Questions to Ask Before Signing a Contract to Have a New Home Built
Having a new home built just for you is exciting! You probably have some questions about the process including the contract for your custom home. Not every building contract is the same, and it's really important to understand the contract you're signing before you sign it. Here are some important questions to think about before you sign a contract to have a new home built.
How much customization can you do?
Buyers often assume that they can have the new home built to their exact specifications, but this is not always the case. There are three basic levels of customization that building companies offer. The first is called "built on spec." In this case, the home is built according to a pre-determined plan, and you are purchasing the home when that building is complete. You do not get a say in much of anything except maybe the paint colors and flooring.
The second option is called "semi-custom." With this option, the floor plan is usually pre-determined, but you can make certain rooms bigger, add things like patios, or have the basement finished.
Finally, there's the "fully custom" option, which has you work with an architect to design your home from the ground, up. Make sure you know what customization options you'll have before you sign the contract.
When will the home be complete?
Sometimes the builders cannot avoid delays. If just one material gets back-ordered or one contractor has to take a sick day, that can set the whole project back. Before you sign a building contract, make sure you ask when the home is projected to be finished, and when it is guaranteed to be finished. These will be two different dates, usually months apart. Make sure you have a plan if the home is not finished until the guaranteed date, as that situation is not unusual.
What lenders can you work with?
Most building companies have a preferred lender that they work with, but you might have the option of using an alternative lender if there is someone else you would rather use. Make sure you determine whether this is a possibility before you sign the building contract. You don't want to assume you can use your credit union only to later learn you have to take out your loan through a different bank.
If you talk to your builder and ask these questions before signing a contract, the whole process of having a new home built should go more smoothly. If you are looking for new homes in your target area, contact a local real estate company.
