I want to buy a new home, what do i need to know?
Types of Sellers
Okay, let's talk about new construction. Now, if you're not buying a new home, don't worry about this video. But if you're thinking about buying a new home or having one built, this is the video for you.
So there are three types of new construction. Now this really isn't a super technical definition. This is just more of a Brendan definition. So bear with me for a moment. But the first type is our custom. Now the custom is when you think about whether you're going to go buy the land, get an architect, get a builder, build this awesome dream home. Super, super cool, super fun. However, not for the faint of heart. A couple things to note that is usually the most expensive route, unless you happen to already have the land, or maybe you're getting the land through an estate or something, typically it's the most expensive.
Now, why is it the most expensive? Well, the first thing is you're getting a one off type of place. So even if you're using a modular home or a builder that's building one of their designs, the thing is you're probably still picking every faucet. You're picking the back splash. You're doing this, you're doing that. The different light fixtures. So there's way more work because you're picking all the unique stuff and you have to go through all the permitting.
So typically if you're going through a custom custom type of build, I tell people usually it's going to take around 20% down, sometimes as low as 10%. But I would say typically 10 to 20% down, first of all, in terms of the loan type. The second thing is you want to expect 10 to 14 months for the process. How much of that is actually just the permitting process, and working with the architect and going through the whole just building process and getting the land developed.
The actual home build, maybe that's only three to five months, but there's still all this other time just to get to that point. So that's our custom. It is super rewarding. We can totally help you with that process, but just know, again, it is the hardest and the most expensive.
Our second type is our semi custom. Now our semi custom is things like going to a builder like Koch, or Kruso, Richmond American, Toll Brothers, Ryan, Envy, et cetera. All these people, all these builders, they're going to have their subdivisions with their signs and all the other stuff. Now with these types of properties, typically you have only a few different models to choose from and you only have a few different packages as far as would you like the stainless steel upgrade? Would you like the wood one or wood two package for your flooring? Stuff like that. You have limited options.
Now, maybe there's still plenty of options for you, but you're typically not picking out a different light fixture for the bedroom versus the kitchen and this and that. You just get a package. That's why it's not fully custom. It's only semi custom. Now in most situations, when you're going through this type of process, you actually get to pay for the house and the land all at once. The builder's going to build it on their dime and then deliver the whole package to you in most of these circumstances. So way way easier and also generally way faster.
Now, if you did happen to get on a early part of the phase on a new development, sometimes sure it could still take 10 months, 12 months, 14 months, but typically most of the builders around here, if they're already in the middle of building it, you're usually somewhere between, I would say three to five months for most of them.
I had a big builder tell me pretty recently that for a lot of their townhomes, it actually only takes them about 66 days to build it. The slowness was dealing with the inspections for the different permits for plumbing and electrical, et cetera.
All right, for our third type is our spec. Now our spec is basically a speculation house and the whole idea's kind of your field of dreams approach. Where they're going to build it and hope that you're going to come and buy it. Now there's two variations of this. In the first version, really again, they're just going to build it. They're going to put the things that they think are attractive that someone may want to have in this type of home and they're going to sell it almost like a resale. It just happens to be a brand new home.
Now our second variation of that is where a builder, they're either planning to do a spec or maybe they're building it for somebody else, but the deal fell through. So they still finished up the house and now they're selling it. So it's an immediate delivery. A lot of these builders, the bigger builders, don't like holding onto these homes sitting vacant. It costs them money just holding cost wise so they want to move them. So sometimes they'll have a little bit of a discount and it's the other person's loss if they lost their EMD or something like that, to try to get the place built and they're going to try to move it fast.
The nice thing is with this third type here, this speculation, it really is much more similar to a regular resale or even a little bit like that semi custom in the sense that you can buy the house with a regular loan, typically. You're going to get the house and the land. The other nice thing is it's usually much faster. So in most cases, the spec house is already either half partially through being built or maybe completely built. So it's a much shorter contractor close timeline than say your fully custom custom type.
So again, we have our custom and I didn't mention, but you're usually going to have to either pay cash or do a construction loan on those. Our second type is going to be our semi custom, which most financing will work with. Then our third type is going to be our spec. So those are our three major types. We can help you with any of these. If you'd more information on any of them, if you're trying to consider them, we'd be happy to go over with them. They all have a little bit of different nuances, but they're all great. They're really fun. We do love new construction. There's just different approaches and different things we need to know about for example, working with their lender if that's the direction that you want to go. Thanks so much. I will see you in the next video.
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