With over one-third of Houston’s current inventory being new construction out in the suburbs, it’s important to know what the market is doing. This is especially true if you plan to go the builder route.
Many buyers and realtors are wary of choosing new construction because of the supply chain issues and canceled contracts that have been in the headlines for the past few years. These are valid concerns and these issues still happen, so it’s important to research the builder before you go into contract.
Keep reading to learn more about what you can expect financially and what to look for in a builder for your new home.
What’s included in the price?
There are so many tiers and types of builders that depending on who you go with, what’s included in the price can vary greatly.
Unless you’ve built a home before, it can be a bit deceiving when you first begin your research. Homes advertised in the low $600s can actually cost into the mid $700s by the time everything is finished.
If you’re looking at a couple of builders in the same community that have about the same size house but the base prices differ significantly, it could be that the higher base price has more things included in the standard features.
Here’s a list of what’s probably not included in the base price:
- The lot premium
- The exterior/external selection of the house (the way it looks or the type of brick and material used on the outside)
- Structural changes
- Special features you may see in the model home
- Design center upgrades
The little things add up! Features like white cabinets, wood tile, an automatic garage door opener, rain gutters, a sprinkler system, or even appliances (most home builders do not include the refrigerator, washer, or dryer) are not usually included in the base price. You can end up spending twice as much in the design center to get what was standard in the home with the higher base price.
This is where a realtor’s expertise comes in handy — especially if they’ve worked with new construction builders before. A realtor can help educate you on what different builders can offer and how much you’re probably going to spend in the design center.
The builder typically pays for you to have a realtor as representation while you’re building your home. The realtor works for you and the sales agent for the home builder works for them.
How much can you actually customize?
More often than not, builders will advertise that your new home can be completely customized to your exact wants and needs.
While this is true to an extent, a lot of the builders in master plan communities and suburbs are production builders who build on a state or national level.
When beginning your builder research, it’s important to pick a floor plan that you absolutely love. These builders use a specific blueprint that’s made on a mass level, and most of the floor plans they use cannot be altered. They may have additional options that allow you to add square footage or switch some rooms around, but unless it’s in the original blueprint, they usually cannot alter the floor plan.
When it comes to design, it can cost a great deal of money to modernize and update your home in the design center. Before you sign a contract, ask the sales agent about the design center options. For example, if you have a few big ticket items in mind like tile floors throughout the entire house, have them give you the pricing or at least a ballpark figure of mid-level flooring.
That way, you can have an idea of what the major costs will be so that you can budget appropriately and make sure that this builder is a good fit for you.
If a sales rep says they can’t give you an estimate or you have to wait for your design center appointment, you may want to reconsider using that builder. They should be able to give you a ballpark figure and realistic expectations before you go to the design center.
There are a lot of builders (especially since the pandemic) that have very limited options that you can choose from when building a home. Some of them have simplified the process so that you just pick an A, B, or C design center package, and within that package, you’ll have a few color schemes to choose from. If you want to keep things simple and don’t like making decisions, then this is a great choice that will keep your unexpected costs a bit lower. If you truly want to build a house and hand select everything, then you should research builders who are still able to accommodate that process for you.
What’s a builder contract?
We also see a lot of misconceptions surrounding builder contracts. Builders use and write their own contracts. They do not use the state forms that you typically see in a traditional resale transaction. When working with a builder, you’ll be required to use the builder contract and unable to change any of the terms and conditions within their contract.
Even if you hire an attorney to make changes or to present something to the builder, they most likely won’t accept. However, it’s always a good idea to have an attorney read over the contract and explain the terms and conditions to you.
You may find a bit more room for negotiation when builders have promotions. It’s not as common to be able to negotiate with production builders in today’s market, but you may have a better chance if you’re working with a smaller or custom home builder. You can ask the builder to include additional features, like appliances or lower earnest money.
The last quarter of the year is typically the best time to buy new construction. Business slows down as builders approach the end of the year, so they offer incentives to try to get rid of the inventory they have left for the year.
What should you know about builder quality?
People often ask us about specific builders and we wish we could give a simple answer, but there are tons of factors to consider. There are so many types and tiers of builders, and most people have different expectations for what they’re looking for in a house.
For example, if you are going with an entry-level builder for an investment property, your expectations are going to be different than if you’re building your forever luxury waterfront home. It really depends on what you are looking for in a builder.
Builders also have different construction teams, sales teams, and suppliers, depending on the community. Production builders are in the business to make money and will cut and save where they can. It’s up to you to research and look at homes within that community that have recently been built to assess the quality.
It’s important to keep in mind that builders rely heavily on reviews and customer satisfaction. At the end of the day, they want to make sure you are happy with your home. Many builders even offer one, two, three, or even ten-year warranties to fall back on if something needs to be fixed down the line.
The best thing you can do to ensure that you’re working with a quality home builder is to explore the community where they are building. Look at some of their almost-complete homes so that you can see what the quality of the build is without all the bells and whistles of the model home.
You’ll also want to get the phase inspections done by a third-party inspector and have the builder correct any issues. This will help give you additional peace of mind that somebody is looking at the builder’s quality of work and holding them accountable.
Not all builders are created equal. It’s important to get an outside perspective and to visit more than one community and builder.
New construction can be a great investment and build instant equity if you do your homework and have the right information and expectations.
If you’re moving to the Houston area and thinking of building a new home, get in touch! We make the home building, buying, and selling process as seamless as possible for families like yours.