New construction homes are highly sought-after in the Fort Worth real estate market because they offer home buyers some key advantages over buying an existing home. Much of the activity is concentrated in the Far Southwest and North Fort Worth, but new construction communities and homes can be found around the metro.
When considering whether a new construction home is right for you and your family, it's essential to weigh the pros and cons before deciding. It pays to be aware of any potential drawbacks, such as possible delays during the building process or higher prices than you might find on an existing home.
As you explore the new construction market, let's learn what home buyers should know before buying new construction.
What defines new construction?
New construction is a new home with no prior occupancy history built from the ground up, often with new materials and modern amenities. New construction can be single-family, townhome, condominium, and multifamily real estate.
Buyers can purchase directly from a builder working on a planned development. The home may be in the process of being built, a vacant spec or model home, or the builders have drafted models to choose from and lots ready to build. A buyer also can separately purchase land and hire a builder.
What are the benefits of buying new construction over an existing home?
The first benefit is easy: everything is pristine in a brand-new home. Unless something exceptional happens, you won't likely make major repairs to hardware systems and structure anytime soon. We're talking about no new roof, HVAC system, water heater, and the like. And, if a component does have a problem in your initial years, it's likely covered under warranty.
This isn't always the case in existing homes, where the buyer may need to replace key components shortly after purchasing. A new home means you move in with fewer initial capital maintenance costs in the early years.
Make it your own
New construction offers buyers the opportunity to customize the property. Buyers choose their finishes and fixtures, select energy-efficient appliances, and specific home upgrades. Design enthusiasts and individuals with particular tastes will relish the opportunity to make numerous choices that help make their house feel like a home.
Some buyers opt to customize the look and layout of the home by working with an architect to plan a truly unique property. This gives the homeowner total control over the future home.
More efficient living
Newer homes utilize the latest technological advances to deliver a better living experience. It's increasingly common for new development homes to include innovative features like smart thermostats, lighting controls, or voice control.
It's not just about asking Alexa to turn up the air conditioning. The upgrades include ones buyers don't always think about or see. The latest window designs, insulation, and materials combine for homes with less environmental impact. Over time, new homeowners save on energy costs through more efficiently built homes.
What are the drawbacks to purchasing a new construction home?
While new construction offers several benefits compared to buying an existing home, some drawbacks are worth noting.
Existing homes are ready right now on the market. Typically you can move in the same day you close, unless it's been negotiated otherwise. And if the home does need renovations, the timeline is usually measured in weeks. Depending on the extent of the upgrades, you could live in the house while the construction is happening.
With new construction, it's a much longer timeline. If you're contracting with a builder to start on a lot picked in a master-planned community using one of their floor plans, the timeline is measured in months–and that's if they can start tomorrow. A typical start to delivery is 8-9 months on a single-family home. High-demand markets and builders could be backed up over a year. Custom builds may have a different timeline. Along the way, building delays may affect how long construction takes before the home can be delivered to you for moving in.
The good news in the late 2022-2023 market is Fort Worth new home builders are scaling back their projections. In the coming years, they may not be as backed up with orders as they were during the pandemic years.
New construction costs
Additionally, new construction homes tend to cost more than similar existing homes in the same area.
According to the U.S. Census Bureau and the Department of Housing and Urban Development, the median sale price for a brand-new home in December 2022 has skyrocketed to $493,300.
The steep cost can be attributed to factors such as the innovative construction materials used, the limited availability of builders in certain areas due to overbooking or market growth complications and increases in overall home values across many parts of America.
Inflation, material shortages, and labor shortages increase building supplies costs, which the home builders pass on to their buyers.
Many builders include a contingency clause that permits them to raise the purchase price if they experience additional expenses for materials. It's not uncommon for these costs to surpass what was initially budgeted.
Locally, Fort Worth's median home price was $355,000 in November 2022, which included existing and new homes. In December, the available new construction listings ranged from $250,000 to $3.5 million.
Not everything is included
Some aspects of the home build you may expect to be incorporated but aren't could surprise you. These could include landscaping, fencing, or finishing a basement. Look carefully at the contract, so you know exactly what the home builder will provide.
To speed up the building process and take advantage of manufacturer discounts, model builders offer specific choices on finishes and appliances. These options may be more limited than buyers like, such as two or three interior colors or just three kitchen countertop options. Customizations beyond what the builder offers could slow down the process while increasing the home's budget. Some home upgrades may not be available, leaving the buyers to install what they want after delivering the home.
How do you know if a new construction home is a good investment for you?
When deciding whether new construction is right for you, start by understanding your needs and budget.
Consider factors like location, size of the house, quality of construction, design elements that are important to you, and any specific features that you would like in the new home. If you're finding existing properties aren't to your taste or require significant updates to meet your needs, it may be more effective to build from scratch.
New construction may also be ideal if you plan to make this your "forever" home or to live in the property for many years. The longer you stay, the more you'll enjoy the home and benefit from real estate appreciation.
When investing in new construction, it's critical that you're assertive and ask the right questions to ensure your interests are taken into account. Being educated beforehand can provide invaluable peace of mind and make navigating this process much smoother.
When touring new construction homes with your real estate agent or builder representative, what are some things to keep in mind?
Be sure to ask lots of questions and pay attention to the details. Model homes often highlight the top-end upgrades a home builder provides as a way to win over homebuyers. What you see in these homes is likely not everything that's included in the base price.
A base price is the fundamental starting point for builders when pricing a new home. There are numerous variables to consider, which is why they use a "base price." The base price won't be the same across builders or even home models. For that reason, it's essential to begin with an inclusive list of standard "included features," such as a two-car garage, carpet flooring, and a basement. As you look at the home, ask what's standard and what is an upgrade.
Whether or not buyers have a positive experience constructing their new home depends on the builder they choose. Do your due diligence and look past what is presented in pictures. Look closely at the quality of workmanship and materials used in the home and its energy-efficiency features.
Don't forget to check any incentives or discounts available on the new home purchase. Lastly, read through all legal documents carefully before signing anything. Be confident that you're making the right decision.
Additionally, research any incentives offered by new home builders, such as closing cost assistance or new appliance packages, that could help sweeten the deal.
What questions should you ask a home builder?
Trust is key when it comes to finding a reliable builder. Before hiring one, ensure you ask them these pertinent questions:
- What warranties are included with the new home purchase? These warranties are designed to safeguard the buyer should any repair be needed within the given period. Look at the builder's options for providing you protection for interior issues, full warranty coverage for a specific period, and an extended exterior warranty.
- Can you provide references from past clients? Asking for at least three references helps to gauge the builder's quality and reputation. Then follow up with these references.
- Are there additional fees that might be incurred along the way during construction? It's possible that increased material costs could be passed on to the buyer. Ask your builder about any contingencies in their contracts that would permit them to raise the purchase price in such cases.
How do you negotiate the best deal on a new construction home?
Negotiating for a new construction home is much like negotiating for an existing one. You will want to ensure you are getting the most value for your money by making offers and counteroffers.
For starters, work with a real estate agent. You may think a real estate agent is only used for existing home sales but having one in your corner can be a true asset. Remember, the builder's agent represents the builder's interests. Your real estate agent is there to represent YOUR interests and get you the best deal possible.
You want to bring in a real estate agent from the start, as some builders will not work with the real estate agent or pay the agent's commission if you hire one later in the process.
A real estate agent can direct you to local builders who offer homes in areas or styles you prefer. They can often help you identify new construction home incentives and discounts that could benefit you. A builder may suggest a "preferred lender," but another lender may have the better deal for your situation. A real estate agent can recommend several companies who lend for new construction for you to shop around.
Remember, the first price a builder presents is the base price. This is the starting point for negotiation and is generally not the final price you'll pay. It covers the structure as designed and standard finishes. Builders expect—and welcome—negotiation on new construction homes. Wood floors instead of carpet, modern lighting fixtures, fireplaces, and up-to-date kitchens are just a few items that can significantly add to the expense of your home. A real estate agent can negotiate deals for upgrades on your behalf.
Typically, it costs around 20% more to buy a new construction house than an existing one. Account for these extra costs while finding an equilibrium between getting what you want and staying within budget boundaries.
Be sure to ask the builder about their typical payment plans and any additional fees that may be assessed along the way.
Make sure to read all legal documents carefully before signing anything. Remember to research any new home purchase incentives that could be available.
How long does the process usually take from start to finish?
The new construction process can take anywhere from six months to a year, depending on the size and scope of the home.
During this time, most new construction homes require multiple inspections throughout the building process. This includes a footer inspection when the home's foundation is poured and an electrical inspection once wiring has been installed.
When purchasing new construction, asking the builder about their timeline and track record for completing projects is essential. This will give you a good idea of when you can expect to move in and what progress updates to expect along the way.
Buying Fort Worth New Construction
With detailed research and negotiation tactics, purchasing new construction in Fort Worth real estate can be a rewarding experience. By being aware of the benefits and drawbacks associated with new construction and understanding what to look for when touring new homes, you can make an informed decision about whether new construction is right for you and your family. The Chicotsky Real Estate Group is happy to answer any questions about buying new construction or for you to use our expertise negotiating with builders to your benefit.