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Buying a New Construction Home

This is a guide to buying a new construction home. Includes info on selecting a builder, upgrades, lots, deposits and inspections.

Guide to Buying a New Home

OK so you have decided that you want to buy a new home in the Salt Lake City area. But how does buying a new piece of real estate differ from buying an existing home. This page details the new home buying process and what you can expect. Please note that this process may vary from builder to builder and area to area.

Selecting a Builder and home

The first phase in the process is selecting the builder / development and floor plan. Most Salt Lake Valley New Home Developments have model homes which you can view. The builder may offer several floor plan's for sale, but will only have 1 or 2 model homes for each development. If you are interested in a floor plan other than that of the model you maybe able to view that floor plan at a different location. When you enter a model home you maybe greeted by the builders Realtor. One of the questions they may ask is 'are you working with a Realtor?'. Remember that you can still use a Realtor to represent you when purchasing a new home and if you are you must provide that Realtor's information when completing the guest book. If you don't this can lead to all sorts of problems later in the process. When weighting up which builder to use you need to consider the cost of upgrades and the lot premium (see below for details).

Upgrades and Lots

So you have decided on a builder / development and floor plan. The next think so mull over are upgrades and lots.

Selecting a Lot

This may not be as easy as it seems. For example, the lot may have certain restrictions applied to it. It you have your heart set on a particular lot then you may only be able to select certain floor plan's. In the South Jordan Daybreak development they go one step further with each lot assigned a specific floor plan which cannot be changed. There may also be a lot premium for view lots or lots adjacent to open space. Some builders may charge lot premiums for all lots and others only for certain lots. Lot premiums can run from $5000 to well over $100,000 and are something that you should consider when selecting a builder. Take the following example:

  1. Property 1 - 3000 square feet home with a view lot. $300,000 for home and $150,000 lot premium.
  2. Property 2 - 3000 square feet home with a view lot. $400,000 for home and $20,000 lot premium.

Assuming that the 2 properties are of similar level of finish at first glance 'Property 1' would seem like the best deal. At least until you add in the lot premium in which case 'Property 2' actually works out to be the cheapest. So beware some builders deliberately lower the price of their homes and then hit you with a large lot premium.


When you buy a new home the listing price is for a base model with no upgrades. Upgrades can be everything from the addition of a bonus room to providing an additional door opener for the garage. Just to complicate matters each builder provides different levels of finish for their base, for example, some may provide tile as standard, a stone fireplace, solid surface countertops etc. So when selecting a builder something else to take into account is the base level of features. The builder should provide you with with a list of standard features and a list of available upgrades with their prices (upgrade prices are sometimes only provided after you have paid a deposit). Be warned when selecting upgrades you can soon add $100,000+ to your home price.

Deposits And Contracts

Once you have selected a lot, the builder will require a 'lot deposit'. This deposit secures / reserves the lot for you, and may or may not be refundable. At this stage the builder with also want proof that you can purchase the house, they may ask for a prequal letter from your lender or may insist that you speak to their lender and get prequalified through them.

Before the home can be built you will need to provide the builder with a list of upgrades, this process is usually performed with the aid of a design consultant who will walk you through the various options and colors. At this stage you will also need to provide an increased deposit. This deposit will usually be based on the price of your home / upgrades. For example, it could be 10% of the base price and 100% of the price of the upgrades. This deposit will probably not be refundable.

New home contracts are usually a lot more restrictive than resale contacts. You will probably not have the option of writing the contract based on the sale of your current home so make sure you are comfortable with either living in rented accommodation for a while or paying for 2 mortgages. You can also find things in the contract which exclude the builder from certain responsibilities. For example, if you perform a Radon test and Radon is found, the builder is not responsible for fixing this issue.


There are 2 main inspection points that you perform during the building process (does not include the inspections performed by the city inspectors). The first inspection takes place after the home has been framed, the windows have been installed and the plumbing / electrics have been installed. Here you walk through with the builder to make sure that everything looks OK, checking that TV outlets are in the correct locations etc.

The main inspection takes place just before the closing. Again you walk through with the builder highlighting anything that needs to be addressed. You should take this task seriously and spend as much time as you need. Even though builders offer a warranty, if you miss something in this inspection and find it after you have moved in then you may or may not be able to get it fixed. For example, most builders will not touch up paint that was missed during the inspection.

It is also worth noting that you still have the right to have an independent inspection performed on your home just like you do with a resale home.