From the first contract to closing day, I love guiding buyers through every step of the home building process. Before breaking ground, run these questions by your builder to ensure that you know exactly what you're signing up for.

 #1: “What incentives do you offer for using your preferred lender and title company?”

Many developments offer incentives to buyers who use their preferred lender and title company. Some may knock off up to $10,000 in closing costs, others will sweeten the deal by negotiating prices on finishes, such as upgrading carpet to hardwood floors.

You should still shop around and get quotes from at least two other lenders before making your decision. But don’t just pay attention to the interest rates. You need to compare each loan estimate’s terms to make sure you’re getting an apples-to-apples comparison.

#2: “What are the standard finishes?”

When you tour a development’s model home, keep in mind that you’re previewing a high-end version of the standard home. You’ll need to find out from the builder which options are standard, which options are upgrades, and what each upgrade costs.

One way to cut costs: Move into the home without an upgrade, then hire a contractor to do the work. Builders charge a huge markup on certain finishes and products. The builder might charge $4,000 to $6,000 for a high-performance air conditioner, but you may be able to get another company to install that same unit for as low as $2,500.

Granted, opting for the latter means you might need to pay the contractor in cash. For some people, the benefit of paying the builder to do upgrades is that they can roll the costs into their loan amount.

#3: “What are your long-term plans for the community?”

Depending on the size of the land, the builder might be planning several subdivisions. This could impact your decision to buy. For example, let’s assume that only a few homes have been built and sold. If the developer plans to construct an additional 50 homes and you’re one of the first to move into the neighborhood, you may have to deal with loud construction crews for several months.

There’s also the risk that the builder loses funding and another company takes over the development. If the builder changes and a lower-quality builder takes over, that could affect the value of your home.

#4: “What are the homeowners association rules and regulations?”

Each homeowners association (HOA) has its own Declaration of Covenants, Conditions, and Restrictions and bylaws. Get these from the builder and review them carefully. Also, look into when you’re required to start paying HOA dues. Many builders cover the costs until at least 50 percent of the homes in the development are sold.

#5: “What warranties do you provide?”

Most builders offer a one-year workmanship warranty and a 10-year structural warranty. Make sure the warranties you receive explicitly state what is and isn’t covered, and what the limitations are for damages. You should also receive manufacturer’s warranties on the washer and dryer, hot water heater, air conditioner, kitchen appliances, and roof.

#6: “Can you connect me with some of your past clients?”

Always check references when vetting home builders. Ask past clients questions such as, “How responsive was the developer when you expressed concerns?” and “Would you use the builder again?” Most builders will only provide glowing references, so you should still scout out some past customers on your own. You can find these people through reviews on Angie’s List or even knock on doors of homes in the neighborhood that have already been built.

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