Ten Tips for Buying New Construction

A lot of our customers ask what’s different about buying new construction.

First of all, you’re buying from the person who built it, not the person who called it home. Often, the property is just one of many they are trying to sell.

We asked our agents who specialize in new construction for the most important things to consider when buying a new house or condo.

1. Hire an agentstacked.png
One that specializes in new construction and isn’t affiliated with the builder.

2. Be creative during negotiations
Builders don’t like to drop their prices. Instead, ask them to cover closing costs or upgrade the kitchen for free.

3. Get it in writing
Don’t sign until everything has been negotiated, agreed upon and written into the contract.

4. Be wary of upgrades
They’re where builders make the most profit. Don’t take upgrades you don’t want or can’t afford.

5. Research the builder
Visit other developments and talk to home-owners. Google the developer for reviews, testimonials and news.

6. Ask for a guarantee
You’re often buying a home that is not completed. What guarantees do you have the home will be ready on time?

7. Get the home inspected
New homes have problems too. Hire an inspector to make sure everytthing is safe and up to code.

8. Bumper-to-bumper coverage
New homes should come with a warranty from the builder. Know what is and isn’t covered and for how long.

9. Look to the future
Check with the city to see what is planned for the surrounding area. If you have a view, will it still be there in 5 years?

10. Find your own lender
Don’t use the builder’s lender. Shop around for the loan that is best for you, not them.

This is our list, but what do you think? If we’ve missed something, leave a comment.

Photo credit: SqueakyMarmot on Flickr.


  • http://http//blog.Franklyrealty.com Frank Borges LL0SA= Broker FranklyRealty.com

    Great points above. I would like to add:

    1) Get your own appraiser (oftentimes through your own lender).

    2) Don’t trust the closing data on the MLS. Oftentimes they will hide $50,000 seller subsidies.

    3) Go to the tax records to see what units are closing for. Many builders are requiring that Realtors sign a piece of paper that forbids them publish the closing price on the MLS. The problem with tax records is you can’t see the upgrades or HUBE closing costs.

    4) Given #3 make your offer SUPER aggressive on closing costs and seller subsidy. The subsidy won’t show up on the tax records, so helps their resales.

    5) Given #4, demand to look at HUD1s. Don’t trust the price that they say another unit sold for. Ask for specific units. Not ones cherry picked.

    6) Ask that % they are sold. And make sure that is CLOSED units. None of this “held back” tricks.

    7) Be aware of the risks with builders unloading the rest of their inventory at an auction. You can lose $50,000 overnight.

    8) If you are between a new construction and a 1 year old resale in a similar building, consider the risks of prices taking a free fall. Even pay $10k-$20k more for the resale. The builder’s last 40 units won’t get more expensive.

    9) Expect the condo fees to take a 10-15% jump after you move in.

    Good luck!


  • http://www.condoauthority.com Jamie


    Great points except I disagree about your thinking for #7. You seem to imply that a builder lowering prices on the remaining 40 units will only affect pricing in that particular building. If a gas station were to have a “going out of business sale” and sold all remaining fuel for 50% off wouldn’t almost everyone buy the gas there until it is gone before buying the market priced gasoline across the street? A builder lowering prices hurts ever owner trying to sell in the building, neighborhood, submarket, city, county, metro area, etc. to the extent the homes are comparable. You mention getting an appraisal. If you contract on resale next door and the appraiser finds out that prices have been dropped $50,000 for a comparable unit next door something will have to give. Either the deal is off because your unit doesn’t appraise or you’re bringing a lot more cash to the table.

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  • http://blog.redfin.com Chris Glew

    Thanks for the additional tips. I really like #6. It’s key that you know what % of homes or condos in the development are closed.


  • http://blog.redfin.com/blog/author/glenn%20kelman Glenn Kelman

    Fantastic list, Chris. On #1, may add: hire a real estate agent or a lawyer — just so we aren’t biased, or at least we don’t sound biased.

  • http://http//blog.Franklyrealty.com Frank Borges LL0SA= Broker FranklyRealty.com

    Hey Glenn,
    I think you are fine saying to hire a real estate professional. A lawyer can read a contract, but that is not where the tricks lie.

    I have seen it happen personally. You can read it on my blog. A community was hovering around $330k, then they held an Auction and everything dropped to $280,000 and they haven’t recovered since.

    And even if they don’t do an outright auction, even if they slowly drop prices $10,000 every 2 months for 10 months… The point is you might think you are getting a “steal” but if the builder has another 20 units, everyone after you will get a “steal-er.”

    Also I left off the all important #10

    #10 WATCH OUT FOR CONDO FEE HIKES AFTER YOU CLOSE Don’t think this doesn’t happen. Sure the condo association is a bunch of owners, and they don’t want the fees to go up, but the builders tend to make them artificially low to attract buyers. Watch out for this.

  • http://www.condoauthority.com Jamie – CondoAuthority.com


    I’m not arguing that a builder reducing prices or auctioning off units in a community does not hurt the existing purchasers. What I’m saying is that it is not limited to owners in the particular building. It instead will affect owners in the building AND owners in nearby buildings to the extent they are comparable. In a way it is not dissimilar to a bunch of foreclosures in one particular building. The banks will cut the price until they can get out which doesn’t help an owner occupied seller who is selling at the same time. At the end of the day I think people should do their research, know the market and what things are selling for, and buy a home that they want to live in. There will always be someone who gets a better “deal”. But, maybe they had to sacrifice the enjoyment of living in a home they like for some time to get that “deal”.

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  • candicehartwig

    I am the Sales Director for a builder who sells new construction. Statement number 10 referencing the lender, is misleading and basically incorrect. We recommend our “in house lender” but do not tie any incentives to using them. We encourage our buyers to shop for the best rate and package AND that includes shopping our lender. Most buyers will shop and come back to our lender. There are many reasons why it pays to use our preferred lender; the lender is familiar with our product and neighborhood, our preferred lender will pay a portion of the closing costs, our lender will provides a guaranty to deliver the mortgage date on time. I could go on and on. Please rethink what you are advising.

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