5 Tips for Buying New Construction

New construction can provide you with exciting home choices, but the homebuying process is different compared to other types of homes. Here are five tips to help make sure your interests are protected, you have a loan that's right for your financial situation, and you're prepared to find and own a newly built home.

Framing for a home

  1. Find Your Own Agent

    Your real estate agent is an important part of your homebuying team, helping you navigate each step of the process and negotiating your offer. With new construction, your real estate agent will also help you choose options.

    When buying new construction, there are additional considerations to consider when choosing an agent. You should look for someone:

    • Who is not affiliated with the builder and who has your best interests in mind.
    • Who has experience in new construction.
    • Who is familiar with the surrounding neighborhood.
    • Who has worked with your builder before. This experience will come in handy when choosing your options and negotiating your offer.

    Note that many builders require your agent accompany you on your first visit.

    With new construction, the builder — who in this case is the seller — typically pays the commission for your buying agent.

  2. Do Your Research on the Builder and Community

    Many builders have been in the business for years, so you should be able to check the quality of their work and their reputation. You can rely on your real estate agent for advice, but you can also do some research on your own. For example:

    • Consider visiting one of their existing local communities and, if possible, talk to the current homeowners.
    • Search online for trends in reviews of the builders and existing communities.
    • Check with the city to see whether future projects are planned for your local neighborhood. Will the quaint pond across the street be there in five years, or is another development slated for its location?
  3. Choose Your Lender Wisely

    Many builders will encourage you to use their preferred lender, sometimes offering more competitive rates and fees. In some cases, particularly in the early phases of development, the preferred lender may be your only option.

    However, you need to shop around for the loan that's right for you and your financial situation.

  4. Negotiate Well

    Frequently, builders will be reluctant to drop their sales prices because they don't want other homebuyers to also see lower prices. Instead, they may be willing to throw in some options, such as upgraded flooring or appliances, or paying closing costs.

    You'll want to rely on your agent's knowledge of the builder and their past negotiating style throughout this process. 

  5. Study the Fine Print

    When buying new construction, there are unique aspects — and important documents — that you should be familiar with.

    • Know your completion date and what happens if it’s missed. With new construction, you're likely buying a home that is not complete. Your purchase agreement should include a completion date, but what if this date is missed? What are the ramifications and your options if the delays are significant? Be sure to talk through this fine print with your agent. 
    • Make sure you understand all warranties on the home, from the overall structure to individual appliances. Keep these files close by because you may need them in the first few years of homeownership. 

Finally, even though your home is new, you should still do a home inspection to make sure it's safe and up to code. You’ll want to discover and address any underlying issues with the home before you move in.

To learn more about the homebuying process, including determining how much you can afford, visit My Home by Freddie Mac®.

Last reviewed: July 05, 2022

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