Building a New Construction Home
There are many unknowns as you start dreaming about your dream home and the possibility of building. At the beginning it’s fun to just think about having a brand new home that has all of your own specifications, selections and colors. I think it is important to know a few things about the process before you dive in.
I will say this first… the biggest and the #1 mistake people make is to not have their own realtor represent them in the transaction. You need someone to represent your side of things so that the process goes well. We work hard to make this a great experience for both you and your builder. This is true for both spec HOA neighborhoods and building custom on your own land. This is usually how it goes: You see a new neighborhood, go to an open house there, meet one of the builder’s realtors, put a reservation on a lot, and before you know it your under contract with a realtor who represents the builders interests and no one to back you up with what you want. We see it all the time and people get very frustrated with the process and it gets very stressful. All you have to do is tell them you have a realtor to represent you and his name is Bjorn White (haha) or whoever is your preferred realtor.
As you get deeper into the process you will realize that there are two main options for building.
The first (1) option is to build a new home in what we call a spec HOA neighborhood. This has its benefits. One of the main benefits is a smaller downpayment. You will usually be about to use a regular conventional loan for about 3-5% of the purchase price as down payment. One of the other benefits is that the builder already owns the land and has it ready for building. The other fees will include a lot reservation fee (2,000-10,000 on average) and also a payment on home upgrades at your design meeting (usually 30% of total upgrade costs). For a spec home in a neighborhood these are the main costs until you close on the home. You will need to stay in their perimeters of finishes for the home. You will have a choice of about 3-5 levels of upgrades for the home. They will usually have some kind of an app for you to look through upgrades and stay up-to-date with the process. On average new construction spec homes take 5-8 months to be completed. If we list your home we will want to list it in that last 7 weeks of the build since we will need them to close on the same day.
The second (2) option is to get a custom builder to build on your own land. This is a different type of builder and a different process. You will first need to find the land. You will want to find the location and type of land that best suits you. You will want to get the land surveyed if there is not one provided on the listing. This survey will show you true property lines, any septic areas (if needed), and any setbacks or land encroachments. This tells you where you will be able to build the home on the land. The septic area must be near the home but you can’t build on the septic area. Once you have the land then I can help you with my preferred builders list. Builders vary based on what you want. Sometimes budget is the most important thing to you and other times high-end finishes or communication are more important. I can help guide you to the right one. I’ve worked with a lot. This good relationship with the builder will be very valuable to you. You will want to select your builder and have them look at the land to make sure its buildable. With a custom builder you will need to get a construction loan from a bank (I recommend Pinnacle Bank or Smart Bank). This construction loan will be good for a year of building and will require 20% of purchase price downpayment. This will allow to take disbursements as they need them throughout the building process. Custom home builders can almost build anything you want as long as it’s in the budget. This can be daunting. What I usually recommend is to find your basic style that you want, then go online to something like Pinterest. You can find basic floor plans there that will give you a good place to start. You can make notes and changes on it and then give it to your architect or renderer to do the real drawing for the builder. The next step is to get an architect or renderer to draw your floor plan and design. This will all help your builder as they give you an estimate for the build and upgrades. The builder will either give you a spreadsheet or app that gives you a breakdown of everything. Getting someone to render the blueprint is a good place to save money instead of an architect. As you start to build they will first clear the lot, grade and start the foundation. On average right now custom construction will take about 8-12 months for completion. Your realtor will be there to help the builder as they need zoning, permits, title, contracts documents and updates along the way. We know that it’s your dream home and we want to make it a great experience for you! If we list your home we will also want to list it in that last 7 weeks of the build since we will need them to close on the same day. If there are sufficient funds then we could also sell your home after you move into the new one. This can make things a little less stressful.
I hope this has been helpful and I hope to hear from you soon to talk about your dream home!