Welcome to the World of New Construction!
By purchasing a newly built home, you have chosen to receive considerable advantages over the used-home buyer. Because your home is brand-new, you are not inheriting any home problems from the previous owner. Your home is built with all new products and will most likely come with numerous warranties that provide protection for you, the new homeowner, as well as for your pocketbook.
There sometimes can be confusion when searching for the perfect new home in a certain price range. For example, an advertisement may state that the company offers homes from the $200s, but you know that there are significantly higher- or lower-priced homes in the neighborhood. The following explanations may help you, as a home buyer, to understand some of the more commonly used terms relating to new construction.
Let this be your guide in order to start understanding the exciting and rewarding world of New Construction and all of the benefits that it has to offer to you. And of course, should you have any additional questions, your new home sales consultant is always there to help!
- Base Price (Starting Price): The beginning price of the home, with no added upgrades or options other than those specified on the Builder’s Included Features list. When given a range, this includes the beginning price of the lowest-priced floor plan available in the neighborhood to the beginning price of the most expensive floor plan available in the neighborhood.
- Lot Premiums: Most floor plan pricing takes into account a certain amount of money toward the price of the land. If you choose an exceptional home site, such as a lot that is wooded, larger than normal, or situated on a corner or next to a marsh, the price of the land becomes more valuable. An additional amount of money can be added to the Base Price in order to accommodate the additional value of the chosen premier lot.
- Included Features: Usually neighborhood-specific, these are features that come with your home at no additional cost when you purchase the home at its Base Price. For example: Ceramic tile floors in kitchen and baths, or carpet throughout the rest of the home might be listed as Included Features.
- Upgraded Features (“Upgrades”): Features that a Builder will allow you to add to the home for an additional cost. For example, if the neighborhood’s Included Features list specifies that the entire house is carpeted, but you would like hardwood floors in your living room, you may be able to pay an additional fee to cover the cost of this upgraded feature.
- Incentives: Depending upon the market and the number of completed or nearly completed houses in inventory, Builders may at times find it necessary to lower prices in order to move that inventory. For example, a reduction of $10,000 off the advertised price of a home may be classified as an Incentive. Sometimes Incentives are offered contingent upon the buyer’s fulfilling some sort of obligation that the Builder has set. For example, $10,000 off the price of the home if the home closes on or before “x” date. Think of an Incentive as the type of special promotion that many retail stores offer from time to time in order to attract buyers and move merchandise. ♦