Buying New Construction: What You Need To Know

We're going to cover all that you need to know if you're looking at buying a new construction home!

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0:00 What you'll learn
0:28 New vs Existing
2:09 CalmMoment
3:07 Representation
5:20 Customization
8:12 Deposit
9:59 Financing
13:08 Sponsor
14:18 General Contractor
15:16 Tax Assessment
17:04 Expectations
17:47 Real buyer's experience

So what kind of down payment, earnest money, and rate are you going to expect in new construction? And then finally, we're going to talk about incentives of purchasing with new construction over an existing home. So let's go ahead and dive into this. We first need to talk about the difference between new and existing and specifically what we're talking about here in this video is we're talking about a home with a builder who already has a home built.
It's a prefabrication and normally what you do is you go, you talk to them and you customize the home and then they build it and then you buy it. Okay. This is not for custom built homes. Okay. So, what do you need to first consider is looking around and exploring if building a home might be a very similar price to purchasing, especially in this market when home values are continuing to grow and grow building might actually be very similar. I have a video that I'm going to link at the end with Scott Smith, sharing his experience of purchasing a new construction home. And he actually talks about how building was actually the same cost as purchasing a home for the exact same specs that they were looking for in their area.
So consider as an option building might not be as far out as you expect, especially if you're not going with a custom build routes. Okay. Now, what you also want to do, is you want to talk to an agent about how a build might have a resale value. Okay. And this is all going to depend on your market. It's impossible to say as a blanket statement, all builds are better than existing homes or all existing homes are better than builds in terms of the resale value. It's just not a fair comparison to do that. So talk with a real estate agency, see if that market is expanding and growing to make sure that if you purchase a new home, and you're going to be in there for a couple of years that you'll see that value come back.
All right. So before we dive into the next one, what I want to do is jump into a quick CalmMoment. And the reason why is because if you're looking at a new build, you're probably feeling the pressure of the really low inventory happening right now. We are in a crazy sellers market nationally. And this is where sellers have the control, home prices are continuing to increase and there aren't a lot of houses available. So if you're putting in offers, you're probably seeing multiple offer situations, you might be getting beat out by other buyers. And if so, I don't want you to look at construction or new construction just as this last ditch effort to try to get the ball rolling.

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Kyle Seagraves
NMLS# 1701021
Motto Mortgage Alliance
8900 N. Dixie Dr.
Dayton, OH 45414
Equal Housing Opportunity

[JimiFigDrix]

I love the way you break things down and how simple you make things to understand with such a positive attitude. I really value your videos because of this. Thank you sir!

[shaundocmcgowan]

You promised me you'd do this topic! Thank you! We break ground next week. Customization, down payment already done

[yuhong]

Just had a amazingly productive meeting with a sales rep on a new construction I am interested in buying - thanks to Kyle! The video really helped me get ready for the conversation. We will see how it goes.

[natasha]

Hey Kyle! You were kind enough to answer my questions on this topic yesterday, thank you! I had the brilliant idea today to look through your videos, and look what I found. Thanks so much for this content and the time you put into it!

[paulcandle]

What about the following strategy: Obtaining the loan from the preferred lenders and utilizing the incentives and then refinancing the loan with a better lender/rate after 3 months or so? Is that a doable/optimal strategy?
Love all of your videos!

[Lovinme]

Can you talk about Modular homes? Thanks

[andrewmilligan]

This was so insightful thank you! As a Realtor in upstate NY I recently took over a subdivision for a builder and this helped me to see it all through the buyers eyes. Thx!

[pj]

Your channel randomly came up amongst multiple nursing clinical videos on Tuesday when I searched TNCC... Since Tuesday evening, I have been bench watching all of your videos. Very informative. Thank you for the informations. 🙏

[Cm]

Thanks for making this! I just started the process of buying a new construction home that will be finished next summer and this was really helpful. Do you recommend locking in a mortgage rate since they’re so low right now?

[tishcasillas]

What are the Pro's and Con's of purchasing one of the Model Home's? Any tips you can provide and how to bring up with as an option?

[britneyhouston-escajeda]

love your videos! Especially for this my new construction will be ready Feb 2021

[qtseymone]

Currently in the process. Our earnest money deposit is paying the lot fee + all desired upgrades. They say this will all be applied to closing costs. I assume that closing costs won't cost be $23k. Have you see this before? Our hope is that the overage will just be applied to our down payment. We fully expect to pay our closing costs but estimate them to only be $7k.

[HoloHoloAdventures]

Great information. We plan to buy a new area for a semi custom home and noticed the prices out there are so expensive and competitive.

[meshisha]

Great info but what im not clear on is how to finance the upgrading. There are many videos on the process but everyone kinda skips over the financing process. Is it because each builder os diff. So you put down ur earnest money n proceed to choosing a lot and upgrades n structural changes. But i hear some builders require cash 10% upfront for the upgrades. How do you finance the upgrades? How do you ensure ur loan will cover it? What should i ask or look for? Still looking at models and the starting prices are outrageous. Need cushion for upgrades. Thoughts? Thx

[KingStreamTv]

I watched a ton of your videos before purchasing my new construction, but this one I missed. Since the rates are crazy, its my first home and I don't know what to expect I made sure to document the process to reflect on in the future lol. That way I can see if I bought at the right time and also for people like me who but prefabrication homes. I originally assumed I will pick the lot and more aspects of the home....NOPE. But at least I got some incentives with my build.

[patrickambler]

Have you by any chance made a video on the process/requirements of obtaining a mortgage loan to purchase vacant/undeveloped land and build a home?

[linzou]

Great video, thanks for this! Currently in the process and I would suggest creating a budget for the upgrades/customizations, and sticking to them. Easier said than done unfortunately lol

[jomalinsdiary]

I just sigb a contract to build a home. They ask me to ask for 1k usd to hold down the price and the dp of the house which is 3.5 convitional and to be paid 15 days before closing, its 6 months before the turn over. We gonna use thier preffered lender and the lender will pay the closing cost. I think its a good deal.

[JustDeraj]

This video is super therapeutic lol. Great info man

[ItsBoogie.]

Hey Kyle I really enjoy your videos. Can you talk about building a new home on your own lot with companies that specialize in that?