreclosures drive down housing prices in a neighborhood. To protect your investment, choose a neighborhood with the fewest number of foreclosures. If there is a high number of foreclosures in the neighborhood, find out why.

19. What Makes the Lots with Premiums Worth More than the Other Lots?

Watch out for this one. Builders put premiums on lots for random reasons and it doesn’t necessarily mean the lot is better than a lot with no premium. Use a knowledgeable Realtor who can help you evaluate each lot and choose one that will increase the value of your home over the next several years, rather than drag it down.

20. Will You Hire Your Own Realtor to Represent You?

Relying on the on-site sales agent to help you buy a home from a builder is a little like hiring the prosecutor to represent you in a lawsuit. The on-site salesperson’s job is to sell homes in this neighborhood from this builder. They aren’t going to tell you about the neighborhood down the street that has higher quality homes in a better school district for less money. Nor are they going to tell you about the high profit margins in upgrades. As much as they try to say they are on your side, they have a fiduciary duty to get the builder the most money for their homes. Not help you buy it right.

If you want to save money, hassle and time, hire your own Realtor when buying a new home who will be unbiased and have your best interests in mind. The builder pays your Realtor’s commission, so having your own representation costs you nothing and will end up saving you thousands.

Thinking of Buying a New Home in Austin?

Check out our Austin Home Buyer Representation Program, then call us at (512) 827-8323 or email us info@AustinRealEstateHomesBlog.com to schedule a no obligation consultation. We can help save you thousands and point out potential resale problems and help you understand local builders.