- Building a New Tract Home

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Building a New Tract Home

BUILD A NEW HOME

Buy New or Build

...you mean there’s another alternative?

Building a new home using a production builder is a great way to get into a new home. A production or pre-planned home is also referred to as a tract home. These homes are not considered custom homes and are typically built in master-planned communities. You can either buy a home that the builder has already built – sometimes called an inventory or spec home – or you can build a new home from scratch and add your personal touch to one of these builder's homes. The entire process for building a home from scratch usually takes anywhere from six months to a year. Here are the basic steps you go through when building a home with a tract builder.

1. Select A Neighborhood

The first step to choosing your new home is to find the right neighborhood. Consider the following points when making your decision – and keep in mind that our New Home Specialists are great resources for matching you and your family with a great neighborhood.

•   Are the homes in the price range that you are qualified?
•   Is the neighborhood safe and where people want to move, buy homes and raise families?
•   Do the neighborhood’s amenities fit your lifestyle?
•   Is there access to schools, transportation, and shopping?
•   How do the neighborhoods you like compare in terms of tax rates, recreational facilities, hospital and medical services, zoning and other public services?

2. Find a Builder and Choose a Floor Plan

Once you decide where and with whom you want to build a new home, you choose a floor plan best suited for your family’s needs. There are many floor plans to choose from. You can start this process by searching for floor plans on our web site. You can enter the parameters that are important to you such as square footage, and the number of beds and baths. Keep in mind that many builders offer floor plan options for an additional fee, which increase the flexibility of their plans. These options allow you to add or subtract rooms or change features on the home. For example, you might be able to change a designated living room into a study or a bedroom into a media room. A few builders will even allow you to personalize the floor plan beyond their option ideas to meet your specific requests such as removing or adding walls or extending rooms.

3. Select a Lot or Home Site

Now that you have selected the floor plan, the builder will help you select the appropriate site for your home because not all floor plans will fit on every lot. Options such as view, corner lot, cul-de-sac, green belt, size of yard and tree coverage are all things you might want consider when choosing your lot. Also keep in mind the area’s future growth plan. There might be roads or other structures planned that affect your choice in lots. If you find a lot you like, the next step is to come to an agreement on price, secure a contract and then complete your loan application.

4. Secure a Contract & Complete your Loan Application

Before entering into a contract, you can work with your New Homes Specialist to negotiate a price with the builder. To determine the price for your home, the builder includes the base price, which includes standard features. Be sure you understand what the standard features are for your floor plan since most model homes have many upgrades throughout. On top of the base price, the builder includes additional fees if there are any such as lot premiums or elevation premiums. After negotiations, if you come to an agreement on price, the builder will request earnest money. The amount varies by builder. Earnest money assures the builder that you do not intend to back out. If you do need to back out after the option or specified period, it is most likely that the builder will keep the earnest money. Talk with your New Homes Specialist about your options for a contingency offer if you need to sell you home first.

At this point, you enter into a contract with the builder to secure the floor plan, lot and price. It is important to remember that although you have locked in a purchase price, the amount will change if you decide to upgrade your options when finishing the design of your home.

Once you have a purchase contract, you can then finish your loan application. Many production homebuilders have their own lenders. They will often make it a condition of your contract that you use their lender. They may offer you points upfront in order to use their lender, but once you agree to this, the interest rate or loan program might be higher than the market interest rate. A good way to make sure you are benefiting from the extra points is to write in the contract that you would like the option to use the lender of your choice if the builder’s lender is not competitive. This will make them try to be competitive, and if they are not, you can use your own lender and still have the incentives offered in the contract. With the approval of your lender, you can now move on to the design phase.

5. Choose Your Design Options

To make your new home your own, you visit the builders design center and pick out options such as floor coverings, cabinet colors, paint, banisters and more. These selections must be made within a specified time period. Builders usually require deposits upfront for options, which is typically 25 – 50% of the total price of your options. Some builders have you pay another percentage before closing and then the remaining amount at closing.

6. Watch Your Lot Turn Into Your Home

•   The builder submits the permits and plans to the city
•   Your lot is scraped and the forms are erected
•   You might attend a pre-construction meeting to meet the builder and go over the plans
•   The builder constructs your home. We recommend that you hire a third party inspector to conduct phase inspections throughout the building process. Please contact us for a list of reputable inspectors.
•   You attend the final walk-through. The site manager will walk you through and around your home to check for any problems that might have been overlooked. If there is any work that needs to be done, it should be complete prior to closing. Usually builders offer limited warranties for a specified time period after closing.

7. Close on Your Home and Move In!

At the mortgage company, you will sign all the mandatory papers and handle the financial purchase of your home. Congratulations, you are now the owner of your new home!