New Home Construction FAQ

There's no honest national number: the cost to build a house swings widely with your region, lot, size, design, and finish level, so the only figure that matters is a written, itemized bid for your plan on your lot. Here's how I tell clients to get a real number:

1. Settle your must-haves and rough square footage first.
2. Get two or three detailed bids on the same plans and specifications.
3. Ask what each bid excludes. Site work, utilities, permits, and allowances are where bids differ most.
4. Add a contingency for surprises. I recommend a written contingency for surprises, sized after you see what the bids exclude.
5. Use per-square-foot prices as a rough screening tool, not a budget.

In my market, Middle Tennessee pricing moves with lot, specs, and finish level, so treat any per-square-foot rumor as a screen only and rely on dated, itemized bids for your plan (verify current local ranges with builders and estimators before you budget).

The biggest "hidden" costs usually sit outside the base price: site work, utility hookups, permits and fees, lot premiums, allowance overages and upgrades, landscaping, window coverings, and closing costs. They aren't truly hidden; they're just not in the advertised number. Before you sign, ask the builder to put these in writing:

1. What site preparation is included (clearing, grading, fill, driveway, retaining walls)?
2. Are water, sewer or septic, electric, and gas connections included, and who pays tap or impact fees?
3. What are the allowances for flooring, lighting, cabinets, and fixtures, and how are overages billed?
4. Is there a lot premium?
5. Are gutters, landscaping, fencing, blinds, and appliances included?

Fees vary by state and county, so check with your local permit office too. In my experience the overages that surprise people most are allowances (flooring, cabinets, lighting) and site work that was never in the base number.

It depends on your market. Buying an existing home is often cheaper and faster up front. Building gets you exactly what you want, new systems, and a builder warranty, but with more decisions and more room for costs to creep. Here's how I'd compare them honestly:

1. Price a comparable existing home where you want to live, then add the repairs and updates it will need in the next few years.
2. Get a real all-in number to build: land, site work, construction, upgrades, and financing costs.
3. Count the time. Rent or a double housing payment during the build adds up.
4. Factor in maintenance. New roofs and systems usually mean fewer repair bills early on.
5. Decide what customization is really worth to you.

Locally, new builds often win on warranty and customization, while existing homes often win on speed and fewer unknown site costs. Run both numbers for the same neighborhood before you decide.

No. You're generally not required to use the builder's preferred lender, but builders often tie incentives like closing-cost credits or rate buydowns to it. The CFPB says plainly that you don't have to use a builder's associated lender and that you have the right to shop around. My advice from the builder's side of the table:

1. Get the incentive in writing: the amount, the conditions, and the deadlines.
2. Get Loan Estimates from the preferred lender and at least one outside lender on the same day, for the same loan.
3. Compare the rate, points, fees, credits, and cash to close, not just the monthly payment.
4. Check whether the incentive is offset by a higher rate or price.
5. Choose the package that costs less over the time you expect to keep the loan.

Source CFPB: Find the right home (builder-associated lenders)

A construction loan pays your builder in stages, called draws, as work is completed. During the build you often pay interest only on the money drawn so far. When the house is finished, the loan is paid off or converted into a regular mortgage. Some loans close once for both phases and others close twice, so compare terms carefully. What I tell clients:

1. Talk to lenders who regularly do construction loans before you sign with a builder.
2. Ask how the draw schedule works and who checks the work before each draw.
3. Ask about the rate, the rate lock, and what happens if the build runs long.
4. Expect the lender to review your builder, plans, and budget.
5. Keep a cash cushion for overages.

Terms vary by lender and state.

Choose a builder the way you'd hire someone to handle your life savings: verify their license and insurance, talk to recent buyers, and walk homes they've finished and homes they're building right now. The sales office tells you little. The job site tells you everything. My checklist:

1. Get names from your local home builders association, real estate agents, and neighbors.
2. Confirm their license (where your state requires one), general liability insurance, and workers' comp.
3. Ask for references from recent buyers and actually call them. Would they hire this builder again?
4. Visit an active job site. Is it organized? Are materials protected from the weather?
5. Ask how long they've built in your area and who handles warranty calls.

NAHB has a good builder-selection checklist.

Source NAHB: How to Choose a Home Builder

A good new construction contract spells out what's being built, for what price, by when, and what happens when something changes. That means plans and specs, allowances, the payment schedule, change orders, delays, inspections, and the warranty. If it isn't in writing, assume it isn't included. What I look for:

1. Plans and a detailed spec sheet attached to the contract.
2. Allowances with dollar amounts, and how overages are billed.
3. A change-order process where every change is written, priced, and signed before work starts.
4. Delay terms: which delays are excused (weather, materials) and what you're owed if the builder is late.
5. Your right to site access and third-party inspections.
6. The warranty document attached, not "available on request."
7. How disputes get resolved.

Have an attorney in your state review it.

Yes. A builder's contract is written to protect the builder, and having a real estate attorney licensed in your state review it before you sign is one of the cheapest protections in the whole process. I'm a builder and inspector, not a lawyer. Here's what I'd want an attorney to look at:

1. Completion dates, and what happens if the builder misses them.
2. Price escalation clauses that let the price rise after you sign.
3. Deposit terms, including when the deposit is refundable.
4. How change orders are priced and approved.
5. Warranty terms, and whether disputes must go to arbitration.
6. Your right to independent inspections.

Production builders may say their contract isn't negotiable. Even then, an attorney can tell you what you're agreeing to. Laws vary by state. If you want a Tennessee-licensed real estate or construction attorney referral for your contract, ask Gary when you call; he can point you toward counsel without replacing them.

The base price covers the model's standard plan and builder-grade finishes. Anything from the design center, such as flooring, cabinets, counters, lighting, and structural options, costs extra, and those choices add up fast. Spend your upgrade money on things that are hard or expensive to change later. My rule of thumb:

1. Prioritize structural and behind-the-wall items now: extra outlets, blocking for TVs and grab bars, insulation, plumbing rough-ins, conduit, ceiling height, and room options.
2. Cosmetic items like paint, light fixtures, hardware, and some flooring can often be upgraded later for less.
3. Ask for a written list of what's standard in the plan you're touring. Model homes are usually loaded with upgrades.
4. Get every upgrade priced and itemized in your contract.

The upgrades that most often change how a house lives day to day are flooring, kitchen cabinets and counters, and HVAC or insulation beyond the base package. Price those early.

Often, yes. It's usually easier to negotiate upgrades, closing-cost help, or lot premiums than the base price, because builders protect the sale prices in their communities. How much room you have depends on the market, the builder, and how long a home has been sitting. From the builder's side, here's what works:

1. Ask what incentives are offered right now, and get them in writing.
2. Look at finished inventory (spec) homes. Builders often want those sold.
3. Ask for upgrades, a lower lot premium, or closing-cost credits instead of a price cut.
4. Compare any lender-tied incentive against outside financing.
5. With a custom builder, negotiate scope and specifications, not just the margin.

A pattern I see work: lock the plans and allowance schedule in writing before deposits get large, then negotiate punch-list and inspection access language while you still have leverage, not after framing starts.

Start with your contract. It defines what the builder promised, which delays are excused (often weather and material shortages), and what remedies, if any, you have when they miss the date. Delays are common in construction, but you have a right to clear, written answers. What I'd do:

1. Ask for an updated written schedule showing what's holding things up.
2. Keep a log with dates, site photos, and copies of every email and text.
3. Talk to your lender now about your rate lock and loan deadlines. Extensions can cost money.
4. Check your lease or the sale of your current home, and have a backup plan.
5. If the delays look unreasonable or communication stops, have a real estate attorney in your state review your options.

Rules vary by state and contract.

Every build is different. Production homes generally go faster than custom homes, and weather, permits, inspections, material availability, and change orders are what stretch the timeline. Ask your builder for a written schedule for your house and find out what the contract says about delays. The typical stages:

1. Permits and site prep
2. Foundation
3. Framing and roof (dried in)
4. Rough plumbing, electrical, and HVAC
5. Insulation and drywall
6. Interior finishes
7. Final inspections and certificate of occupancy
8. Walkthrough and closing

To stay on track:

1. Make your selections early and stick with them.
2. Limit change orders.
3. Ask for regular schedule updates.
4. Don't lock in a move date or a rate lock until the builder commits to a firm completion date.

Treat every sales-office completion date as an estimate until it is written with consequences for delay, and plan your move and rate lock around the builder's actual pace, not the brochure.

Raise it right away, in writing, while the work is still exposed and cheap to fix. Once insulation and drywall go up, problems get harder to prove and more expensive to correct. My process:

1. Photograph the issue with something in the shot for scale, and note the date and location.
2. Email your builder's point of contact describing what you saw, and ask how and when it will be corrected.
3. Ask whether that stage passed the local code inspection. Remember that code is a minimum, not a quality standard.
4. If the answer doesn't satisfy you, hire an independent inspector to look at it.
5. Keep everything in one folder.
6. If problems keep piling up, talk to a real estate attorney in your state before your next payment.

Contracts and state rules vary.

Ask before you sign. A good builder will name one point of contact (usually the project manager or superintendent), commit to regular updates, and explain when you can safely visit the site. Silence is the complaint I hear most from homeowners. Get these answers in writing:

1. Who is my main contact, and how quickly do they respond?
2. How often will I get schedule updates: weekly, or at milestones?
3. Can I visit the site, and do I need an appointment? Many builders require an escort for safety and insurance reasons.
4. When are the key meetings: pre-construction, pre-drywall, and the walkthrough?
5. How do I submit questions or concerns so there's a record?

Then raise concerns by email, not just by phone.

Source NAHB: Questions to Ask Your Home Builder

In most cases, yes. Check your purchase contract first, though, because some builders limit when inspectors can visit, require appointments, or want proof of the inspector's insurance. Make your right to independent inspections part of the deal before you sign. How I'd set it up:

1. Ask the builder in writing: "Will you allow third-party inspections at pre-drywall and final, and what are your rules?"
2. Hire an inspector who does phase inspections on new construction.
3. Work out the timing with the superintendent so the inspector sees the house before insulation and drywall go in.
4. Attend the inspection if you can, and ask questions.
5. Send the report to the builder and ask for a written response on each item.

If a builder refuses any outside inspection at all, I'd treat that as a red flag.

Use the final walkthrough to check everything you can see, touch, and operate, and get every defect written down before you close. You have the most leverage before closing. Bring your independent inspection report so those items end up on the punch list. My checklist:

1. Exterior: the ground slopes away from the house; gutters, siding, trim, and caulking are complete.
2. Doors and windows open, close, and lock, with no damage.
3. Every faucet, toilet, and drain works. Look under the sinks for leaks.
4. Every light, switch, outlet, and GFCI works.
5. Heating and cooling both run.
6. Every appliance turns on.
7. Floors, cabinets, counters, paint, and drywall are free of damage.
8. Your upgrades match the contract.

Photograph everything. Phase checklists and buyer tools live under Dream Home Mastery at buildavia.com/learn.html.

Yes. In 30+ years of building and inspecting, I've never seen a perfect new house. Crews are human, and city inspections check minimum code at certain stages, not workmanship or every detail. An independent inspection finds problems while the builder is still obligated to fix them. What I recommend:

1. Hire a home inspector with new construction experience (licensed, if your state licenses inspectors).
2. Schedule the final inspection before your walkthrough so the findings go on your punch list.
3. If you can, add a pre-drywall inspection during the build.
4. Get a warranty inspection before your first-year coverage ends.
5. Send every report to the builder in writing.

ASHI's online directory can help you find an inspector.

Source ASHI: Find an Inspector

The walkthrough is usually scheduled shortly before closing. How fast punch-list items get fixed depends on your builder and your contract, so get the timeline in writing, including which items will be done before closing and which after. Here's what protects you:

1. Ask for the walkthrough date as soon as the builder can commit to one.
2. Make sure every item is written on the punch list, not just talked about.
3. Ask for a target completion date for each item.
4. Re-check the finished items before you close.
5. If items will still be open after closing, get a signed written agreement on how and when they'll be finished. Ask your closing agent or attorney about the options where you live.
6. Anything that gets missed becomes a warranty request, so submit it in writing.

A pre-drywall inspection happens after the framing, roof, windows, and rough plumbing, electrical, and HVAC are in, but before insulation and drywall cover them. For most buyers it's worth it, because it's your last chance to see the bones of the house. InterNACHI notes that drywall can hide problems and make them difficult and expensive to fix later. What I look for: framing and structural connections, cut or notched joists, window and door flashing, roof and wall penetrations, plumbing and wiring placement, ductwork, and fire blocking. My advice:

1. Ask the builder for the pre-drywall date in writing.
2. Book an inspector with new construction experience.
3. Photograph every wall yourself. Those photos are priceless later.
4. Get repairs confirmed before the drywall goes up.

Call Gary at The Duncan Group, 615-479-5707, or see buildavia.com/inspection.html. No online booking form; he picks up and schedules directly.

Source InterNACHI: Pre-Drywall Inspections

Expect the same kinds of closing costs as any home purchase: lender fees, appraisal, title insurance, government recording fees and taxes, and prepaid items like property taxes, homeowners insurance, and interest. Some builders also pass along new-construction charges. Your Loan Estimate and Closing Disclosure show the actual numbers, and the CFPB lists the common fees. What I'd do:

1. Ask the builder to list any builder-specific charges in your contract, such as HOA setup or utility connection fees.
2. Compare Loan Estimates from more than one lender.
3. If the builder offers help with closing costs, get it in writing and find out whether it's tied to a particular lender.
4. Review your Closing Disclosure early and ask about anything new.

Who pays what varies by state and contract.

Source CFPB: What fees or charges are paid when closing on a mortgage?

Builder warranties usually start at closing or when you take possession, but your warranty document sets the exact start date. Find it, and put every expiration date on your calendar the day you move in. Different parts of the home often have different coverage periods. What I recommend:

1. Get the complete warranty booklet before closing, not after.
2. Find the start date and each coverage period (workmanship, systems, structural).
3. Set reminders well before each one ends, especially the first-year deadline.
4. Schedule an independent warranty inspection before that first-year deadline.
5. Register your appliances and equipment with their manufacturers. They're often covered by the manufacturer, not the builder.

The FTC explains typical new-home warranty coverage.

Source FTC: Warranties for New Homes

Not automatically. In most cases, signing the walkthrough form confirms the punch list, but the exact effect depends on your contract and the wording on the form, so read it before you sign. Some forms include language acknowledging the home's condition, and you should understand that language before you sign. What I tell buyers:

1. Ask for a copy of the walkthrough form ahead of time.
2. Never sign a blank or incomplete list. Make sure every item you found is written down.
3. Ask the builder to note on the form that the list isn't a complete list of every defect and doesn't waive your warranty. Keep a copy.
4. Photograph everything on walkthrough day.
5. If the form says you accept the home "as is," talk to a real estate attorney in your state before signing.

This isn't legal advice.

Yes. A rate lock only protects your rate if you close within the lock period. If construction runs long, the lock can expire, and extending it may cost a fee, depending on your lender. The CFPB explains how rate locks work and which questions to ask. I've seen good deals get squeezed this way. My advice:

1. Don't lock until the builder can give you a realistic completion date.
2. Ask your lender about longer or extended locks for new construction, and what each one costs.
3. Ask exactly what happens if your lock expires.
4. Check whether the builder's contract or lender incentive covers lock extensions.
5. Stay in close touch with both the builder and the lender as closing gets near.

Source CFPB: What's a lock-in or a rate lock on a mortgage?

Builder warranties often cover workmanship and materials for about one year, plumbing, electrical, and HVAC for about two years, and major structural defects for up to ten years. Every warranty is different, though, and the written one you receive is what counts. That breakdown comes from the FTC's guide to new home warranties, which also notes that builder warranties usually exclude household appliances, small cracks, and items covered by a manufacturer's warranty. What I tell homeowners:

1. Read the warranty before closing and ask who backs it: the builder or a third-party company.
2. Note what's excluded and how "structural" is defined.
3. Learn which maintenance is your responsibility, because skipping it can affect coverage.
4. Put each expiration date on your calendar.
5. Some states have their own new-home warranty rules, so check yours.

Source FTC: Warranties for New Homes

Build a paper trail and escalate in steps. Start with written requests, then send a formal letter citing your warranty. Next, use the dispute process from the warranty company or your contract. After that, turn to outside help: your state's contractor licensing board, the consumer protection office, or an attorney. The FTC notes that many new-home warranties offer or require mediation and arbitration for disputed claims. What I'd do:

1. Re-read your warranty for coverage, deadlines, and dispute procedures.
2. Send a dated letter, by a trackable method, listing each defect with photos.
3. Get an independent inspector's written report on the defects.
4. Contact the third-party warranty company if one backs your home.
5. File a complaint with your state licensing board or the attorney general's consumer office.
6. Talk to a construction attorney before any deadlines pass.

Rules vary by state.

Source FTC: Warranties for New Homes

Treat it as urgent. Limit the damage first, then call your builder's warranty line, and follow up in writing. Builder warranties often cover HVAC, plumbing, and electrical systems for a period after closing, while appliances are usually covered by their manufacturers rather than the builder, according to the FTC. What I'd do:

1. For a leak, shut off the water at the fixture or the main. For HVAC, check the thermostat, the breaker, and the filter first.
2. Photograph any damage.
3. Call the builder's emergency warranty number and note the date and time.
4. Email a written claim the same day.
5. Check your warranty before hiring your own repair company, because outside repairs can complicate coverage.
6. Learn where your main water shutoff is before you need it.

Source FTC: Warranties for New Homes

There's no single national deadline. How long a builder has to fix defects, and how long they stay responsible, depends on your warranty, your contract, and your state's laws. Your warranty usually sets the coverage period for each part of the home and may describe a timeframe for repairs. What I tell homeowners:

1. Find the coverage period for the item in question (workmanship, systems, or structural).
2. Look for any stated response or repair timeframes.
3. Report the defect in writing as soon as you find it. Don't wait until the warranty is almost over.
4. Track how long the builder takes, and follow up in writing.
5. You may still have options under state law after a warranty ends, so ask a construction attorney in your state.

With my own inspection clients I push them to put every defect in writing with photos, use the builder's notice path, and calendar the one-year warranty end date so claims do not die on day 366.

Often, yes, but your contract or warranty may require mediation or arbitration first, and your state sets the deadlines and procedures. Some states also require you to give the builder notice and a chance to make repairs before you can file. Talk to a construction attorney in your state; this isn't legal advice. Before it gets that far, here's what I've seen work:

1. Document everything: photos, dates, emails, and every response from the builder.
2. Get a written report on the defects from an independent inspector or engineer.
3. Send a formal written demand that describes each defect and asks for repair.
4. Follow any dispute process in your warranty or contract.
5. Ask an attorney about deadlines early, because waiting can cost you options.

Lawsuits are slow and expensive, so push for repairs first when you can.

File every warranty claim in writing, following the exact process in your warranty, and keep proof. Response times are set by your warranty and your builder, not by a national rule. The FTC recommends putting repair requests in writing even when there's a hotline, and keeping a record of every conversation. Step by step:

1. Read your warranty's claim instructions and deadlines.
2. Describe each issue clearly, with photos, its location, and the date you noticed it.
3. Submit it through the builder's portal or by email, and save the confirmation.
4. Report emergencies (active leaks, no heat, electrical hazards) by phone right away, then follow up in writing.
5. Write down when the builder responds and when repairs are made.
6. Group non-urgent items together, but never let a deadline pass.

Source FTC: Warranties for New Homes

Some hairline drywall cracks, especially at the corners of doors and windows, are common in a new house as the lumber dries and the house settles. Cracks that are wide, growing, or keep coming back, or that show up along with sticking doors, deserve a closer look. The FTC notes that builder warranties usually don't cover small cracks in drywall, tile, or concrete, so check what your warranty allows. How I sort them:

1. Photograph each crack with a date and a coin or ruler for scale.
2. Pencil-mark the ends of the crack and check again in a few weeks.
3. Watch for related signs: sticking doors, gaps at the trim, sloping floors.
4. Report cracks to the builder in writing before your first-year deadline.
5. If a crack keeps growing, have an inspector or structural engineer look at it.

Source FTC: Warranties for New Homes