Wednesday, April 9, 2014

9 Pieces of Advice for Buying a New Construction Home


My husband and I bought a new construction home in 2012.  We were living in the city and decided we wanted a single family home, more space and a bigger yard.  We looked for houses and somewhere along the way stopped into a model home of a new construction community.  We were surprised to learn that having a brand new house built was not much more expensive (in some cases even cheaper) than buying a "used" house, so we started to give building from scratch some serious thought.  We looked into several different builders in our area and quickly discovered that Ryan Homes was one of the most affordable of the single family builders in our area.  Ryan Homes does not offer a lot of the custom features that other builders offer, but we knew we wanted to "customize" our home ourselves anyway, so we were ok with that.

We worked with an RH salesperson to look at several different models and price out options.  Then, once all our selections were made and our good faith deposit was paid, we were turned over to our project manager to begin construction.  The buying and building process was very overwhelming.  Neither my husband or I were first-time buyers, but building a house from scratch is an entirely different experience.  There are so many more decisions, trade-offs and potential to spend A LOT of money on upgrades.

Now that we have been in our house for almost two years, I wish we could do it all over again!  After living in our home, seeing what spaces we use most, and doing a lot of DIY projects, I have learned a ton!  In some instances I am glad we made the decisions we did, but others I wish we had done differently.  Obviously everyone is different, so my "lessons learned" may not apply to everyone, but here is my advice for anyone considering or in the process of buying a new construction home:

1. Ask for a price list of all of the upgrades offered for your model.  And ask for it early.  You will not believe how quickly your upgrades can add up and how little is included in the base price.  I promise you that about 90% of what you see in the model home is an upgrade... and is not cheap.  We went with very minimal upgrades and negotiated some things for free and still wound up spending about $25,000 over our base home price.  You don't want to get your heart set on a particular model only to find out you can't afford it when you add your "must have" upgrades.  

2. Splurge on structural, not cosmetic upgrades.  Almost all of the upgrades we chose were things we could not easily do down the road; a 4' extension on the family room, a few extra windows, master bedroom/bathroom luxury suite.  We passed on the things we knew we could either do ourselves or have a contractor do cheaper.  Things like flooring, crown molding, the deck, etc. were all things we knew we could do ourselves cheaper than Ryan's price.  We recently installed hardwood floors in our study.  The same exact flooring was almost exactly 1/2 the price of what the builder was charging.

3. Negotiate.  Most builders will tell you they don't negotiate, and they are all lying.  They may not budge on the base home price, but if they think you are really serious about buying, they will throw in some upgrades for free or at a discount.  Just make sure you do all of your negotiating before you give them any money.  Once they have you hooked, you can forget about getting anything else for free.

4. Consider lighting, especially on the first floor.  I wish we had gotten more recessed lights and/or rough-ins.  It's essentially impossible to add recessed lights on the first floor without tearing out your ceiling (unless you get really creative like John with his coffered ceiling).  If you don't like a ton of lamps in each room, think about splurging for the extra lighting package.  The second floor is a bit easier to add lighting later since you can access it from the attic.  That's what we plan to do for the upstairs bedrooms at some point.

5. Get a three car garage!  (If it's an option).  This is probably my biggest regret about our house.  This was one structural upgrade that we felt was superfluous at the time.  Both of our previous homes were in the city where we didn't even have a driveway, so we figured a two-car garage would be more than enough.  We were wrong.  I still cannot believe how often we use the garage and I think everyone has more "stuff" to store in their garage than they realize.  We added some storage under our deck and we are going to build a shed at some point, but it would be nice to have the extra garage space instead of adding another structure to our property.  A three-car garage is not cheap, but I would argue that it is worth the money.  (I would love to hear what someone with a three-car garage thinks about it).

6. Don't let the salesperson talk you into extras you don't need.  They love to tell you how that extra upgrade will only cost you $10.00 a month since you will be financing it in your mortgage.  But you're also paying interest on it for the term of your mortgage so you actually wind up paying more for it than the listed price.

7. Make sure you get the kitchen you want.  A kitchen renovation is one of most expensive things you can do to your house.  If you just have to have those butterscotch glazed painted cabinets, just do it... or it will cost you tens of thousands of dollars to rip out your existing cabinets and do it later.

8. Consider sunlight when choosing your lot.  We did not think about this, but it just so happened to work out for us.  Our family room and kitchen are in the back of the house, which is where the sun sets.  This is perfect for us because we both get home from work around 6:00, so we enjoy some natural sunlight in the evening.  And it makes for some romantic sunsets on our back deck :).

9. Be wary of lot premiums.  Some communities we looked at were charging up to $30,000 for lot premiums!!  In some cases every single lot had a premium, which still makes no sense to me.  I think it's false advertising to say that houses start at $200,000 when you need to pay at least $10,000 for the land to put the house on.  (Maybe that's just me).  As with the upgrades list, make sure you get the list of lot premiums for every lot in the community so you can make an informed decision.

I know a lot of readers have also recently built new-construction homes.  I would love for you to comment and share your lessons learned!

17 comments:

  1. I'm so glad you did this list! There are quite a few of these I was thinking/talking about in the last few weeks with family. A 3-Car Garage was not an option for our lot although in other communities the Rome does have that as an option but boy do I wish we had one. All of your points are right on target.

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  3. Great points, Colette. I wholeheartedly agree with every one of them. After almost 2 years in our RH as well, I see things I wish I had done differently (maybe I would even choose a different model). We are not as handy as the two of you are, so living with my choices has been frustrating, to say the least. However, I, too, am ready to do it again!

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    1. I agree with you... I'm not sure that I would have chosen the same model either. Oh well, we will get it right next time... haha.

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  4. Good tips! I wished I would have added lighting in all the bedrooms and that I would have added the bump out in our family room. But I think when our basement is finished the bulk of our time together and entertaining will be spent down there. I also would add the tip, do not paint until drywall inspection/repair is done.

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  5. Completely agree! Even though we haven't even moved in yet, I regret not getting the garage extension or family room extension. The one thing I'm so pleased with that we did were the gas rough ins for all possible things- range, dryer and water heater. At least for us, it's cheaper to use and if the power goes out I can still take a hot shower!

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  6. My husband and I are first time home buyers and want new construction, but I'm curious about the flooring situation. To save $$, it's been suggested to use an outside source. Am I supposed to tell the builder NOT to put flooring in...? B/c it would seem ripping it out just to put new down is silly. Thanks for your help!

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    1. Hi Jessica! I actually don't think the builder is allowed to not put any flooring in. But the standard flooring (wall to wall carpet, vinyl in the kitchen and bathrooms, etc) is included in the price of the house so we just went with that. I agree it's kind of counter productive to rip out brand new flooring, but I don't think there is any way around it.

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    2. My realtor told me to always go ahead and get the flooring that they are giving you for free and once they have been worn out by the kids or pets you can upgrade with your own contractor for half the price as if you did it with the builder.

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  7. I agree with you on almost everything. As far as the recessed light part, it is possible to add some recessed lights if you already have lights wired nearby. I recently moved one of my recessed lights to a different location and installed 3 new pendant lights that will be over my new island. It is possible, but you need to have wiring nearby so you can add new ones.

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  8. Thank you for this. My husband and I just put our townhome on the market and plan to build our first single family home this summer and are considering Ryan Homes but were a little afraid after reading so many negative reviews. It is nice to see that some people do have positive experiences. About the lot premium – do you think they are always a bad idea? The lot we want does have a lot premium but we really don’t want to have the view from our back yard to be someone else’s house. Have you ever heard of people negotiating the price of lot premiums?

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    1. I definitely think there are situations where it makes sense to pay a lot premium! If you have your heart set on a certain lot, I think it would be worth it to pay another $5-10K to be happy where you are living. I don't think they are very flexible on negotiating the lot premiums, but you may be able to use it as leverage to get some discounts on the actual house. Good luck and feel free to contact me if you have any other questions!

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  9. Several of the points mentioned are extremely useful and helpful! In my opinion, knowing this information beforehand should make the process more enjoyable, efficient, and less costly! Thanks for sharing!

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  10. Lot premiums are par for the course when building new construction. There was only one builder location (a Toll Brothers) that did NOT have lot premiums that I toured. Typically, once a month there is a lot that is "free", just ask your SR.
    We went a little crazy with upgrades (only because we purchased during their 44% off program) We did compare prices before selecting the upgrade so we installed hardwood flooring at a pretty good discount. I wish I would have gotten the gourmet island but after the fight over the morning room (we got it), I did not push the issue. I also put recessed lighting in the kitchen and a rough in for a ceiling fan in the morning room.
    I strongly suggest you make a visit to a decorated version of the model you have chosen. The RH website does tell you if you look for your model only. Always ask what is standard in that model. It makes a huge difference in what you choose to do in your home.
    Hopefully everything turns out well- we are still waiting to break ground on our Courtland Gate

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  11. I have to agree with you. Of course, I had to have the butterscotch glazed maple cabinets and I have never once regretted it. We did a LOT of upgrades to our Ravenna and a full hardwood first floor and upstairs hallway were part of it. You are right - it was costly. I have all the prices listed on my blog if anyone wants to see what they were (in Jan 2012) and compare. We upgraded the carpet by many levels and the padding all the way and yet? Just like everyone else who got a big house from Ryan? The carpet is a joke. Maybe it's more the job done installing it, but it bunched up quite a bit. My cousin, who lives across the street got a giant house and in her master bedroom it did not take 6 months for the carpet to start to bunch up and buckle. Ridiculous. You should get the least expensive and get it replaced later to save money AND to have a decent installation job done when you get your 'real' carpet. Otherwise the extra expense is truly wasted. I wish I had known in time about this.

    Yes to more lights. With as many as we added, we wish we had added even more. Put them in every closet and the pantry - you will be glad you did. The only room where extra lights should be an after-build, in my opinion, is whatever room/s you have unfinished in your basement. We had a bedroom built in where the unfinished storage room was, so we only had the great big utility room unfinished. An electrician just charged $50 a light to add them in that space.

    Oh how I wish we had a three car garage! The Ravenna offers it now, although there were no lots in our neighborhood which would have afforded it, so we could not have done it anyway. Still? If I built this house again it would be one of the first things I add.

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  12. My sister and her husband are in the process of building a new home, and I was shocked to find out how inexpensive it really is in comparison to buying a home that is already built. Now my husband and I are considering building a home in the next couple of years. I love your tip about splurging on the things that cannot easily be added later. I'm the kind of person who would want the best of the best right from the get-go, but you make a great point that some of the cosmetics can easily be added down the road! http://www.caprikarealty.com

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I am so thrilled that you stopped by and I loooove comments! Leave me some love and I will respond shortly. Peace and love – Colette.