The ABCs of New Construction

New Home Buyers have a lot of questions about new construction on their home journey and, even if you’ve done a lot of research, trying to remember what different terms mean — and where they come into play during the buying process — can be overwhelming. Take a look below at the new construction terms and share it with your family so they can familiarize themselves with the language of purchasing a brand-new home.

 

Appraisal
A licensed appraiser’s estimation of a home’s market value based on comparable recent sales of nearby homes.

BYOL (Build Your Own Lot)
Building a custom home on a lot the buyer already owns.

Custom Home
A home that’s entirely designed and built to a buyer’s specifications on the buyer’s selected land.

Down Payment
The percentage of a home’s purchase price — usually between 5 and 20 percent — paid upfront in cash.

Extras
Additional work requested of a contractor that wasn’t included in the original plan, and is separately billed.

Floor Plan
A scale drawing of a home, story or room that includes measurements and furnishings to help design the layout and wiring.

Green
A home that meets LEED, ENERGY STAR or other efficiency standards to reduce the home’s energy consumption.

Homeowners Association
A managing body within a subdivision or neighborhood that creates and enforces rules for properties within the community.

Introductory Pricing
A pricing strategy where buyers purchase the first homes in a development at lower prices to spur more sales, interest and brand awareness.

Jumbo Mortgage
A mortgage that exceeds the conforming-loan limit, commonly used for luxury home purchases.

Key Rate
An interest rate set by the federal government that determines the cost to borrow money — in this case, a mortgage to buy a new home.

Lot Availability
A display or inventory of available, sold and reserved lots in a new development, regardless of what stage the home or development is in.

Model Home
A house in a new community that is furnished and staged as representative of the development and shown to prospective buyers

Negotiation
The discussion around the asking price where the would-be homeowner tries to get the best deal and the builder tries to get
the most profit.

Open House
An event where prospective buyers can explore a builder’s model home, including features and amenities, and the surrounding
community.

Phases
Stages in a community’s development that include choosing land, framing homes and closing sales.

QMI (Quick Move-In Home)
A new home that is completed or near completion, and available for move-in as early as two weeks, or immediately.

Resale Home
Any pre-existing home with at least one former owner who lived in it.

Spec Home
A home that’s designed, built and sold by a builder, and on the builder’s selected land.

Tract Home
Any home — single-family, condo, townhouse, etc. — built on a developer- or builder-owned plot of land that’s been subdivided. Typically built to a pre-established floor plan.

Upgrade
Added or premium furnishings and finishes designed to enhance a home and increase its resale value.

Virtual Tour
Take a virtual tour and picture yourself in your very own brand new home

Warranty
A stipulation for every new home that the builder will repair any major defect in the structural integrity for a set period after closing, typically one to 10 years.

X Marks the Spot!
Where you sign for your dream home!

You Only Live Once (YOLO)
An approach to gauging if something is worth doing, like
designing and building your dream home from the ground up.

Zero-Lot Lines
A residence built closer to the property line.