One of our first Landed Partner Agents, Matt McGaffey from Seattle, shares common steps you may go through when buying a new construction.
Are you thinking about buying a new construction, but you're unsure about how the process works? Read our guide below to understand how the process compares and contrasts with buying a different type of home. There can be many benefits to buying a new construction – it's brand new when you move in, and you often have a lot of choice in building a home that fits your style and works well for your family.
Here are some pieces to be aware of that can be different from buying any other home:
1. Bring your own agent with you prior to visiting.
Make sure you have an agent before you go into a sales office at a community site, or if you talk to them on the phone, be explicit about already having an agent. Many new construction builders will not allow you to work with your agent after you have already talked to them about buying one of their properties. Many homebuyers don't realize that signing any documents without your agent present can limit your ability to use your own agent for support down the line.
If you are working with a Landed partner agent, make sure to visit the builder together from the very beginning to look over documents prior to signing. Having your agent support you in this process means you have someone on your team who is able to fully represent your needs.
2. Choose your home site location, model, and upgrades.
After establishing that you have an agent, you should visit the site and walk through any models that they have with your agent. Maybe even do this 2-3 times, on 2-3 different days, at 2-3 different times of the day. Initially, you may not notice things such as how well-lit the home is or traffic noise.
Review any documentation they have on site with your agent; including upgrades available, color schemes, floor plans, and so on. Ask the site agent if they can accommodate customizations that you may want to pursue.
Note: If you are using Landed down payment support, keep in mind that upgrades are often not included in the Beginning Property Value (BPV). Landed can only review upgrades for inclusion in BPV if they increase the livable area or they are unchangeable “lot upgrades” such as a corner unit.
3. Negotiate and then sign the contract.
Once you've identified the floor plan and lot number that’s right for you, you can ask the site broker to send you the contract. This is a good time to negotiate.
Some builders may be less willing to negotiate – especially with a popular floor plan or location – but either way, it's important to understand the dynamics of the community and surrounding areas. Have your agent look into how quickly homes are selling, both new and old, and specifically the floor plan you are interested in. Are there other communities nearby and what are the statistics for those? Talk to your agent about what makes the most sense based on the community and local market.
Tip from Matt: “Unless you know of significant competition, on occasion, you can negotiate both a price reduction and credits. You may need to be resilient and prepared to walk away. In my experience, it can be like buying a car: the expectation is that you will negotiate, and if you want to get credits or reductions, you have to ‘walk away’ and come back. You will also need to be prepared for the site agent to use their own negotiation tactics. ‘Another party is very interested in this home and plans to sign today/tomorrow’ or ‘we are increasing the price of this model next week’ or ‘the contract expires today and I'll have to get the builder to agree to these terms and conditions again.”
4. Close on your home and understand the timeline.
The process of closing is relatively similar to a traditional home sale (see 10 Steps to Get to Your Closing Day), except the timeline is often more drawn out and you may have a few additional steps in which you confirm the design and custom features. The sample timeline below shows how long it might take for the next steps of closing to happen once you sign your contract.
Buying a New Construction: A Timeline
While most steps for buying a new construction are similar to buying any other home, it's important to be prepared for the key aspects that can be different.
Pre-purchase: Key Steps
- Prior to signing - bring your own agent with you.
- Choose your home site location, model, and upgrades.
- Negotiate + sign the contract.
Post-purchase: Example Timeline
- Day 0: Sign the contract.
- Days 1-2: Deliver earnest money to escrow.
- Days 3-5: Apply for a loan. (Landed has participating lenders who your account manager can connect you with for great rates!)
- Days 0-21: Conduct design review, to make any customization/design/option selections for the home. (Timing depends on the level of completion at time of purchase.) Additional deposits will also be due at the time of selection.
- Days +/- 30: Loan approval.
- Months 3-6: Close on your home. Timing depends on when the home construction is complete. This timeline varies and can also change and be extended depending on the weather, supply of materials, etc. Most builders reserve the right to extend to up to two years.
Note: The timeline listed above is general and your own timeline will vary. Have your agent work with your builder to get a more accurate timeline for your property.