Buying a New Construction Home in Greater Sacramento: What Buyers Need to Know

Buying a brand-new home can be exciting. You may be able to choose the floor plan, finishes and location of your home while getting modern construction, improved energy efficiency and fewer immediate maintenance concerns.

But buying a new construction home is different from buying a resale home.

The builder controls the sales process, uses its own purchase agreement and may offer financing incentives, upgrade packages, lot premiums and other options that can make comparing the true cost of the home more complicated.

If you are considering new construction in Greater Sacramento, Placer County, Sacramento County or El Dorado County, here are some of the most important things to understand before visiting model homes or signing a contract.

1. Consider Having Your Own Real Estate Agent Before Visiting the Builder

One of the most important decisions should happen before you walk into a model-home sales office.

The builder's onsite sales team is there to sell the builder's homes. Buyers should not automatically assume the builder's salesperson is representing their interests.

You can have your own real estate agent help you evaluate the purchase, compare communities, analyze the contract and negotiate where possible.

Some builders also have specific procedures for registering a buyer's real estate agent. Those procedures can begin with the buyer's first visit or registration.

For that reason, it is smart to talk with your agent before touring new-home communities.

In California, buyers working with a real estate agent should also expect a written buyer-representation agreement explaining the services provided and how the agent will be compensated.

2. The Base Price Is Not Necessarily the Final Price

A builder may advertise a home starting at a particular price, but the final purchase price can be considerably different.

The cost can change based on the elevation, lot location, structural options, flooring, cabinetry, countertops, appliances, electrical upgrades, landscaping and other selections.

There may also be a separate lot premium for properties with larger yards, corner locations, views, open space or other desirable characteristics.

Before comparing one builder with another, determine the realistic "all-in" cost of the home you would actually buy.

A $650,000 base-price home with $70,000 in upgrades and a $25,000 lot premium is very different from a $650,000 finished home.

3. Builder Incentives Can Be Valuable — But Compare the Entire Package

Builders frequently use incentives to attract buyers.

An incentive might include a mortgage-rate buydown, closing-cost assistance, design-center credit, upgrade package or price reduction.

However, some incentives may require you to use the builder's preferred lender or other affiliated service provider.

Do not evaluate an incentive based only on the advertised dollar amount.

Compare the interest rate, lender fees, points, closing costs, monthly payment and total cash required to close.

A large builder credit does not automatically mean you are getting the best financing.

4. Compare the Loan Estimate

Financing deserves special attention with new construction.

Ask lenders for the official Loan Estimate when one is required to be provided and compare the numbers carefully.

Before committing to a home, you should understand three numbers:

• Your comfortable maximum loan amount
• Your estimated total monthly housing payment, including principal, interest, property taxes, insurance, HOA dues and applicable special taxes
• Your expected total cash needed to close

This makes it much easier to compare the builder's preferred lender with another lender.

5. Look Beyond the Mortgage Payment

New construction communities can have expenses that are easy to overlook when concentrating on the purchase price.

These may include homeowners association dues, Community Facilities District special taxes commonly associated with Mello-Roos financing, other assessments, solar-related costs and higher property taxes associated with a newly built home.

Ask for a complete estimate of your anticipated monthly housing expense before making your decision.

Two homes with similar purchase prices can have noticeably different monthly costs.

6. Understand What Comes Standard and What Is an Upgrade

Model homes are designed to look impressive.

They may contain upgraded flooring, cabinets, countertops, lighting, landscaping, built-in features and structural options that are not included in the advertised base price.

When touring a model, ask which features are standard and which are upgrades.

Then request pricing for the options that matter to you.

It is much easier to control the budget before design-center selections begin than after you start choosing upgrades.

7. Lot Selection Can Be Almost as Important as Floor Plan Selection

Buyers often focus heavily on the house and not enough on the lot.

Consider orientation, afternoon sun, neighboring homes, nearby streets, future phases, drainage, slope, retaining walls, utility equipment and planned development around the property.

Also find out what may eventually be built behind or beside the home.

An open field today does not necessarily mean permanent open space.

Location within the subdivision can affect both your enjoyment of the property and its future resale value.

8. New Homes Should Still Be Inspected

A new home is new — but that does not mean an independent inspection has no value.

Construction involves many trades, materials and systems.

Depending on the builder, construction stage and access permitted under the contract, buyers may consider inspections during construction and/or before closing.

A professional home inspector may identify items involving electrical systems, plumbing, HVAC, roofing, drainage, appliances, finish work or other components that deserve attention.

Buyers should also carefully complete the builder's final walkthrough or orientation and document items that need correction.

9. Understand the Builder Warranty

New homes generally come with builder warranties, but coverage and procedures vary.

Before closing, understand what is covered, how warranty requests are submitted, the applicable timelines and who handles service after you move in.

Keep copies of your purchase agreement, disclosures, warranty documents, inspection reports and walkthrough records.

You should also document important issues in writing rather than relying only on verbal conversations.

10. Understand Solar and Energy Features

California's energy standards affect newly constructed homes, and many new homes include solar photovoltaic systems along with newer energy-efficiency requirements.

Buyers should determine whether the solar system is owned, financed or subject to another arrangement and understand how that affects their purchase and monthly expenses.

Also ask about battery-storage capability, EV charging, heat pumps, insulation and other energy-related features.

Energy efficiency can be an advantage of buying new construction, but buyers should understand exactly what equipment and obligations come with the property.

11. Construction Timelines Can Change

If you are buying a home that is still being built, the projected completion date should be treated as an estimate unless your contract provides otherwise.

Weather, inspections, permits, materials, labor and utility connections can affect construction schedules.

This is especially important if you are selling another home, ending a lease, locking a mortgage rate or coordinating a move.

Build some flexibility into your plans whenever possible.

12. Think About Resale Before You Buy

Even if you expect to live in the home for many years, think about how another buyer may view the property someday.

Factors such as lot location, floor plan, number of bedrooms, parking, schools, proximity to major roads and the amount spent on upgrades can influence resale value.

Be particularly careful about over-improving a home through design-center upgrades that may not produce the same value when you eventually sell.

Can You Negotiate With a New Home Builder?

Sometimes.

Negotiating with a builder is different from negotiating with an individual homeowner.

Builders may be reluctant to reduce the published price because lower recorded sales can affect future sales within the development.

Depending on inventory and market conditions, there may be more flexibility with financing incentives, closing costs, upgrades, lot premiums, completed inventory homes or homes approaching the builder's fiscal deadlines.

The opportunities vary by builder, subdivision, construction phase and current market conditions.

That is another reason local market knowledge can be valuable.

New Construction vs. Resale: Which Is Better?

Neither choice is automatically better.

New construction may appeal to buyers who want newer systems, modern layouts, energy efficiency and the ability to select finishes.

Resale homes may offer established neighborhoods, mature landscaping, larger lots, completed amenities and locations where little new construction remains.

The right decision depends on your budget, timeline, preferred location and lifestyle.

In many cases, buyers benefit from comparing both new construction and resale homes before deciding.