The new construction building process in the Triangle
Are you dreaming about building a home and getting just what you want on the lot you choose? It takes some time and work but it can be worth it especially if you know what you want and are flexible. I try to go to the design center and all builder meetings and walkthroughs with you.
- Choose neighborhood and builder
- Ask questions
- Choose lot and reserve lot
- Work on plan and pricing
- Sign contract, pay deposit
- Arrange financing
- Schedule design center appointment, make selections
- Builder meeting pre construction to go over plan
- Site meeting with builder (sometimes at pre construction meeting)
- Pre drywall builder meeting
- Walk through typically 7-10 days before closing
- Home inspection
- Final walk through
- Settlement and closing at attorneys office
- Keys to buyer when deed is recorded. Usually several hours after closing.
- Builder call backs for one year warranty by NC law
Decide on a neighborhood and builder
Most builders follow a similar process when selling a home before it is built. Often called a presale, this is a way to get the home you want on the home site of your choice. How customized the plan will be depends on the builder. Most builders start with an existing plan they have built before and work with you to tweak it to fit your desires. In the Triangle it usually takes around 5 ot 6 months to build. If it’s a busy neighborhood and builder the time may depend on how many homes are ahead of yours on their production schedule. For a true custom it can be 9+ months.
Large national or regional builders are often called production or tract builders. There are some very good production builders. Examples of production builders in the Triangle are Cal Atlantic, Pulte, DR Horton, Beazer, Toll Brothers, NV Homes and Drees. These big builders usually have many structural options priced (changes to the plan that are necessary for the building permit) and you can’t make changes to their plans other than what is presented. Other changes are design center options. These are decorating options and plan changes that aren’t structural.
Custom and semi custom builders provide many options and sometimes their architect will design the plan exactly as you want it.
There are many questions to ask the builders representative if you have narrowed down your neighborhood choices.
- What features are included in the base price of the homes?
- How much does the typical buyer spend on design center options?
- What is the estimated build time after contract?
- Are the lots developed yet? If not what stage is the development in?
- What lots are available and are there lot premiums?
- What incentives does the builder offer? Has the agent heard these are going to change?
- How does the builder usually structure price increases?
- I always ask to see the recorded plat, the pretty colored site plan map doesn’t have real information that you need when choosing a lot.
- What are the deposits and how are they are structured?
Choose a lot
First get the recorded plat. I usually ask the builder’s rep what lot they think is the best. They are on site everyday and have walked them all. This is helpful and a starting point. You can get good info from that question especially if the site is under construction. Some lot premiums are worth it and some not, it’s humans grading the lots so there may be a good one overlooked. We’ll look at a lot of factors like the slope, drainage, easements, position, yard, trees and resale. After you have decided on a lot it’s time to do a lot hold.
Most builders will do a lot hold while you work on the plan. You should be serious about building with that builder and on that lot. A lot hold is usually for a few days to 2 weeks, $1000-$5000 and is refundable. It makes sense to pick the lot first because you will be spending time and energy working on the plan. We need to make sure the house will fit on the lot.
Price estimate before customization
This is hard! Trying to figure out the price before you have customized the plan is necessary so you can keep on budget when making changes. I usually ask to see a list of priced specs for a similar plan that we have seen. Every builder is different with the pricing structure. You can’t assume by looking at the standard feature sheet you won’t add $$$$ at the design center. I go through the spec sheet and see how it compared with what the buyer wants. It’s usually surprising how much extra you can spend, even when everything is included. I have never had anyone not spend money at the design center.
Work on plan
This usually involves pricing and back and forth tweaking the plan. The process can be quick for minimal changes or take a long time if you are doing a custom plan. The goal is to get it right but as quickly as possible. Builders tend to raise prices as homes sell and it’s good to get the price locked in.
It’s not common to get a deal with a presale. Builders usually offer incentives and sometimes we can get more. See my post about negotiating new construction
It’s time for the contract. Builders contracts are totally biased toward the builder and they won’t change the contract.This is where there is risk and you have to trust the reputation of the builder. Deposits vary. Here is a link to a post I wrote about new construction deposits. In most cases the deposit (varies between $5000 and 10%) is all you pay until closing and is applied to your down payment.
You should have been preapproved before looking at homes. The contract will require you to apply for a loan by a stated date. Most builders have a preferred lender or several to choose from and will pay $2000 or $3000 toward closing costs. I would compare with the lender who preapproved you. Sometimes the builder doesn’t actually pay closing costs, the lender makes the money up from the rate.
Design center appointment
Most big builders have a design center with a designer to help you with selections. This is by appointment only. Sometimes you have one appointment and with other builders you may have 2 or 3 appointments. Be prepared by having a list of the features you may want to upgrade based on the inventory spec sheet we got before contract. Have exterior photos of the colors of homes you like. Have a couple of choices because there are usually restrictions about colors being close together on the street. You may not get your first choice.
Occasionally my clients won’t be able to come back for appointments. If that is the case we need to do as much as we can with the onsite agent before you leave town. I like builders who have selections in the model home. There aren’t as many choices but it’s convenient. Sometimes you can go to vendors in your area to see the selections. It depends on the builder and level of customization.
Know your budget and be prepared to stick to it. It’s so tempting to upgrade especially when an item doesn’t seem very expensive. It all adds up. I can help with what is best for resale or suggesting what will give a similar look without upgrading. A good place to spend your money is hardwood floors and stairs. That makes a difference with resale.
This is where you meet your builder or project manager, go over the plans in detail, and discuss any special concerns. sometimes you go over the electrical at this time or with other builders that happens at the design center. This meeting takes around 2+ hours and is important because you are building a relationship with your builder. This can be done remotely with good communication with the builder.
After the house is framed, electrical, plumbing and heating and air rough ins done you will have a walk through with the builder. This is to make sure light fixtures, cable and phone outlets are in the right place and you are good with things before the walls are covered up with sheetrock. This is an easy to do with photos or video if you can’t be in town.
7-10 days before closing you will do a walk through with the builder. This is a new home orientation as well as a time for you to point out cosmetic items that you want repaired. Some builders do a great job getting the house ready. I don’t feel like it should be the buyers job to do a builders punch list for them so I expect the house to be ready. No house is perfect though. Sometimes I will do the walk through if the buyer can’t come back and the builder will do the orientation at the day of closing walk.
In NC builders typically warrant the house for a year and come back before the end of the year to do a final repair list. Even with a new home a home inspection is a good idea. Sometimes my clients wait until right before the end of the year warranty to have the inspection. This gives the home time to settle and for drainage issues under the house to show up. The downside of this is the builder could go out of business or just not come back. Builders usually want the home inspection done around the same time as the walk through, 7-10 days before closing so the contractors can take care of issues on the same visit.
Final walk through
Right before closing we have a final walk through. This is to check and sign off that walk through and inspection items are done. It doesn’t take long. We usually go straight to closing at the attorneys office from the final walk through.
The builders usually pay the attorney fee if you use their attorney. It’s just easier for them to close everything from one office. The closing is where you sign the loan documents. When the deed is recorded in the court house the house is yours and you get the keys. I think it’s fine to use the builders attorney for closing. Most people wire their down payment funds. Here is a link to more detailed information about closing.
Builders typically come back and do warranty work within the first couple of months and additionally at the end of the year. Your systems and appliances have their own warranty. The builder contract usually addresses warranty.