New Construction Workbook

Shae Tanner did not expect to build her first home. In fact, knowing that the new construction process can be overwhelming mentally and financially, she went into her home search fully intending to find an existing home.

Once she began looking, the IT specialist says she was surprised by the Las Vegas market’s “massive divide” between run-down older homes often in need of major repairs, and recently built or brand-new constructions. “There wasn’t really a middle ground in my market,” she recalls. Once she made the decision that she would need to be on the more expensive side of that divide to make a good investment, “it was overwhelmingly in our best interest to build new.” Thanks to her pragmatism and decisiveness—and in large part to the efforts of her builder—the stress she anticipated never materialized. “The building process was extremely smooth,” she says. “I don’t think we had a single issue the whole time, and it went exactly as planned and finished on time.”

Any builder will admit that not everyone has as seamless an experience as Tanner. But with optimized project management practices, it’s more straightforward than ever to build a home. And the process can be streamlined even further with plenty of planning, flexibility and decisiveness on the part of the homebuyer.

Before you contact a builder or buy land, take the time to research, make lists and do plenty of soul-searching about what you’re looking for in your new home, either on your own or with the assistance of a real estate agent. Jumping into a build without much forethought or planning could potentially be a recipe for complications down the line. Here’s what the experts recommend weighing before you commit to anything:

Some developers build in a wide range of price points, while others specialize in economy, luxury or other niches. When Tanner built her home, she first identified a community she wanted to live in, then pinpointed a builder in that community based on her desired price point. “There were several builders who were each basically marketing toward specific market niches. My builder was the ‘affordable family home’ builder so to speak—they did all the entry-level homes in that community,” she explains. To get a very basic sense of price across 160 U.S. cities, use Building Journal’s online new construction cost calculator.

What features do you envision in your new home? “When somebody's looking to build a new home it's because they have different needs than when they moved into their old home or apartment,” says Ben Horning, general manager of Berks Homes and founder of BH Design Build in Pennsylvania. “Most of the time people are looking for bigger and better or just different—their life changes. I would say the first thing [to do] is establishing a baseline of what they need to have.” Eventually, Horning says, the process will get to a point where “you can start separating the needs from the wants as you filter through your budgeting process.”

But first, scour the internet, talk to others who’ve built and visit model homes to help you gauge priorities in terms of:

Whether you’re buying land for a custom home build or opting for a home in an existing master-planned community, location is just as key as it would be if you were purchasing an existing home. Research schools, property taxes, the feel of neighborhoods, commute times and proximity to restaurants and other amenities.

Are you a hands-on DIYer or do you prefer to leave everything to the pros? You can save money by doing certain tasks, like landscaping, yourself—but it’s important to be realistic. “There were things that I did not opt for that I had planned to do on my own at a later date,” says Tanner of her build. “But in hindsight, it kind of doesn't make sense to do that. If I had rolled in the cost of having a back patio cover into my mortgage, I wouldn't even notice it exists—but trying to add that on out of pocket is quite a large expense all at once. Since I knew I wanted it and would have to get it done, I should have just gotten it [from the builder].”

Also assess your DIY comfort level with finances and contractor tasks. While you can act as general contractor for a custom home build on property that you own (bringing on a design-build company or enlisting your own separate architect and builder), the average homeowner may not be prepared to deal with the management and minutiae of a new construction.

Will you purchase a lot yourself to build on, or will you have a builder construct your home on land they already have purchased? From a headache-minimizing perspective, working with an established builder who already owns lots—and who has project managers, designers and architects on hand to guide you along the way—will streamline the process. It will also ensure that your lot is utility- and build-ready (opting for builder-owned land may grant you access to better financing options, too). Since builders have the capital to buy land as it becomes available, homebuyers may find competition for lots to be fierce if they want to buy their own lot.

“There's definitely a lot more responsibility on the homeowner that is building on their land because we can't do everything for them,” says Horning, who estimates that his company builds about 20 homes on buyers’ own land per year, versus about 400 in pre-planned communities. When the homebuyer owns the property, “they have to go to the city, township or municipality and deal with them a lot more as opposed to in a [builder] community, where we deal with everything ourselves.”

While it depends on the area, typically “it's a lot more expensive in this day and age to have your own land and build because you're not able to get the economies of scale in terms of developing the property that you would in a neighborhood,” explains Horning. “Whereas in a community, you get the advantage of applying those costs over many more lots.”

The type of home—and builder—you choose will affect the timeline, cost and ease of building your new home. Before you can select a builder, you’ll need to decide whether you prefer to select from an existing system of plans and finishing packages, or if it’s worth the extra costs and hands-on decision-making to customize your home from the ground up.

From first contact with a builder to closing date is typically somewhere in the four- to six-month range, but could run closer to eight if there are delays. Where will you live while construction is completed? What if it goes longer than planned? Flexibility (and a comfortable place to stay while you wait out your build) is essential to making the process less stressful. “The reason some people go for already-built homes is that they can't afford to wait for a home to be constructed, or they need to use the sale of a previous home in the purchase—so they have difficulty with the timelines new homes go on,” says Tanner. “But I was just entering the market so it was easy for me to wait that time.”

Getting pre-qualified for your new construction mortgage—or a self-build construction loan if you are acting as your own general contractor—ahead of time is key. Investopedia has a thorough guide to getting a mortgage when you’re building your own home.

The first step to finding the right builder is to decide whether you need a custom or production builder.

No matter the type, the right builder will make the planning and building process as smooth as possible. In addition to researching builder plans, speaking with a real estate agent and visiting model homes, Melia recommends combing through Better Business Bureau ratings and online reviews to find a good match. “It’s a big purchase, so you want to make sure you're working with a great company,” he says.

Make sure you ask these questions up front to save yourself unnecessary time and stress later:

This phase of homebuilding, where you’ll select design elements, finishing touches and upgrades for your dream home, will be exciting to most—but could become excruciating to some. This all depends on your builder’s process, your patience level and your decision-making style, says Horning—and a good builder will make it all as painless as possible.

“The amount of decisions that have to be made is an eye-opener for people who haven't built a home before,” Horning says. “You're picking everything from the exterior colors and materials down to your toilet color and type, so it can be overwhelming. And no matter how great the builder is at providing service and a great experience, it's still inherently stressful. It's our job to make it less stressful.”

Horning says that Berks Homes clients simply pop into one of the builder’s two selection galleries (”giant buildings with every product that we sell in them”) and in two to four hours know exactly what they’re putting in their home—and the price. Berks also pre-packages options in terms of pricing per home to make the process simpler. According to Melia, Holt Homes has a similar selection timeframe: typically a four-hour appointment, but for higher-price point homes there might be two appointments.

Custom builders likely will have a more involved process, with allowances included for standard tiers of feature selections and homeowners given the option to upgrade for additional cost if desired. Trish Williams, a Keller Williams real estate agent who works with GreenWood Design Build in Minnesota, says that construction collaboration software such as BuilderTrend helps keep everyone on the same page and deadline. “Every option they pick goes on the list and they have to approve it before we order—and they always have a running total of where they're at for the total home price throughout the whole process,” says Williams.

“It was easy—like, really easy,” recalls Tanner of her selections. The builder “took care of everything so it was just a matter of doing what they told me to do when they called me every month or so until it was done. They made any appointments for me that I needed, such as tile or to pick finishes. I just had to show up and everything was already filled out and waiting for me.” Since she used an economy production builder, “It was very much just like selecting your order off a menu,” she adds.

“Some people like the process and love going over every decision; other people get really overwhelmed,” explains Horning. “You can have the same exact home in terms of the amount of selections to make, and one couple might take two-and-a-half hours to pick all their selections. The other couple might need to have two separate meetings that take three hours and they get completely overwhelmed.” If an individual buyer—or a buyer couple—does feel burdened by the choices involved in planning their new home, a builder representative should be able to mediate and move things along. “We're certainly heavily invested in the marital counseling aspect,” Horning says.

A fireplace is a surefire way to make your new construction feel like home right from the beginning. A hearth doesn’t just add warmth to your build; it can also add value if you decide to sell your house later on. Here are a few things you’ll need to think about in order to make your new-construction fireplace installation fuss-free:

Once your lot, type of home and features are chosen, you’ll know your actual home costs and you very well may experience some sticker shock. But if you prioritized your wish list and gave enough thought to price point back in Step 1, it will be much less stressful to make hard budget decisions—and avoid disappointment—at this stage.

Once you know which priorities your budget can accommodate, it’s time to drill down. Williams uses the example of a fireplace: “If we've established [that the homeowner wants] a gas fireplace, I don't really want to start talking about an expensive 60-inch wood-burning fireplace if they have $5,000 to spend,” she says. “So we start filtering through options according to budget. Sometimes people don't know their budget and that's totally fine. They don't know that they're willing to spend a certain amount of money until they see what the options are.”

If a homeowner doesn’t like any of the options within their budget for a feature or appliance they really want, says Williams, she may find a happy medium by suggesting moving up in price for that item and scaling back on something else. “If all of a sudden they realize they just have to have this certain fireplace that’s double what they had hoped to spend, maybe their flooring goes down on the list because they’d rather accommodate for that that really nice fireplace. It’s really about guiding them through that process, and it takes a while.”

This is another time where flexibility and pragmatism will come in handy, and a great builder or designer should be understanding and willing to work with you if you change your mind about something. In GreenWood homes, the Heat & Glo 6000 Series gas fireplace is a standard allowance. “The homebuilders love it,” Williams says. “But if they go in and decide they want a ribbon-style fireplace, we know that it's more and we talk about that. People don't have to spend more than they want to.”

“If you think in terms of just a giant list, you’re constantly reorganizing the priorities on that list according to budget and people don't know necessarily from the beginning, what their priority numbers are until they start getting financial numbers,” she adds.

This is the phase where a homeowner is ideally more hands-off—providing that planning, designing and budgeting was thoroughly and accurately done so that the construction project managers can effectively and efficiently do their jobs.

From start to finish, here’s what to expect:

There isn't a tremendous amount of homeowner involvement at this point, “because it's all pre-planned,” says Horning, who adds that Berks clients may come to the site about three times for scheduled meetings and walk-throughs. “We like to get everything 100 percent nailed down in terms of selections and design choices before we break ground. So really, for them, it's just kind of ‘sit back and enjoy.’”

Melia says he believes what differentiates Holt from larger builders is site superintendents and project managers who ensure that homeowners are informed, but not overwhelmed with information. Tanner points out that her build process was “100 percent handled by [the builder] the whole time. I had to do almost nothing. If they were experts in anything, it was in project management.”

Ultimately, Tanner experienced the best of both worlds: She never felt overwhelmed and she’s very happy with her home. Building her home was a “game changer” and “the best purchase I have ever made,” she says. She adds that, thanks to the easy process and the great results she experienced, she would “absolutely” build a new construction home again if she ever decided to move.

To learn more about the new home building process and fireplace planning, check out our ideas hub dedicated to all things new construction.