Buying a New Construction Home in Grand Rapids, Michigan

Are you thinking about buying a new construction home in and around Grand Rapids, Michigan? Are you just not sure where to start when thinking about buying a new construction property? Well, you’re in luck as we’re going to break down the 10 steps for you to think about when buying a new construction property in Grand Rapids and/or West Michigan. 

Step One: Find a Real Estate Professional 

To get yourself started, it’s very important to align yourself with a real estate professional who has been there, done that and has expertise in the new construction process. It is critical to understand the ins and outs and set an initial consultation so you can have an understanding of what to expect through the rest of this process.

We have seen many people go into this blind and call us on the back end after they’re halfway through the process when mistakes have been made or they’ve secured the wrong site. You want to align yourself with a real estate professional who is an expert in the new construction process, who has relationships with local builders, and who can guide you through the ins and outs of making sure you get your dream home.

Step Two: The Financials of a New Construction Home

Next, you want to think about the financing end of things. There are two parts to this. You certainly want to review your budget, going over your income, expenses, etc so you can be comfortable with the budgeting side of the new construction process. That goes hand in hand with whether you are going to get financing or paying cash. 

If you’re looking at financing, we want to get you connected with a local lender so you can outline the options for new construction financing. There are not a lot of people who are very familiar with construction loans. A construction loan would be starting from scratch, more of that custom design, where you go out, you’ve secured the land, you found the builder, but you need to work with the bank to get that financing where you’re actually in charge of giving the builder draws.

There is a lot that goes into the construction loan piece, and we’re not going to get into all of those details, but we need to think about financing options. One option is going to be a construction loan and the other option is going to be an end loan. This might be a situation where a builder is halfway through a home, maybe more of a bigger box builder, where they’re holding the financing and you’re just securing the mortgage exactly like you would when buying an existing home. So step two is understanding your budget and financing options for new construction opportunities.

Step Three: Research Builders in Grand Rapids

A big piece of this puzzle is heavily reliant on your price point so once you’ve gone through the financing piece and understand what you’re comfortable with from a budget perspective, you’re then going to go out and secure builders.

There is a range of builders from high-end custom builders to lower-end, bigger box builders. We don’t want to say manufacturer, but there are plenty of builders out there that are doing 400, 500, 600 homes a year and that’s what they’re great at, but we need to establish and research what you are looking for in a builder.

When you’re researching builders, you’re going through who’s good and at what price range. You going to look at builder reviews, talk to the builders, and once you have it narrowed down to two or three builders, you’re going to ask for some references on some current homes from past clients. The builder relationship is critical. We have clients who have had some amazing success stories and still have relationships today with builders they’ve loved, but unfortunately, there have also been some horror stories.

There have been some very unfortunate situations where a client ended up picking the wrong builder and quite frankly, had a terrible experience. Selecting the right builder for what you’re looking for is critical. 

Step Four: Location and Site Selection

Location, location, location is very important. Choosing the right location and site can mean many things to many people depending on where you’re at in life. You may be thinking about whether you want to be in the woods, in a community, in the north end of Grand Rapids, south end of Grand Rapids, etc. So, you are going to narrow down what location you’re drawn toward.

The next part is more critical and this is one thing that people miss, especially if you’ve never done new construction, and that is the actual site selection within the community or the woods. For this, you’re analyzing the actual building site and what’s going to make sense for you. This is one place where we can help our clients make sure we don’t make mistakes because there are a lot of things that go into this that people don’t think about. For example, where is your well and septic going to sit on a site? Is the site suitable for a walkout basement? Is it a corner lot? Is it a bigger lot with a big backyard? Is there woods in the back? The list could go on and on.

All of this comes into your personal preference, and also, what’s going to make sense for the future to ensure that you’re making the right investment. So, step number four is going to be identifying a great location for you along with the perfect site for your new build.

Step Five: Picking the Floor Plan of your New Construction Home

You have found the builder, picked the site, and now you and the builder are going to work on really understanding your needs and selecting the right floor plan. This is critical and is the time for you to get clear on what you’re going to enjoy, whether that’s a big sprawling ranch-style home or a two-story with all the bedrooms upstairs, walkout basement, bedrooms, bathrooms, interior style upgrades, features, and the list goes on.

This is when you and your builder are going to identify the floor plan, the amenities, the upgrades, etc. You want to take your time with this step so along with the builder you can design the perfect home for your needs. 

Step Six: Finalize Price & Terms with the Builder

At this point you’ve designed the perfect home, you have a good idea of pricing, and this is when you want to finalize your price and terms with your builder. This is an important conversation because you hear horror stories about an initial starting price, maybe that’s $700,000, and then the end price ends up being $900,000.

You want to be very disciplined and have an understanding of what the end price is going to be and what are the chances of overages. In most cases, you’re going to have some minor overages, maybe from some minor upgrades or a different level of fixtures, tile, etc. But it’s going to be critical for you and the builder to be on the same page of how close are we going to be to that base price and how much wiggle room you want to have on that. You’re going to put this in writing, and this is a place where we can help to make sure that you’re protected. 

Step Seven: Monitor the Process

You have agreed on a price, understand the timing, and negotiated how long this process is going to take, you and the builder are on the same page, and you hit the go button, so this is where you’re going to want to enjoy monitoring the process. This is your new home.

This is where people get excited seeing something come right out of the ground into a beautiful brand-new construction home. The joy of being a new homeowner is going to include going over to the house and seeing the progress, monitoring things, and continuing to make sure that you and the builder are on the same page as far as communication and any changes midway through the process. This is an important piece because we can guarantee you, there are going to be some changes throughout this multi-month-long process of that new construction. 

Step Eight: The Final Inspection

Step number eight in the new construction progress is your final inspection. Now that you have made it through months of this process and the build of your new home, we have to discuss this critical piece of the equation. There have been many stories of buyers not doing a final inspection and having some issues that could have been prevented before the final closing. So, we highly recommend that you do a final inspection when the home is built. That’s going to do a couple of different things for you: one, it’s going to make sure that everything was done to your standards, and there are no catastrophic issues as far as foundation, drainage, roof lines, or anything else. But two, it’s also going to give you a punch list of items for the builder to take care of before closing, and this is very common. There’s not one home that’s ever been built that is perfect and that punch list can have 20, 30, 40 different little things from paint chips to tightening door handles to caulking around the window to lose shingles.

That final inspection is critical to the process. It is also important to understand that in the state of Michigan, builders all have a one-year home warranty on their craftsmanship so you’re not only going to have that final inspection before close, but your builder is going to be with you for that first year and hopefully beyond as things come up, whether that be some drywall cracks or just minor things that the builder will come back and take care of for you inside of that first year.

Step Nine: Closing on the Property

Step number nine is a pretty quick one, but it’s an exciting one because you are officially closing on the property. After all of this work you put in, you’ve finally made it to that closing date, which is awesome and it’s exciting. This means the house is ready for you to move in. You’re finalizing bank documents and getting the loan officially closed, so we can roll you right into step ten. 

Step Ten: Moving into Your New Home

It’s time to move into your new home! There are plenty of things that go into this portion of the process from connecting with moving companies, getting the builder warranty information, getting the mechanical warranty information, setting up utilities, and moving in. From this point, you get to enjoy the fruits of your labor, your hard work, your excitement, and enjoying your brand new home.

Many more details are going to come up along the way and that is why it’s so important to align yourself with a professional that’s done this countless times, can navigate the process easily, and help you as a buyer so you are protected and can just enjoy the process. New construction home building can be considered a stressful process, but it doesn’t have to be so long as you follow it correctly.

Stay tuned as we continue this conversation in the future and get more detailed on some of the local builders in West Michigan. For now, if you have any questions and want to get started on this process, our team would be happy to help and work to guide you along the way!