New Construction in Houston: FAQ

The builder's salesperson works for the builder. Your own agent compares the home with other builders and resales, negotiates for you and keeps the contract, inspections and closing on track. Every builder works a little differently, from contracts and incentives to upgrade pricing and what they will or won't change, so experience with many builders helps us negotiate better and tell you what's possible and what isn't. That's where a good, experienced agent comes in. Many builders offer to pay buyer-agent compensation, and we explain how our fee works before you sign anything.

Yes. We represent buyers purchasing from builders, from the contract and inspections through the final walkthrough and closing.

Most builders require your agent to register you at, or before, your first visit to a community. If you tour alone first, the builder may not recognize your agent later. Call us before you go, and we'll register you or meet you there.

Builders protect their base prices, but there is often room on incentives: rate buydowns, closing-cost help, upgrade credits and lot premiums. Finished spec homes, and homes near quarter-end or year-end, usually have the most room.

A spec home is one the builder starts without a buyer under contract. Once it's finished, every month it sits costs the builder money: interest on the construction loan, property taxes, insurance, utilities, lawn care and upkeep, HOA dues and marketing. Builders would rather put that money and their construction credit into the next home, so finished specs often come with bigger incentives, such as rate buydowns, closing-cost help or a lower price, especially near quarter-end or year-end. You also get a home you can walk through, inspect and close on in weeks instead of waiting months for a build; the trade-off is that the finishes and floor plan are already chosen. We still recommend an independent inspection, even on a brand-new home.

We compare the builder's price with recent sales of similar new homes in the same and nearby communities, other builders' current inventory and incentives, and recent resales of comparable homes that are a few years old. Then we adjust for lot size and position, square footage, upgrades and finishes, and what's included, such as blinds, appliances, fencing and landscaping. Incentives matter too, since a rate buydown or closing-cost credit can be worth more than a small price cut, and so does the total monthly cost, including the property tax rate and any MUD, PID and HOA fees, which vary by community. New homes often carry a premium over comparable resales, so we show you what you're paying for and where there's room to negotiate.

The biggest incentives are often tied to the builder's lender. Compare that lender's Loan Estimate with at least one outside lender. The incentive is only worth it if your total cost over the years you expect to own the home is lower.

Yes. City inspections check minimum code, not workmanship. We recommend a pre-drywall inspection, a final inspection before closing and an 11-month inspection before the first-year warranty runs out.

Many new Houston-area communities sit in a Municipal Utility District (MUD) or Public Improvement District (PID) that repays the bonds used to build roads, water and sewer lines. They add to your property tax rate, so compare total tax rates, not just prices, when you shop communities.

Most production builders include a limited warranty, typically 1 year for workmanship and materials, 2 years for plumbing, electrical, heating and air-conditioning systems, and 6 to 10 years for major structural components. Texas doesn't require builders to give a warranty, but state law sets the minimums for one that counts: under Texas Civil Practice and Remedies Code Section 16.009, a builder whose written warranty covers at least 1 year for workmanship and materials, 2 years for those systems and 6 years for major structural components shortens the deadline to sue over construction defects from 10 years to 6. Texas law can also give new-home buyers implied warranties, but builder contracts often limit or replace them, and Texas Property Code Chapter 27 sets out how defect claims work, including written notice to the builder at least 60 days before filing suit. Read what's excluded and how claims are handled, and have a Texas real estate attorney review the warranty and contract before you sign.

A spec (inventory) home is finished or nearly finished, so you can often close within weeks, and specs are usually the better deal because the builder is paying to carry them and wants to move on to the next home. A home built from the ground up generally comes at a premium, since the builder isn't carrying holding costs at that point and has less reason to discount, but you choose the lot, plan and finishes, and production builders typically take six to twelve months.

Put your budget into things that are hard to change later: structural options, ceiling height, extra outlets and data lines, plumbing rough-ins, insulation and windows. Flooring, light fixtures and paint are often cheaper to change after closing.

Many builders use their own contract instead of the standard Texas resale form, with their own deadlines, earnest money rules and dispute terms. We go over it with you before you sign, explain what we typically run into with that builder and answer your questions, including what's negotiable and what isn't. Because it's a legally binding contract, you can also have a real estate attorney review it and answer any legal questions.

New construction gets you a home built to current codes, new systems and usually a builder warranty. A resale home can offer a bigger yard, mature trees or a lower price per square foot. Compare price per square foot, lot position, HOA or shared-driveway rules and flood history, and get an independent inspection either way.

Check the survey against the plat for building lines and easements, deed restrictions, historic district rules, the flood zone, utility access and whether the lot can be subdivided. Use the option period to confirm each one before you're committed.

Yes. Builder homes we've listed include 4002 Marquette St in West University Place, 1110 Peden St in Montrose, 903 Quitman St in Near Northside and a new duplex at 7818 Hanfro Ln. We price each home separately based on its lot position and features. Listing for builders also gives our buyers a unique benefit: we know what builders look for in an offer and where they can and can't negotiate.

Yes. We regularly see off-market lots and land kits, and we track lot sales so you can see what similar lots have sold for before you make an offer.

Yes. We pull lot comps, help price out what a finished development could sell for, and negotiate an option period long enough for your feasibility work. We'll also advise you to confirm the survey against the plat, any deed restrictions and historic district rules with your surveyor, the title company and the city before you commit.

Yes. We review floor plans and finish boards from a buyer's perspective and tell you which features help a home sell at your target price.

From recent sales of comparable new construction and nearby resales, adjusted for lot position, features and current mortgage rates.

Yes. We list single lots, finished homes and multi-unit projects.

Two things surprise new-build buyers, and we'd rather you hear them from us before closing.

First, appraisal districts value property as of January 1. If your home was only a lot or partly built on that date, the first year's bill is based on that lower value, and the next year's bill on the finished home can be several times higher. Many lenders set the first escrow from the low figure, so the payment then rises after an escrow shortage. Budget for the full tax from the start.

Second, you can file for the exemption once you own the home and live in it. Buyers who close after January 1 can get it for the rest of that year, prorated from the closing date, if the previous owner didn't have one. The 10% limit on yearly homestead value increases starts only after your first year with the exemption, and newly finished construction is added at full value.

A new home can be inspected in stages while it's built:

• Pre-pour: foundation forms, steel or cables and under-slab plumbing, before the concrete goes in.
• Pre-drywall: framing, wiring, plumbing, ductwork, windows and insulation, while the walls are still open.
• Final: the finished home, before closing.

Problems caught before the drywall goes up cost far less to fix. Before you sign, confirm in the builder's contract that your TREC-licensed inspector can visit at each stage and how much notice the builder will give. Schedule an 11-month inspection too, before the one-year workmanship warranty ends.

The builder's contract decides. Most builder contracts give an estimated completion date rather than a firm one, and let the builder extend it for weather, materials, permits and other delays outside its control, sometimes by months. Before you sign, check:

• whether there's an outside date after which you can cancel and get your deposit back;
• how long your rate lock lasts and who pays to extend it;
• whether any incentives depend on closing by a certain date.

If you're selling a home or timing a move around completion, build in extra time.

There's no standard amount. It ranges from a few thousand dollars on a finished home to a percentage of the price on a home built from the ground up. Design-center upgrades are often paid separately and up front, and those deposits are commonly nonrefundable because they're specific to your home. Before you sign, ask:

• who holds the money, a title company or the builder;
• when it's refundable;
• what happens to it if your loan falls through;
• whether upgrade deposits count toward your down payment.

The builder. The on-site sales consultant works for the builder, and their job is to sell the builder's homes on the builder's terms. For what it's worth, many of them are helpful and honest, but they don't owe you advice on price, contract terms or other communities. To have someone on your side, bring your own agent to your first visit, or name them on the registration card. Many builders won't recognize an agent added later. See Do you represent buyers of new construction homes?