3 things to know about buying new construction

Kevin Guerrero
Published on April 12, 2017

3 things to know about buying new construction



When homebuilders stop (or slow) building, inventories of homes for sale dwindle and we end up in a tight sellers’ market (like now). While there are many reasons for the recent slowdown in new home construction (high material costs, unavailability of labor, etc.), there is good news on the horizon: they are building again.

In fact, according to AP economics writers Christopher S. Rugaber and Josh Boak, new home sales increased more than 6 percent in February, which is “nearly 13 percent higher than February of last year,”

That makes this the perfect time to learn the ins and outs of buying a new construction home. Much of the process is similar to buying an existing home, but, if you’re considering a new home, it’s critical that you understand some of the differences – critical to both your sanity and your pocketbook.

1. The builder has an agent and a lender . . .do you?

If you’ve ever visited a new home community, you no doubt noticed the fencing that corrals folks to towards the builder’s office prior to viewing the model homes. The greeters inside this office are often times licensed real estate agents (but not always in Colorado), employed by the builder or developer. Their job is to sell all the fabulous home and community features … and did I mention that they work for the builder?

So, while it may appear as if the sales representative is working for you, they are not. You are a customer, the builder is their CLIENT. There’s a big difference … a customer must be treated fairly, but a client’s best interests trump all.

Here’s the good news. You can hire an agent to represent you and the builder will pay that agent’s commission. Since there’s no additional money out of your pocket, your best bet is to go into the situation with your own representative. Your agent will place your best interest above all just as the builders rep is looking out for the builder. So, even though you are considering a new home, don’t pass on the opportunity to have an expert in your corner. Someone who understands the new construction process and someone who you can rely on to make your best interest the highest priority.

Whether or not you should work with the builder’s preferred lender will take some research. Often that lender will be able to save you money on your mortgage but the only way to know for certain is to obtain quotes from other lenders and compare them all. The preferred lender will often advertise that they pay some or all of the closing costs. In many cases, they make up those concessions by charging higher fees or a slightly higher interest rate. Look at the total cost and compare apples to apples.

2. Research is a bit more challenging

The initial steps in the house hunt, after seeing a lender, include deciding what part of town works best and what type of home. When the neighborhood is brand new, you’ll be presented with some challenges not present when purchasing an existing home. Keep the following in mind when researching homes and communities:

  • Even new homes can have problems. Visit some existing homes in new communities you are considering. Chat with the homeowners. Ask about their experience with their homes, the neighborhood AND the builder.The Better Business Bureau is also a valuable resource. Use it to research the developer/builder
  • Ask the builder’s agent about the Homeowners Association (HOA) and the monthly fee. Ask to see the HOA documents – CC&Rs (covenants conditions and restrictions). Run them by your agent or attorney if there is anything you don’t understand.
  • Check if Internet and TV service will be available in the community.
  • Visit the city planning office to determine what they have planned for the area surrounding the community.
  • Check the neighborhood’s proximity to busy roads, airport flight patterns, and the neighborhood demographics (young families, empty nesters, etc.). Pick the place that best suits your lifestyle.
  • Although it is great to be one of the “founding” members of a new neighborhood, keep in mind moving in at the outset means you will be living in a construction zone for the near future.

3. New home upgrades can be confusing

As you tour the model homes, unless you purchase identical upgrades, your home will not look anything like the model. In fact, it will be a bare shell, with the least expensive flooring, appliances and fixtures. Find out exactly what comes with the basic home price. With that in mind, you can add upgrades and keep within your budget.

Some upgrades performed by the builder during the construction process can save you money in the long run. Others are less expensive if you hire someone to do the upgrades later. The advantage of having them done during construction, though, is that you can roll the costs into the loan.

Let’s take a look at some popular builder upgrades.

  • The lot — The one upgrade that you can be assured will hold its value is land. Unless you live in Hawaii, no more land is being created. A larger lot, or a better location lot can be worth the money … you will see this amount listed as the “lot premium.” More desirable or larger lots will come with this additional charge.
  • Structural upgrades — Upgrading to a three-car from a two-car garage or including an extra bathroom are popular upgrades because it’s usually less expensive to build these from the ground up rather than add later. And the value of this type of upgrade is enduring.
  • Flooring upgrades — going from the standard to an upgraded carpet an pad will sure be nice but don’t count on this adding any extra value to the property. Same goes for the upgraded laminate flooring. Adding hardwood floors don’t always add value, but often times help getting the home sold quicker down the road.
  • Plumbing and electrical — Anything that will help save money while you live in the home is worth considering. For instance, a super-efficient HVAC system and tankless water heater are worth considering purchasing as an upgrade.


If you’re looking for some really great builders in Colorado Springs, check out CreekStone Homes and Campbell Homes. I’ve worked with both and they build fantastic homes (I own a CreekStone!).


CreekStone Home in Gold Hill Mesa


The above post “3 things to know about buying new construction” was provided by Kevin Guerrero of Keller Williams Clients’ Choice Realty. To find out more about Kevin and Keller Williams check out the ABOUT US page. To get a complimentary home valuation click HERE.

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