10 questions to ask the home builder when buying a new construction

The idea of being the first to live in a home appeals to many homebuyers. In 2022, a record number of new construction homes hit the U.S. market, exceeding 34% of all listed single-family homes. So whether you’re dreaming about a brand new-home or not, there’s a decent chance you might end up making an offer on one.

The fact that nobody has lived in a new construction home is, however, a double-edged sword. On the one hand, it’s all brand new and, if you’re working directly with the builder, you may be able to have some input on the design to really make it your own. On the other, no one but the builder can attest to the quality of the home, the quirks it may have, or be able to share any experience about living in it.

As such, it’s up to you to ask questions before buying a new construction home. You don’t want to go in blind and find that the house has the quality of a Bluth model home. (That is, bad quality.) To help you avoid any costly problems or unpleasant surprises, we’ve rounded up a series of questions you should ask the builder before buying a new construction home.

1. How long have you been building homes?

You wouldn’t trust your kids with a nanny who has never taken care of a child, so why would you trust a builder who has never built a house? You have high expectations for your home so you want to know your builder has a good reputation.

Reputable builders will be eager to share information about their history and experience. They can provide the names and addresses of completed homes or communities so you can go see them for yourself. If they have a website, you can do it virtually. If you take a drive, make note of the homes’ exterior quality and curb appeal. Many builders reuse designs so you could even find a similar model of what you’re going to buy to see how it looks finished.

2. Do you have references?

Again, any reputable builder will happily share references of recent satisfied buyers or contractors that they work with. Regardless of where your home is in the building stage, it’s always valuable to get feedback from previous buyers. Who knows, maybe a buyer was happy until an issue arose later than expected in the building process. 

If you see somebody doing yard work on your drive through one of the builder’s communities, introduce yourself and ask if they’re satisfied with the house. Obviously, the builder is incentivized to send you to happy references, it’s good to get a random sample if possible.

Ask references if they’ve had any problems with the builder, how they were handled, and if they would buy a home from this builder again.

3. What is included in the price and what costs extra?

If you’re buying in a community, there are probably just a few models to choose from with different pricing options available. If you’re paying a builder to build a new home from scratch, you should clearly negotiate a budget and make sure you understand what you’re paying for.

In a community, touring a model home can be misleading. Many models will feature high-end building products, top-of-the-line appliances, and expensive design features that aren’t included in the home’s base price. Make sure you understand what aspects of the home come standard and what qualifies as an upgrade and, therefore, a price increase.

Just because something came standard on a builder’s earlier homes or communities doesn’t mean that’s the case now. It’s best to avoid any unpleasant surprises by reviewing the build sheet to make sure you understand what you’re paying for.

Likewise, if you are getting any extras, you should figure out when to pay for them. Some builders want you to pay upfront for extras, while others prefer you pay at closing. Some builders may split the pay schedule. There’s no advantage or disadvantage to any of these options, it’s just good for you to know what you’ll owe and when you’ll owe it.

4. What are my financing options?

If you’re buying a brand new home directly from a builder, you may have fewer financing options than you would in a traditional sale. That’s because you’re basically financing the construction rather than purchasing the home from another owner.

Buying subdivision or tract homes, semi-custom homes, and spec homes may have a similar financing process than that of an existing home. You’ll still have to shop for a competitive mortgage rate and find the right mortgage for you.

Building a custom home from scratch may require you to carry a construction loan. Then, depending on your lender and situation, you might be able to roll your construction loan into a regular mortgage loan. Your builder can help you figure out what makes the most sense for you.

It’s increasingly common practice for builders to require buyers to get pre-approved for a loan with their preferred lender prior to signing the contract. That’s a protection for the builder to ensure they’re only building for serious buyers. That said, you don’t have to use that lender. Preapproval is not a commitment to that lender.

Some builders will offer incentives to use their preferred lender, however. They might throw in an upgrade allowance, free solar panels, a closing cost credit, or other perks. You should still shop around but it’s worth knowing what they’re offering.

5. What does the payment timeline look like?

When you sign a purchase agreement for a new construction home, you’ll likely have to make a non-refundable deposit that functions like a down payment. The agreement will state the exact amount but it’s usually up to 15% of the purchase price.

Beyond that first initial fee, regardless of the lender you use, you need to know when your interest rate will lock, how long it will stay locked, and what happens to your rate if the home’s completion is delayed for any reason. If you purchase upgrades, you need to know if you can roll those costs into your home loan or need to pay for them separately. 

Building a custom home with a construction loan will incur different payment terms that a traditional mortgage. Your lender will draft a draw schedule, which is a timeline of when certain payments will be paid to the builder during construction. You’ll owe interest on each of these payments before potentially turning the loan into a regular mortgage.

Every situation is a little different so make sure you know what you’ll owe and understand the payment schedule.

6. Will there be an HOA?

It’s true: HOAs are not for everyone. While they can be great for certain people and communities, many people end up feeling like they’re paying a monthly fee for nothing. That fee can make a big difference in what you pay for your home every month so if there will be an HOA in a completed community, you need to understand how it works.

Some of the questions you should answer include:

• How much are monthly dues?
• What amenities does the HOA maintain?
• What landscaping does the HOA maintain?
• How will rule enforcement be handled?
• What kind of changes can I make to my home in the future?

You do not want to buy a new construction home and wait patiently for it to be built only to wind up paying hundreds of dollars every month for a homeowners’ association that does nothing for you.

7. What is the construction schedule?

“When will my home be finished” isn’t the easiest question to answer. Instead, ask what the construction schedule looks like. Builders want to finish the job as fast as possible (their reputation is predicated on efficiency) and they’ll have a timeline of certain milestones of the process. Still, nobody’s perfect and construction can fall behind due to a number of factors both within and beyond a builder’s control.

What you really need to know is what happens if a builder misses a completion date. The builder should have a contingency plan if they miss a deadline or fall behind schedule. Your sales contract will stipulate what constitutes an excusable delay and what happens with your payments or plans should a delay arise. Make sure you go over this with your attorney to make sure this clause is satisfactory.

8. What energy efficient options do you offer?

These days, energy efficiency is all the rage in real estate. Not only are energy efficient materials and methods better for the environment, but they can also save you money in the long run. Ask how a builder approaches insulation and sealing, appliances, heating and cooling systems, windows and doors to understand their sustainable options.

Many builders deliver ENERGY STAR-certified new construction homes these days that are more efficient than regular homes and can save you hundreds of dollars every year. The builder will have more information on the materials and methods they use and be able to explain how they can save you money.

9. How involved can I be with construction?

It’s natural to want to see how construction on your new home is coming along. Builders know this and will aim to accommodate your desire to see progress. Still, they’re working on an active construction site and they can’t have you constantly hovering around and still expect to be productive.

Some builders offer frame walk appointments to show the progress before installing drywall so you can see that everything looks right. You should bring your agent to this appointment (and yes, you want a real estate agent when buying new construction), as well as your structural options, electrical, and plumbing documents so the two of you can verify that everything is where it’s supposed to be. Likewise, a final walkthrough is also common, allowing you to identify any final items that need additional attention or repair.

If you want to visit the site a lot to watch the progress, ask the builder about their safety procedures. Some will be more flexible than others. Maybe they’ll allow drop-in visits whenever you want, or they may require that you make appointments ahead of time. 

If you know you’ll be interested in visiting the site often (Because why not? Building a home can be exciting!), ask the builder what’s allowed per their safety procedures. Some builders may be more flexible to multiple visits than others, and you may even have to make appointments ahead of time. Still, construction shouldn’t be secret so if a builder is very resistant to you visiting the site, take this as a red flag.

10. What do you need from me?

Finally, builders are humans too! When you buy a new construction home, you’re entering into a pact with a builder in which you’re both hoping for the best from one another. You want a beautiful new house, they want another satisfied customer. Yes, they’re working for you but if there’s anything you can do to expedite the process or make your expectations clear upfront, a builder will appreciate an open dialogue.