Buying New Construction? Why Vetting Your Builder First Is Crucial

It's a really important step to take.

If the idea of buying a new construction home sounds good to you, you're not alone. A 2021 survey by the National Association of Home Builders found that 60% of buyers would prefer a newly built home over an existing one. And it's pretty easy to see why.

When you buy new construction, you get the benefit of moving into a home in pristine condition. You might also, in some cases, get to customize certain features of your home. For example, some builders might let you have a say in the type of flooring you get. Others might let you get even more involved in the construction process, to the point where you're able to dictate how many bedrooms and bathrooms your home has.

But if you're going to buy new construction, it's important to sign up to work with a builder who's reliable and trustworthy. And if you don't research your builder, you might end up sorely regretting your decision.

You can't afford to take chances

The process of buying a new construction home is somewhat similar to that of buying an existing home. You make an offer, and if it's accepted, you sign a contract, apply for a mortgage loan, and wait for your loan to close.

But there's another big hurdle you'll need to jump in the course of buying new construction -- waiting for your home to actually get built. If you're buying new construction in the sense that you have a completed home that's yet to be occupied, you're not taking the same risk as someone who's buying a newly built home that's still in the construction phase. But in that latter situation, vetting your builder is something you absolutely must do.

First of all, the last thing you want is to spend your life savings on a poorly built home. But if your builder has a reputation for cutting corners and producing inferior work, then that's a risk you'll end up taking.

Secondly, you want to make sure your builder isn't experiencing financial difficulties. If that's the case, it could delay the construction of your home, which could not only upend your life, but cost you money in different ways. And if your builder is forced to bail on your home midway through due to running out of money, you could really end up in a sorry situation.

An important step worth taking

Digging into your builder's finances and reputation may seem invasive. But it's an important step to take. So if you're ready to enter into a new construction contract, before you do, ask your builder to disclose their financials so you can make sure they're on solid ground. And also, ask for references from previous buyers who have worked with your builder before.

Another good bet? Take a look at some of the homes your builder has completed. If they appear to be well constructed, that's something you can take comfort in.

All told, there's lots to be gained by purchasing a new construction home. But make sure you don't get stuck with a builder who might do shoddy work or leave you high and dry.