An Overview on New Construction Single Family Homes

Here are some thoughts on new construction based on my 23+ years in the business. I have had clients build new construction at every phase listed below and I was happy to help them along the way. First, we will talk about the different types of new construction for single-family homes. Next, we will focus on semi-custom and custom-built homes and how to accomplish that, and finally, I share some miscellaneous thoughts on construction in general.

1. Neighborhood new construction with the single builder. They buy the land. 4-5 different models and each model has changes that can be made but limited in choices and not custom.
2. Neighborhood new construction with multiple builders. Similar to above except there are multiple builders who are allowed to buy land within the subdivision and build their semi-custom homes. There are usually rules that need to be followed (ie. colors, amount of stone on front elevation, etc). This way they try to control the value of the homes and maintain a standard.
3. Spec homes. A builder buys land and builds a home on it. Depending on when the buyer comes into the process selections can be made. The earlier the buyer comes in the more choices and options to change/upgrade. The later they come in the less they can say in what goes into the final product.
4. Semi-custom home. Similar to a spec in that the builder has a few choices of a floorplan they like to build but the buyer is involved from the beginning which allows them to make more selections and changes. All working off of an existing architectural floorplan the builder has access to and more than likely has built before. I will go over more ways this can be pulled off below.
5. Full Custom. This is where the buyer is involved from the beginning and usually even involved in the architectural drawing of the floorplans. Every decision the buyer is involved in. I will go over more ways this can be pulled off below.

Now that we have the different types of new construction let me focus on semi-custom and full custom and different options on how to accomplish these two types:

1. Builder has the land already so the location is selected. You have to work with this builder since they owned the land. You can go with a semi-custom or full custom at this point. The size you can build will depend on the size of the land, any easements, or subdivision restrictions. PRO: it can be built quicker since the builder is selected and the land is already purchased. Builders can take your “sushi order” and help put together drawings and guide you. CON: limited in choice of builder and location.
2. You buy the land and get a builder of your choice involved. This gives you more options as far as location goes. You can purchase vacant land or you can purchase a “tear down” home. PRO: you have a more selection of builders and locations. You can get architectural drawings done on your own and then shop builders and have them bid on the drawings and let you know the costs. CON: can take longer. You have to close on the land first before permits and other items can be pulled. You have to really know what you want with the architect to have those drawings done. The loan structure is slightly more complicated but nothing that can’t be done.
3. There is another method we have been seeing since the great recession of ’07-’12. Builders are not buying the land and holding inventory but they form relationships with Realtors and potential home sellers. You may even see their sign on the property listed for sale as a “tear down”. Their hope is that the buyer will build with them not knowing they don’t have to. If the builder does not own the land, you don’t have to build with them.

Miscellaneous:

1. Cost of new construction is high right now with the price of lumber and other materials being the highest in a long time. Predictions are they will come down but not until 2022.
2. Cost to have plans drawn up alone can cost $10,000+/-.
3. You have to be decisive in what you want understanding that even new construction is not perfect and you will want to change things after you move in.
4. I help throughout. From selections to introducing you to builders to helping you find the land. One thing I do is help with any tough conversations with the builder. If you don’t like something but are hesitant to “rock the boat” I can talk to them on your behalf and make it look like it was my issue and I’m trying to protect you. That way they get annoyed with me and not you.
5. I still recommend a home inspector, 3rd party, go through the final product before closing to help you create the “punch list” of items still to be done. The “punch list” can be checked off after closing and after you move in. Another common way to do it is to wait 11 months and before the warranty runs out you have a running list of things from the first year of living at the home and the builder comes back and touches everything up. Unless if it is a larger issue that needs to be addressed immediately of course.
6. Builder reputation is important. I’ll always share what I know and if I don’t know much I will try to find out more from those who do.