Ask the Expert: Buying a Newly Constructed Home

Ron Croushore
CEO, Prudential Preferred Realty

Experience shows us that few homebuyers have the knowledge and understanding of the home building process when it comes to planning, building and buying a newly constructed home. There are many advantages to buying new! Most notably, your new home is designed and built to suit your lifestyle. “It is your style and form; you decide the function,” says Ron Croushore, CEO, Prudential Preferred Realty. “When you select the features such as built-in appliances, carpet and wallpaper colors, flooring, hardwoods, decorating, landscaping, and all of the bells and whistles within the home, meeting your everyday wants and needs becomes a much simpler task.”

Newly constructed homes also allow for the most recent technologies and energy-efficient materials. Ron also suggests buying a newly constructed home because “they carry much better home warranties. New construction also appreciates faster then existing homes, and in today’s economic climate, that feature is extremely important.”

Upkeep on a newly constructed home also tends to be a real money-saver. “Essentially, when you purchase a newly constructed home, you are not inheriting someone else’s problems,” adds Croushore. “Newly constructed homes are, of course… brand new, so instead of spending time and money to fix wear and tear in an existing house, you can focus on making your new house a home.

The questions and answers below will not only help educate buyers about purchasing a newly constructed home, but will provide clarity and allow for an understanding of the new construction real estate market.

What protection do I have when buying a new home?
• Governmental inspections enforcing local building codes
• Lender inspections
• "Buyer protection insurance" policies that some builders offer
• Manufacturers' guarantees on building materials
• Protective covenants in some communities

Does my newly constructed home provide me with more energy efficiency?

When we consider energy efficiency, we often think of the unit that actually heats or cools the air in the house. What we should consider, however, is how well the house actually retains the heated or cooled air. To evaluate this you must consider a variety of factors, some of which are listed below:

• "R" factor of insulation used in walls, ceilings, attics, crawl spaces, and basements
• Types of windows and doors
• Caulking and weather stripping
• Air movement and circulation
• Cathedral ceilings
• North/South exposure
• Fireplaces and woodstoves
• The amount of trees, plants, and shrubbery around the home

How do I finance my newly constructed home?

The answer to this question can be a critical one. There are many important factors to be considered when choosing a mortgage financing plan:

• Monthly payment and qualification
• Down payment requirements
• Special builder financing
• VA-FHA approval
• Time needed for new home delivery

What are the closing costs on my newly constructed home?

You will find that the closing costs will vary according to the purchase price and mortgage amount. Some of the items that normally make up a closing costs package are listed below:

• Loan origination fee
• Appraisal fee
• Credit report
• Prepaid interest
• Insurance premium
• Prepaid taxes.
• Title examination
• Title insurance
• Preparation of deed
• Preparation of mortgage
• Notary fees
• Recording the deed
• Recording the mortgage
• Local transfer tax (varies by jurisdiction)
• State transfer tax
• Location survey
• Termite inspection
• Mechanics lien insurance

What standard features are included in the price of my newly constructed home?

A "standard feature" can best be described as that material, system, or item that the builder includes in the base price of the home. Standard features may vary from builder to builder and even from model to model. Builders normally provide the customer with either a brochure or a handout indicating their standard features.
Standards usually include:
Electrical, Plumbing and Heating Systems, Kitchen Appliances and Cabinets, Counter Tops, Gutters and Downspouts, Water Heater, Full Insulation, Floor Coverings, Carpentry, Lighting Fixtures and Hardware.
Often a builder will provide a list of extras or options from which you may select such as:
Patio or Porch, Deck, Seeded or Sodded Lawn, Fireplaces, Finished Basement, Wet Bar, Special Wood Trimming, Bay Windows, Paved Driveway, or Special Finished Rooms. The base price of a home can escalate rapidly with the inclusion of these types of extras. Ensure that you receive in writing each particular and its cost whenever options, changes, extras, or material selections are made between you and the builder.

What should I know about the utilities servicing my newly constructed home?
The term "utilities" normally describes items that are available for utilization by the homeowner such as water, sewage, natural gas, electricity, and telephone. Electricity, gas, and telephone service are provided by a public utility company, while water and sewage can be provided either by a public or private utility, or on the site itself if there is a well or septic tank.

What are some of the key things I should consider when selecting a new home building site?
Location: Values of properties in the area, proximity to conveniences, zoning of adjacent properties, topography and drainage, transportation
Availability of Utilities
Other Important Items such as: Building permit requirements, proper lot approvals and recordation, zoning restrictions, recorded rights of way and other easements and protective covenants.

How do I coordinate the sale of my present home with the purchase of a newly constructed home?

This is a situation which must be handled very carefully. It is very easy to find yourself with two houses - or no house! Some of the important considerations are listed below.
• Analysis of equity available in your present home
• Funds available in bank accounts, stocks, bonds or other similar sources
• "Bridge" or "gap" loan possibilities
• Projected delivery date of your new home
• Careful market evaluation of your present home and a sound home sale marketing plan

What’s the vocabulary of new construction?
The vocabulary of new construction ranges from "A to Z." A few words you should be familiar with are:
1. Bearing Wall: A wall that supports the ceiling, floor or roof above it.
2. Blueprints: Working drawings that show the construction details of the home.
3. Casing: A piece of trim material around the top and sides of doors and windows.
4. Corbel: A piece of wood or masonry projecting from a wall used to support some part of the house above it.
5. Dry Wall: A masonry wall laid up without mortar. Any interior wall finished with something other than plaster.
6. Flashing: A piece of material used to protect, cover or deflect water from places where two materials join or from angles.
7. Footings: A concrete support under a foundation, chimney or column that rests on solid ground and is wider than that what it supports.
8. Framing: Putting together the lumber skeleton parts of the house.
9. Girder: A large horizontal beam often carrying other beams and joists on which the first floor is laid.
10. Parapet: The part of the wall of a house that rises above the roof line.
11. Soffit: The underside of a structural part, as of a beam, arch, etc.
12. Specifications: Written statements that establish the quality of materials and workmanship required.
13. Studs: Vertical framing in a wall or partition.

How do I get in touch with you? (Call 1.800.860.SOLD) For further information regarding these questions and new construction in your area, please refer to our website, www.prudentialpreferred.com, click on “Find a Property” next to the logo, “New Construction,” then “FAQ” from the drop down menus.

ASK THE EXPERT ARCHIVE:
Should you get pre-approved for a mortgage? (6/6/2008)
What are The Steps Involved in Selling a Home? (5/30/2008)
Buying a Newly Constructed Home (5/23/2008)
How to select an agent? (5/16/2008)