What You Need To Know When Buying A Brand New Home From a Home Builder
September 29, 2020
When purchasing a new home from a builder, there are many decisions to be made during the early stages.
First, is the selection of a floor plan. Obviously, you must choose one that fits your lifestyle and price range, but that’s not all you need to consider. I would recommend that you select a floor plan that is less than the maximum dollar amount for which you qualify if you need to purchase a home lot and various customization options that are available from the builder. As a rule of thumb, your lot and options should cost you roughly 20% of the cost of the floor plan best new construction builders near me.
For example, let’s say you qualify for a $240k home. The floor plan you select should not cost more then $200k. That will leave you $40k (20% of $200k) for the lot and custom options that will be installed in the home.
However, some builders work differently. Lennar, for example, builds what are called E.I. (“Everything’s Included”) homes, which means all options are already upgraded and your only choice involves the color of the carpeting, counters, and cabinets. For a builder like this, you will not need the full 20% allowance since there is less options to add on.
On the other hand, a builder like KB Home will charge you for every single option you can imagine, some of which should be included but are not. In that case, you may need to allocate as much as 25% of your budget for options and a home lot (sometimes called a home site).
The next consideration is the selection of the lot. While just about anything and everything inside and outside the home is replaceable or can be upgraded in the future, the only thing that cannot be changed is the parcel of land that your home sits upon. I would say that a lot is the most important decision governing the home purchase from a builder.
If available, I would select a larger-than-average site that is located at the end of a street or in a cul-de-sac. Ideally, the lot would not have another one behind it and would back up to a natural area, wilderness area, or golf course.
For a variety of reasons, these lots will always be worth more than a regular interior lot with several neighbors. One of the main advantages of this type of lot is the reduction in through-traffic and all that goes with it. Always request that the builder open up lots that are not currently available to allow you to get the best location in the community. However, if you must purchase an interior lot due to the lack of availability, then select one that preferably has smaller, one-story floor plans on either side of it. Your home will look larger by comparison.
After choosing a floor plan and lot, you need to determine which options you should and should not pay the builder to install for you. Paying for builders’ options is always a give and take. On one hand, because the options are included in the sales price (hence in the mortgage), you will have lower out-of-pocket expenses. On the other hand, you will most likely be paying 10%-50% more than it would cost to have a licensed contractor come to your home after it has been built to install the same exact option.
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