If you are building a home from the ground up, the pricing works like this:

Lot Premium + Base Price of the Home + Additional Upgrades = final purchase price

If you are looking at a “spec” home (or home that is completed or almost completed), these elements have all been considered into the final price.

The estimated budget for closing costs tends to fluctuate, but as a general guideline, allocating around 2% of the home’s purchase price is advisable. For instance, if the final purchase price is $750,000, setting aside $15,000 for closing costs is a prudent approach. These costs encompass various expenses such as loan origination fees, recording fees, escrow fees, prepaid HOA fees, property taxes, insurance, and additional charges. Once you’ve pinpointed the specific home you’re interested in, the lender is the most reliable source to provide detailed information about these costs.

When budgeting for your new home, keep in mind there are several items that builders may not include in the home. These are items such as:

*Landscaping

*Window Coverings

*Refrigerator

*Washer and Dryer

Building a new home offers a myriad of benefits compared to purchasing a resale home. One of the key advantages is customization. When building from scratch, homeowners have the freedom to tailor every detail to their preferences, from the floor plan to the finishes. This allows for the creation of a truly personalized living space that meets individual needs and reflects unique tastes. Additionally, new homes often come with the latest technology and energy-efficient features, resulting in lower utility bills and a smaller environmental footprint. There’s also the satisfaction of knowing that everything is brand new, reducing the likelihood of immediate repairs or renovations. While purchasing a resale home may offer a sense of history, building anew provides the opportunity to shape a home that perfectly aligns with one’s vision and modern living standards.

Life happens! And *sometimes* builders are sympathetic. It really depends on the market and the house itself. If it is a seller’s market and there is a lot of demand for the home, the builder may give you the deposit back and sell to the next buyer. However, more often than not, the builder will keep the deposit, or a large portion of the deposit, and let you out of the contract. This is another good reason to have a Realtor on your side. Things happen. If your Realtor has a good relationship with the builder, they will try to get your full deposit back if possible.

In Colorado, builders have 2 years to complete the home.

Likely no. And if they do, it will cost you. Builders have to submit the structural plans to the city and county before they can begin construction. If they need to make a modification (such as finishing the basement), they will need to go back through the permitting process which can take a long time. If you are hoping to make a change cosmetically (changing the tile, flooring, etc.), they will likely do this – but it will cost. All the elements of the home are ordered very early in the process and making any changes will likely be expensive.

Each builder works a little differently, but they will all require you prequalify either with their in-house mortgage company or their selected lender. YOU DO NOT HAVE TO USE THEIR LENDER. However, in most cases, if you do use the builder’s lender, there is usually an additional incentive and possible lender credit towards your closing costs.

Currently, builders with in-house mortgage companies are offering some crazy good incentives to use their lender (such as 4.75% 30-year fixed interest rate).

When you purchase a new build home, you will likely have to pay a deposit (somewhere between $5k-$30k). This amount will be held in a non-interest-bearing account and will be used towards your final purchase price. If you are building your home from the ground up, some builders will require you to pay a percentage of the design finishes you choose (usually between 2-10%).

The final amount will not be due until you close on the house.

This one varies by builder. Most builders offer a 1, 2-5, and 10-year warranty. The one-year warranty is like a bumper-to-bumper warranty. Within that first year, the builder will come back and fix anything that may have been missed during the final walkthrough (examples include paint touch up, lighting fixtures, landscaping, etc.) Keep in mind, building a home is one of the last man-made products and sometimes there are things that are missed and you won’t notice it until 6 months into living in the home.

The 2-5 year warranty covers anything mechanical (think HVAC, appliances, etc.). One tip I will add here is to make sure to register your appliances and anything mechanical (HVAC, hot water heater), as the manufacturers of these items often offer an extended 5-year warranty.

The 10-year warranty is anything structural.

Right before the home is completed and we have our final walk, you will meet the builder’s warranty representative. Sometimes these warranty reps are part of the company and sometimes they are a 3^rd party company.

One more tip is to schedule a 3^rd party inspector to come check out the house about 10 months after you close before your 1-year warranty is up to make sure all items of concern are brought up to the builder.

Absolutely! My recommendation is to visit on Sundays when there are fewer contractors working on the home. Always let your builder know when you plan to visit the site as for many months, the site will likely have dangerous materials such as exposed nails, holes in the flooring for ducting, etc. If you are building from out of town, I will send you weekly updates.

This is a common question, and my take is that the answer isn’t one-size-fits-all. It hinges on the dynamics of the real estate market. Essentially, it boils down to whether the buyer has many options and has the choice with attractive housing alternatives apart from the new home on the table. In such a scenario, Buyers wield negotiating leverage and can push for concessions, whether that translates to a lower price or the seller covering some closing costs. Conversely, if the builder finds themselves with numerous alternative offers, indicating high demand for their homes, they hold the upper hand in negotiations, likely leading to a negative response when asked for concessions.

At this current time, builders are giving out really nice concessions that can be applied to either a rate buy down, closing costs, appliance upgrades, etc. I do not foresee the builders offering these concessions for much longer, so if you’re at all interested in purchasing a new construction home, the negotiation power is with the buyer.

Each option comes with its own set of considerations. New construction homes offer the thrill of customization, allowing you to put your personal touch on every detail, from flooring to fixtures. However, patience is key as the building process can take several months. On the flip side, resale homes offer the advantage of immediate occupancy and often come with established neighborhoods and mature landscaping. The decision may hinge on your timeline, desire for personalization, and how well you navigate the hidden costs associated with each (new homes often do not have window coverings or landscaping whereas a resale home may need new paint and carpet).

While I might be a bit biased, I genuinely believe having a Realtor by your side is a smart move when embarking on the journey of building a new home. Whether it’s me or another capable broker in the neighborhood, having a Realtor adds significant value to your experience. Here’s the deal: the builder charges the same amount either way, and if you forego a broker, they pocket the money that could have covered your representation. A Realtor not only guides you through the process, explaining intricacies along the way, but also brings valuable insights from past experiences. Plus, the best part? It’s the seller who foots the bill for your Realtor, making it a win-win. If you’re hesitant due to past experiences, explore and chat with a few Realtors to find someone you’re comfortable with and can navigate this involved and lengthy process alongside.

Yes, I think it’s imperative you always have a third-party inspector check out the home even though it’s brand new. There are three separate inspections that can be done during the build process: foundation inspection, pre-drywall inspection, final inspection (see THIS blog post for more information on each inspection). All the builders in Painted Prairie are good intentioned, but they are moving fast and using multiple sub-contractors which makes plenty of room for mistakes.