Buying Early in a New Development: Pros and Cons

Buying early usually gets you first pick of homesites and plans, and sometimes earlier-phase pricing. The trade-off is living with construction, unfinished amenities and a developer-run HOA for a while. Ask what's planned on every empty lot around you before you choose.

The upside of buying early

• First pick. The best homesites, like those backing up to open space, often go first.
• More choices. More plans and options are available before a phase fills up.
• Pricing. Builders sometimes raise prices as a community fills. That isn't guaranteed, so don't count on it.
• Time to plan. A to-be-built home gives you months to sell, save or finish a lease.

The downside

• Construction nearby. Noise, traffic and dust until your section is built out.
• Amenities in progress. The pool or trails may not be open yet.
• A developer-run HOA. North Carolina law lets the declaration set a period of developer control, then requires owners to elect a board, with a majority of owners, no later than when it ends.
• Uncertainty. Future phases can change what's built around you.

What are some upcoming construction projects in Raleigh?

There are always projects underway, and they change constantly, so any list I gave you would go stale. Check the source instead:

• The city or town planning department's development map
• The county's planning department
• The state's road project plans for highways near you

For any community you're considering, ask the builder for the community plan and what's approved for land around it.

When buying new construction, when do you pay?

In stages, usually:

1. Earnest money when you sign the contract. Freddie Mac estimates 1% to 2% of the price as a general guide. It's typically credited toward your costs at closing.
2. Option or upgrade deposits, if the builder requires them for your selections.
3. Closing. Your down payment and closing costs, with your mortgage covering the rest. Federal rules require your lender to give you the Closing Disclosure at least three business days before closing.

Ask the builder which deposits are refundable and when.

Questions to ask before buying early

• What's planned on the land behind and beside this homesite?
• When will the amenities open?
• How many phases are there, and when is build-out expected?
• When does HOA control pass to the owners?
• Can I see the approved plans for the next phase?

Who's writing this. I sell new homes for D.R. Horton at Collins Ridge in Hillsborough, so I represent the builder, not you. This guide is general education from my years on job sites and in sales. It isn't legal, tax or lending advice, and it doesn't describe any specific home, price or incentive. Check the sources linked below, and talk with your own lender, agent or attorney before you decide.