As Bend grows and seeks to better meet supply and demand, new home construction is a topic of interest for home buyers. How do you decide if a newly-built home is for you? It’s important to understand the process as well as the advantages and disadvantages of new home construction. In order to help make the right decision for your family and your budget, Angie Mombert and Brent Landels of the Cascadia Group walk us through some of the things that buyers considering a newly-built home will want to think about as they navigate the housing options in Central Oregon.
Brent: I grew up in the construction industry. My dad was a remodeler and my brother became a subcontractor for a regional builder. I started selling new construction in 1989 for a semi-custom production builder as a sales assistant. Over the next 20 years I worked my way up to Division President. In my biggest year I helped 105 create and purchase their homes. During my career, I have been involved with the sale and construction of well over 1,000 homes and the creation of over 60 neighborhoods.
Angie: Prior to obtaining my real estate license in 2004, I had just finished a build on my personal home with a local builder that was doing a small neighborhood in Bend with semi-custom homes. We were able to be involved from the ground up, and I loved the process. After getting my license, I was fortunate enough to be able to work with a team that represented builders on a couple of different projects in Central Oregon, and things just clicked for me. I love everything about it from the development stages, design, construction process to handing over a new home to a homeowner. Throughout the years I have worked on a multitude of projects for several different local and regional builders.
New construction homes come with a warranty that is much more inclusive than a warranty purchased for an existing home. Another advantage is that some builders allow homeowners to make changes and selections for their home to personalize their space. One of the most overlooked advantages is that all of the neighbors are all moving in at the same time frame. So, everyone is “new to the neighborhood” and it is much easier to make friends for kids and adults alike. But most of all, everything is NEW! Most builders also provide a New Home Orientation Walk Through to introduce the buyer to their home so the buyer will have the comfort of knowing how all of the systems in their new home operate. There is no trial and error.
Occasionally, timeframes for construction will change and it can be difficult to pin down an exact closing date. There may be additional costs for things that are not typically included, such as window coverings, air conditioning or landscape and fencing.
Depending on when the buyer gets involved, they may have to be able to picture things that they cannot see yet. It takes more trust and patience to have a home built, than to buy something that they can see, touch, and smell. That includes the neighborhood, too. Early into a neighborhood many of the other homes won’t yet exist. Some builders use their own paperwork, which can be confusing for both the other agent and buyer. Even Title Insurance will be different with a likely requirement for Early Issue Title Insurance. The Earnest Money is typically released to the builder and any changes are usually paid for at the time of selection.
Maybe. All builders approach their business differently. Some allow customization and some don’t.
Very rarely will a builder allow a buyer to be “hands on”. The state mandates that a builder is responsible for everything that occurs on a home while the permit is open. So, because of liability reasons, many builders do not allow the buyer to be “hands on” throughout the process.
Some builders and their representatives have a process to keep buyers updated, but not all of them do. Our team provides weekly updates and pictures while the home is under construction. We provide these updates to both the Buyer and the Buyer’s agent and find that open communication throughout the process eases the buyer’s mind as well as minimizes the potential for mistakes.
Each home is inspected approximately 40 times during the build by the local jurisdiction, whether it is a city or county building department. However, we always encourage our buyers to obtain an independent home inspection by a licensed home inspector of their choosing once the home is deemed complete or “finaled”. This allows the builder to use items found in the home inspection report as a “punch list”. One thing to remember though, is if that inspector calls something that differs from local, state and national building codes, the builder must decline to alter a home outside of code or what the permit allows for.
With a production builder the loan process is very similar to an existing home. Some builders even have lenders that they partner with that may offer special incentives to buyers purchasing with them. On a custom build, the loan process can be different and more difficult depending on if the builder carries the financing throughout construction, or if the buyer obtains a construction loan and makes payments throughout the building process.
Many builders are requiring non-refundable earnest money deposits and expecting the buyer to pay out of pocket for upgrades throughout the process. Getting a good feeling for what items are included in the sale of the home vs. any upgrades you may be wanting to do and making sure that those items fit into your budget ahead of time is always recommended.
Everyone moves in together within a short time frame, so everyone has the commonality of having built a house and not knowing anyone. Lifelong friendships are often made in new neighborhoods. The one negative is there are a lot of trucks and noise while the homes are getting built. In a seller’s market, it is usually a wise decision to purchase one of the first homes in the neighborhood. Builders are usually eager to build sales momentum, and as they increase prices in new phases, your home value appreciates as well.
Take a long look at the marketing materials of the builder/developer. The buyer should make sure they understand what amenities are going to be in the neighborhood and the rights and responsibilities they will have as homeowners as well as the rights and responsibilities of any Homeowners Association that may be involved. Make sure that the Covenants, Conditions, and Restrictions (CCR’s) fit your lifestyle and your intended use for the property.
By far the most important thing is to select a reputable builder that you can trust and that is licensed, bonded and insured. Ask lots of questions to make sure you understand their process including how they handle warranty after the sale. Good communication is imperative to a positive building experience.
It is not required to have a Realtor but depending on the builder that you chose, there may be a lot of details to understand and choices to make along that way, and the process can get overwhelming. Being represented by a Realtor means another set of eyes and ears paying attention to the build process and advocating for you should any issues arise.
Experience, experience, experience. New construction is a niche in the market that can be very difficult to master and unfortunately, some of the lessons learned have been learned the hard way. To avoid having one of those “learning experiences”, our advice is to work with an agent that has been through the process many times and understands how to navigate issues as they arise. Misunderstandings over expectations can be painful and expensive for all involved.
The Central Oregon Builder’s Association has a list of Realtors that are experienced in the new construction niche and many of them would welcome the chance to answer questions about the construction process. Most builder representatives are also a wealth of information on the process and a great place to start. You can also learn about the process and check contractor’s/builder’s licensing information at the Oregon Construction Contractors Board.