Buying a Pre-Construction Home

You've found the listing in a neighborhood that you love, but the house hasn't been built yet. What now?

An increasing number of our listings are just this. A builder purchased an older, smaller home in an established neighborhood and creates plans to raze the existing house and build a house twice the size on the lot. Builders will use this procedure to build a spec house (short for speculative house). This is a new house that a home builder constructs on the speculation that it will sell easily for a profit. Buying the house before it is built has advantages for both the buyer and the builder.

First, you're probably in good hands. Most of the builders in our area are experts in the type of construction they use and most have a good reputation and financial strength to do a good job. If the builder sells the house before it's built, they have money in hand to perform the construction whereas they do not if they're building on spec. That being said, doing your own research is always a good idea.

Second, you have options. When buying a pre-construction home, you also have an opportunity to make it your own. When a builder constructs a spec house, they design them to be as appealing to home buyers as possible, so the finishes can be pretty vanilla. You can customize many things, make floor plan changes, upgrade materials and finishes, and add other things like a pool, patio, or ADU. Just remember, changes can add up and can affect your timeline.

Third, you can inquire about pricing and incentives. Some builders may even offer additional discounts or special financing to help close a sale. We recommend working with a buyer's agent who is familiar with buying pre-construction. The builder will be working with an agent, and you should have your own. (You should also work with a lender who is familiar with new construction if you aren't paying cash. The process of paying the builder is different than a loan used to buy a move-in-ready home.)

Finally, builders generally offer warranties. There are two types: an implied warranty, which covers workmanship defects that will have a significant impact on the home’s livability, habitability, and safety; and an express warranty which clearly defines the problems the builder is responsible for fixing. Just remember, even though you're buying a completely new home, get an inspection. In fact, you can have the home inspected throughout each phase of the building process. This is great as the inspector can see the structure, plumbing, HVAC, and electrical work before the drywall is installed, and the builder can make any necessary corrections.

Buying pre-construction is exciting but requires patience. It takes time to build a new home. When you move in, however, you are moving into a home that is uniquely yours. We're just a phone call away if you need help with this process.