A Complete Guide to New Construction!
Let’s talk about all things new construction! From types of new houses, available financing, and upcoming projects, there is so much to know! Approximately 25% of our clients each year choose the fresh start of a new build, a journey that's very different from purchasing a resale property. With new construction currently representing about 10% of the Enumclaw market and poised for significant growth, now is the perfect time to learn more!
Types of New Construction:
I like to break up new construction into 4 buckets:
Tract Homes: Tract homes, also informally known as “cookie cutter” homes, are standardized, fast construction houses found in suburban communities. Tract homes are often offered from large builders like LGI, Lennar, D.R. Horton, and KB Homes. Tract homes are built on a large scale by developers who purchase land, divide it into plots, and construct multiple houses using a set of pre-designed plans. This allows for rapid construction and cost efficiency, making tract homes a popular choice for homebuyers due to their entry level price points. These homes are constructed on a limited number of pre-designed plans with very limited customization available.
Semi Custom Homes: Offering a balanced approach, semi-custom construction allows buyers to personalize their new home by selecting from a curated range of pre-designed floor plans, features, materials, and finishes offered by the builder. While providing significant personalization, it's important to understand that customization is limited to the builder's pre-approved options. Typically, once under contract, buyers will visit a builder-affiliated showroom to make these selections, often during a dedicated appointment. It's crucial to note that upgrade choices can influence the final price, and builders often require an upfront deposit, typically around 20%, for these selected upgrades.
Note!: Tract homes and Semi Custom homes will have overlap as well. For example, Tract Homes and Semi Custom Homes may both offer presale (a home for sale that has not been built/in the process of being built) and move-in-ready options. The difference lies in the price points and available customizations. Tract homes are dealing with economies of scale, meaning they are building large numbers of identical houses that are cheaper and faster to build - so available customizations on their pre-sale homes are going to be more limited to keep costs down and the process streamlined. Whereas a true semi-custom home builder, such as JK Monarch, can source product at a more localized level to provide higher quality finishes and options to the buyer at the presale level. Both types of builders can also offer move-in ready spec homes. Choosing the right one for you is going to depend on availability and your goal timeline. Also, the extent of available customizations is directly related to the stage of construction. Buyers purchasing a pre-sale in its early stages typically have maximum flexibility in selecting design upgrades. However, as construction progresses, modification options may become limited, particularly if materials have already been ordered. Once ordered, these items generally cannot be changed. To ensure the widest range of upgrade choices, purchasing a home during the early pre-sale phase is recommended!
Spec / Move in Ready Homes: Spec, short for “speculative” are homes where the builders make all the design and construction decisions “speculating” what a potential buyer may want based on market trends. They will list the houses once they are complete. Spec homes are ideal for buyers looking for a new, move-in-ready home without the wait or involvement required in a pre-sale build!
Custom Homes: A custom home allows you to do whatever the heck you want and you have FULL control over the building process. Usually, you will have your own land and work with a home builder and possibly an architect to build something completely tailored to you. However, this extensive ability to customize doesn't come cheap and the ability to choose whatever you want can be overwhelming. However, if you love the ability to have full control over the design and construction process and it's in the budget, this is a great option for you to get exactly what you want!
Timelines:
Tract Homes: Construction of a new tract home typically takes approximately six months from start to completion.
Semi-Custom Homes: Building a new semi-custom home generally requires a timeframe of 7 to 9 months.
Spec Homes (Move-In Ready): These homes offer the quickest turnaround because they are fully built! Closing is possible within 30 to 45 days using standard residential financing.
Custom Homes: The construction timeline for a fully custom home can range significantly, from 12 to 24 months or longer, depending on the complexity and scope of the project and land acquisition.
Financing and Costs:
Earnest Money Deposit: Builders typically require an upfront earnest money deposit, which can vary between 1% and 3% of the purchase price. This amount is builder-specific. Please contact us with details of the community you're interested in, and we can provide precise earnest money requirements.
Builder Incentives: Many builders offer incentives when buyers utilize their preferred in-house lender. These incentives can include credits towards upgrades or closing costs and vary from builder to builder. Pre-approval and closing with their lender are usually required to qualify.
Financing Options:
Standard Presale and Semi-Custom Homes: These typically qualify for traditional financing options such as FHA, VA, and Conventional loans.
Custom Homes: Financing for custom home construction usually involves a construction loan. This type of loan covers the costs associated with land acquisition, contracted labor, building materials, and permits. Lenders generally require a down payment of around 20% of the projected total cost. The construction loan closes before building starts and during the construction phase, the lender will disburse funds in stages (draws) as needed. Throughout this period, the borrower is typically responsible for interest payments only on the funds drawn. Upon completion of the home, the construction loan converts into a traditional mortgage with both principal and interest payments.
Unlock the Possibilities of New Construction with Our Expert Guidance!
If the idea of a brand-new home excites you, you've come to the right place. We have deep roots in this community and a comprehensive understanding of the local new construction market, including the top builders and upcoming projects. Our expertise extends to providing insightful advice on upgrades that enhance your home's value and those that might not be the best investment.
Protect Your Representation: A key piece of advice for anyone exploring new construction: always bring your own real estate agent with you on your very first visit to a builder's site. Registering independently will waive your right to your own representation (and builder’s will not tell you this). While builder site agents are knowledgeable, their primary responsibility is to the builder. We act solely in your best interest, offering unbiased guidance on everything from contracts to upgrade selections.
Whether you're looking to purchase or sell in Enumclaw and the neighboring communities, our team is here to assist you. Reach out to us today – we're ready to put our expertise to work for you!
