Warning signs to know when buying a newly built home

When evaluating newly built homes, there are pivotal warning signs buyers should watch for:

The number one cautionary red flag is visible signs of poor workmanship or flawed materials on home walkthroughs, like extensive cracks, unlevel floors, misaligned doors/windows or incomplete finishes. Even singular minor flaws become more concerning at scale across several rooms or areas, potentially indicating broader underlying defects compared to isolated trimming or finish blemishes alone. If 30% or more of floor tiling exhibits uneven grout lines for example, it casts doubts on overall tile installation aptitude.

Another vital warning indicator is lack of safety fundamentals – absence of code-required elements like proper firewall separations, below-standard railing heights, missing appliance grounding indicate gaps verifying compliance rigors exist. Deficient firewall assembly allowing potential fire spread between units acts as more severe than missing outlet covers in one room alone due to life/property safety implications.

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George Nicola

George is a seasoned interior designer and property marketing strategist with over 13 years of experience. He specializes in transforming properties into visually stunning spaces, helping clients recognize the potential and beauty in each property. With an impressive international client base of exciting projects throughout Europe and America.

When it comes to buying a new house construction, there are many construction red flags to consider before signing a contract. While it can be exciting to have a brand new or a custom home built, these red flags indicate potential problems with the construction or the builder, and can ultimately save buyers from making a costly mistake.

One of the easiest red flags to spot is poor construction quality. This can manifest in a number of ways, such as uneven floors, poorly installed fixtures, or cracks in the walls.

These issues can indicate that the builder has cut corners or used subpar materials, which can lead to bigger problems down the road. It is important for buyers to thoroughly inspect the construction quality of the home before making an offer.

Another easy to spot red flag to watch out for is a lack of transparency from the builder. If something feels not right, then probably it is not right. If the builder is not forthcoming with information about the construction process or the materials used, this can be a sign that they have something to hide. 

Buyers should ask plenty of questions and do their own research to ensure that they are getting a quality home from a reputable builder. By being aware of these red flags, buyers can make a more informed decision when it comes to buying a new construction home.

Huge red flags in new construction

Major visible defects, moisture issues, and signs of rushing or sloppy work should be huge red flags with any new construction home.

Some of the biggest red flags to watch out for with new construction homes include:

  1. Visible construction defects – Things like large cracks in the foundation or walls, significantly uneven floors, major leaks, huge gaps between walls/floors and doors/windows, etc. These indicate a major structural problem.
  2. Water drainage issues – Improper drainage away from the house that causes ponding against the foundation. Or gutters/downspouts that drain right beside the home’s foundation. This leads to flooding, cracks, and mold.
  3. Signs of rushing or cutting corners – Poor caulking, gaps in insulation, sloppy and uneven paint/drywall, loose fixtures, etc. This implies the builders took shortcuts or rushed the job.
  4. Shoddy exterior finish work – Problems like large gaps between exterior materials, cracked stucco, loose siding, poorly sealed windows/doors, or no flashing above trim indicate poor workmanship.
  5. Improper ventilation – Lack of adequate attic/roof ventilation, kitchen/bath exhaust fans vented into attics rather than outside, absence of whole house ventilation system. Results in moisture issues.
  6. Soil erosion issues – Soil erosion alongside the home causes structural instability. Also no protective ground cover allowing weeds to take root and damage the foundation.

What constitutes a construction defect?

A construction defect typically refers to any deficiency in the building of a home that:

  1. Fails minimum code standards – This includes violations of applicable building codes, architectural drawings, or zoning and permitting requirements. Examples would be improper electrical wiring, ventilation that doesn’t meet mechanical code, etc.
  2. Breaches implied warranty – There are warranties implied by law that provide protections like suitable livability, proper drainage away from structure, soundness and workmanlike construction where work meets industry standards. Defects here relate to defects impacting occupation.
  3. Requires substantial repair – Major structural issues like cracking foundations, water intrusion leading to mold growth, or advanced deterioration of roof would qualify. Basically construction flaws that undermine livable conditions in the home through significant repair needs.
  4. Poses health and safety hazard – Defects introducing fall hazards, fire risks, the possibility of electrical shock, infestations, or exposure to toxic mold would potentially breach the warranty of habitability.

While minor flaws like nail pops or sticking doors may frustrate new homeowners, construction defects typically center on issues that critically impact financial risk, safe occupancy, structural soundness or mechanical operations according to code and common law warranties.

Exterior red flags are easy to spot on a new home

Here are some exterior red flags that would be easy for an average homebuyer to spot on a newly constructed home:

  • Crooked exterior walls – Walls that visibly bulge or bow indicate structural issues with framing.
  • Cracks in brickwork or stucco – Large jagged cracks suggest problems with foundation settling.
  • Rotting roof shingles – Curled or cracked shingles indicate cheap quality or improper installation.
  • Leaky doors and windows – Gaps visible around frames or daylight visible through indicate poor sealing.
  • Improper drainage slope – Yards that slope back towards house can lead to flooding or moisture damage.
  • Soil erosion alongside the home – Crumbling soil creating visible divots against foundation undermines stability.
  • Tree roots encroaching exterior walls or walkways – Can indicate drainage issues and may eventually cause cracks.
  • Poor quality exterior materials – Already peeling paint, fading siding, rusting fixtures or mold growth points to cutting corners.
  • Uneven gravel driveway with potholes or sinkholes – Signals issues compacting and leveling the underlying base.

How do you know if a house has structural problems?

There are several visible signs that may indicate structural problems in a poorly constructed house:

Signs of overall poor construction:

  • Crooked door frames If door frames are uneven or walls are out of plumb, it points to shifting foundation or framing issues.
  • Floor unevenness – Floors that visibly slope or feel unlevel underfoot can signify structural movement.
  • Wall cracks – Cracks wider than 1/4 inch, or cracks that leak indicate foundation issues.
  • Ceiling cracks – Cracks running through ceilings may mean problems with roof framing.

Signs of a structurally bad house:

  • Sticking doors and windows – if multiple doors or windows stick, the house may be settling unevenly.
  • Creaking floors and stairs – Loud creaking indicates potential problems with floor joists or supports.
  • Bowing walls – Outward leaning walls show failure under weight loads bearing down.
  • Chimney separating – Gaps wider than 1/2 inch mean facade could eventually detach.
  • Mold or dampness – Chronic mold emerging in same area hints at sinking foundation.

While there is no universal standard for acceptable wall bowing, structural engineers often advise bracing or reinforcing when:

  1. The wall is out of plumb more than 2 inches in an 8 foot vertical distance (roughly a 3 degree angle).
  2. Bowing exceeds 1 inch over 12 vertical feet of wall or floor-to-ceiling height. Outward curves over an inch show excessive structural loads.
  3. Horizontal cracking wider than 1/8 inch appears in any part of a bowed wall. Cracks signal further movement is causing decorative surface damage.
  4. There are sounds – faint creaking or similar noises – coming from the stressed member. This often starts before visible bowing occurs.
  5. Doors/windows near the bowed wall no longer latch properly or stick due to changes in the wall surface. Openings widen then force back into place temporarily.

While no level is technically unacceptable, engineers often recommend bracing at much lower thresholds as a preventive measure. Waiting for more obvious signs can lead to exponentially worse issues over time. Acting quickly to shore up problems areas prevents damage propagation.

The term “stressed member” is engineering jargon referring to an overloaded structural building component that shows strain signs – this can be an outward or inward bowing wall.

In addition to visual signs like cracks and bowing, functional issues like sticking doors, chronic creaking noises, musty smells, and visible sagging point to structural degradation. Seek an engineer’s assessment if you suspect foundational or integral framing defects.

Developer Reputation and History

When buying a new construction, it is important to research the developer’s reputation and history to ensure that you are making a wise investment.

Here are some key factors to consider:

Past Projects

Research the developer’s past projects to get an idea of the quality of their work. Look for projects that are similar in size and scope to the one you are considering.

Check if the developer has experience in building the type of property you are interested in, such as single-family homes, townhouses, or condos.

Customer Reviews

Reading customer reviews can give you an idea of the developer’s reputation. Check online review sites, such as Yelp or Google Reviews, and look for patterns in the reviews.

Are there consistent complaints about the developer’s workmanship or customer service? Are there any red flags that suggest the developer is not reputable?

Legal Issues

Play Video about A book highlighting of the red flags when buying a new construction contract.

Check if there are any legal issues associated with the developer or their past projects. Look for lawsuits or complaints filed against the developer, and investigate the outcome of these cases. Check if the developer has ever filed for bankruptcy, which could be a sign of financial instability.

By researching the developer’s reputation and history, you can make an informed decision about whether to move forward with a new construction purchase. Remember that a reputable developer with a solid track record is more likely to deliver a quality product that will hold its value over time.

Quality of Construction Red flags in home construction

When it comes to buying a new construction, the quality of construction is one of the most important factors to consider. Here are some key subtopics to keep in mind.

Conflicting plans as a red flag

Inconsistency with marketing plans is a major red flag. 

For example, a model home tour may showcase a large quartz kitchen island and professional-grade appliance package with the buyer’s selected premium finishes.

Investor changes or unexpected material shortages arise during actual home construction. As a result, the builder substitutes a smaller island using builder-grade laminate and supplies appliances from their standard discount lines without pre-approval

Seeing discrepancies between actual home construction and official marketing renderings plan or model home walkthroughs can diminish buyer trust if not proactively addressed by builders.

Significant inconsistencies across presented build plans versus final built outcomes can undermine confidence in oversight. It casts doubts on the accuracy of what will truly get built and suggests potential gaps in necessary cross-checks to comply with represented feature claims.

Upfront transparency around any needed visual plan deviations stems concerns. Builders clearly noting necessary specification downgrades or layout changes well in advance avoids mismatched expectations when signing off at closing walkthroughs. Delivering the intended marketed home as closely as possible, or mutually agreeing on any constructability concessions early on, keeps confidence high around oversight rigor and accuracy.

Having conflicting building plans is a definite red flag that comes up when assessing new construction defects or issues. Here’s why:

  1. Confusion Leads to Mistakes – When different sets of plans exist, there is a higher likelihood that incorrect plans will be interpreted or aspects missed, leading to improper building according to code. Conflicting measurements, materials specs or sequencing can contribute to defects.
  2. Hard to Hold Accountable – If issues or discrepancies arise, having conflicting documentation makes it hard to pin responsibility on design sources, building inspectors or contractors who may pass blame around for misinterpretations rather than addressing direct issues.
  3. Indicates Lack of Review Process – New builds should have thorough, integrated reviews across architectural, structural, mechanical, zoning etc. Conflicting blueprints or change orders demonstrate necessary approvals may have lapsed.
  4. Opens Door for Cutting Corners – Builders hoping to reduce costs/effort may exploit confusion around plans to take shortcuts if they assume issues may be chalked up to mixed documentation rather than intentional violation.

Materials Used

Homebuyers should pay attention to the types of materials used for the foundation, walls, roof, and other key components of the home. For example, a roof made of cheap, thin shingles may not hold up as well as a roof made of thicker, more durable materials.

Different materials used in a new construction, not defined in the contract
Different materials used in a new construction, not defined in the contract

Many material substitutions are hard to identify as a buyer if you don’t know specific product names/grades to look for. Reputable builders are transparent about any substitutions or item-level changes during construction.

Some less scrupulous new construction builders try to cut costs by using cheaper materials than what they advertised to buyers without transparency.

Some things commonly hidden or substituted include:

Flooring

  • Builder-grade carpeting rather than nicer wool or synthetic carpets quoted
  • Bamboo or cheap laminate instead of real wood floors

Framing

  • Lower grade dimensional lumber containing more knots flaws instead of premium framing

Insulation

  • Less expensive batt fiberglass instead of upgraded rigid foam or spray foam insulation

Roofing

  • 30 year asphalt shingles substituted for quoted slate, cedar shake, or metal roof

Windows

  • Vinyl or fiberglass windows that seem like wood on surface but aren’t durable

Plumbing fixtures/faucets

  • Builder-grade fixtures that seem upscale but are actually low-performing

Appliances

  • Builder model appliances rather than higher end product lines as selected

Building Code Compliance

A book with the words red building codes, highlighting potential red flags when buying a new construction.
A book with the words red building codes, highlighting potential red flags when buying a new construction.

Building codes are put in place to ensure that homes are built to a certain standard of safety and quality. Homebuyers should make sure that the builder is following all relevant building codes and regulations.

This can help ensure that the home is safe and well-built. Buyers can ask the builder for documentation showing that the home is up to code, or they can hire an independent inspector to check for compliance.

Inspection Reports

Before buying a new construction home, it’s important to have the home inspected by a professional. Inspection reports can reveal any issues with the home’s construction or systems. 

Buyers should make sure that the builder allows for inspections before closing on the home. If any issues are found during the inspection, the buyer can negotiate with the builder to have them fixed before closing.

Paying attention to the quality of construction is crucial when buying a new construction home. By focusing on the materials used, building code compliance, and inspection reports, buyers can ensure that they are getting a safe, well-built home.

Warranty and Service red flags from a home builder

When buying a new construction, it is important to consider the warranty and service that comes with it. A warranty is a guarantee from the builder that they will fix any defects or issues with the home during a specified period of time.

A red construction book on a wooden table, highlighting red flags when buying a new construction.
A red construction book on a wooden table, highlighting red flags when buying a new construction.

Length of Warranty and Coverage Details

Most new home builders provide a 1-year workmanship warranty covering defects in materials and labor. Major structural components may extend to a 2-10 year builder’s limited warranty period. In comparing coverages:

The main aspect the base 1-year warranty addresses are craftsmanship defects like leaks, breaks, cracks or installation flaws that arise in the first 12 months. More extensive major physical damage coverage lasts 2-10 years for structural elements like framing, roofing, electrical. What primary remains excluded are minor flaws beyond 12 months and incidental homeowner maintenance items throughout.

Transitioning to differences, workmanship focuses on builder construction quality while structural warranties cover system-level collapses and failures. Inspection responsiveness also varies – 1 year warrants expedited fixes while extended structural claims undergo extensive root cause assessments.

Most warranties exclude normal wear-and-tear, environmental damage like floods or earthquakes, and third-party work like owner-upgraded components. Using unauthorized products during builder requirement walkthroughs furthermore voids coverage.

Claim Process

If an issue arises with the home that is covered by the warranty, it is important to understand the claim process. The builder should provide information on how to file a claim and what steps need to be taken. It is important to follow the claim process carefully to ensure that the issue is resolved in a timely manner.

Here is a step-by-step guide on how to make a warranty claim for a new home:

  1. Review warranty coverage – Check warranty terms to confirm the reported issue should be covered under the builder’s workmanship or structural warranty based on timeframe and qualifying damage.
  2. Document the problem – Take photos/video and write down when the issue first appeared and exactly what is occurring. Note relevant warranty details like coverage timeframes or product information.
  3. Submit written request – Send a letter or email to the builder’s designated warranty representative detailing the damage and referencing your warranty rights. Provide supporting documentation.
  4. Allow access for inspection – Per warranty terms, allow the builder reasonable access to inspect reported issues if required. This allows determining applicable repairs.
  5. Obtain timeframe/resolution plan – Builder should convey in writing expected repair timeline and overview of resolution plan if deemed a qualified warranty claim.
  6. Follow-up if delayed – For extensive damage, periodic status check-ins are reasonable to ensure repairs occur per established timeline and restore home to intended condition.
  7. Escalate if needed – If the builder denies claim eligibility or unreasonable delays continue, provide written notice you will pursue third-party state warranty mediation to reach a resolution.

Thorough documentation and consistent communication with reasonable expectations often helps resolve new home warranty claims effectively. But third-party mediation can give recourse if issues emerge in the process.

The warranty and service that comes with a new construction can provide peace of mind to the buyer. It is important to carefully review for any disclaimers to understand what is contractually promised by the builder and what is not. Often builders market more than it’s contractually promissed relying on disclaimers like “artist impression”.

Does new construction have real estate disclaimer?

Yes, new construction homes typically do come with certain disclaimers that home buyers should be aware of. Some common new construction disclaimers include:

  1. Model Home Disclaimer – States that the model home, decorations, landscaping, etc are not part of the actual home sale. This is considered “marketing material” only.
  2. Material Variations Disclaimer – Discloses minor variations in materials, colors and finishes from what was selected due to product availability changes over the construction timeline.
  3. Measurements Disclaimer – Notes that actual home dimensions may vary slightly from architectural plans or models based on as-built conditions.
  4. Landscaping Disclaimer – Specifies landscaping is not guaranteed to match models and matures over years. Issues like plants dying are generally not warranted.
  5. Visual Representation Disclaimer – Clarifies that renderings, illustrations or drawings are artistic concepts which may deviate from actual built home outcome.

There are typically broad disclaimers limiting builder liability for issues caused by acts of nature, weather and climate conditions or normal wear-and-tear post-construction.

Reading all disclaimers carefully enables buyers to understand what is – and is not – contractually promised or realistically expected when purchasing a newly built home. Setting proper expectations based on disclosures prevents frustration.

The “artist’s impression” or “artist’s concept” disclaimer is something commonly seen in new construction housing marketing materials when renderings, illustrations, or drawings of the to-be-built homes are presented. Essentially this disclaimer states:

The visual representations of home and community designs such as brochures, advertisements, and websites, including architectural drawings, renderings, illustrations, models, and landscaping are artists’ perceptions and are provided strictly for illustrative purposes to reflect preliminary visions of the builder.

They should not be relied upon and will not represent products as-built or ensure actual outcomes. Features may vary from artistic renderings including but not limited to exterior and interior design, placement, configuration, materials, appliances, cabinetry, floor plans, options, promotions, standard features, assessments/dues, etc. All square footages, measurements and dimensions are approximations only; actual dimensions will differ after construction and may change without notice. Speak to an authorized new home specialist for up-to-date details.

In plain terms, the artist’s impression/concept serves to disclaim the accuracy of preliminary visuals used in marketing so buyers do not develop misguided expectations about specifications that can change over the course of engineering, governmental approvals, construction, etc.

Absolving liability for variations between sales materials and final built condition limits disputes when homes manifest slightly differently.

Buyers should rely on written specifications only for binding representations on what will ultimately get physically built versus what is visually depicted initially.

Contract and pricing home builder red flags

When buying a new construction, it is crucial to pay attention to the contract and pricing details. Here are some important factors to consider:

Red Flags in payment schedule for new home construction

It is important to have a clear understanding of the payment schedule before signing the contract. Some builders may require a large upfront deposit, while others may require payments at various stages of the construction process. 

The payment schedule should be clearly outlined in the contract, and any changes to the schedule should be agreed upon in writing.

Here is a typical payment schedule for new home buyers as construction progresses, any diviation from the typical contractual outlined schedule is a red flag:

Earnest money: 1-2% deposit with contract/contingency signing ($2,000-$5,000 typically)

Start Poured Foundation: 10-15% of total price 45-60 days after contract – covers initial excavation work

Framing Complete: 10-20% additional payment covers lumber and basic structure

Exterior Finished: Next 10-25% payment as roofing, siding work is done

Interior Work: 33-50% of remaining balance paid as mechanicals, drywall, paint are finished

Pre-occupancy walk through: Minor holdback (5-10%) retained for any touch ups needed

Closing and final payment: 100% paid minus any agreed upon final punchlist items or credits

Increments range around every 30-60 days from groundbreaking to certificate of occupancy. Builder line of credit finances the in-between construction. Final payment when an occupancy permit is granted. Payment size & timing can be negotiated.

How to ask the builder to re-draw payment schedule for new home construction?

Here is a polite and constructive way to ask your builder to reconsider the payment schedule for your new home construction project:

“Good morning [builder’s name], I wanted to come back to our previous discussion of the payment schedule details for my new home. After reviewing it further with my financial advisor, I feel that 10% deposit at contract signing followed by 40% at pre-drywall stage, 40% at final walkthrough, and 10% at closing would align better with the timeline of my personal finances.

I know providing an upfront deposit and prompt incremental payments helps keep cashflow regular on your end for smooth operations and subcontractor payments. However, I am limited in how much I can contribute upfront due to other investments and would feel more comfortable paying in larger portions as the home nears completion.

Would you be amenable to revisiting the prior payment schedule we discussed to see if we can find a solution like the one I outlined that works well for both parties? What is the maximum upfront deposit you would be comfortable accepting to still adequately fund early site work? I’m open to constructive suggestions here. Please let me know if we can find a middle ground.”

This frames the request as seeking a mutually workable solution rather than demanding contract changes. Adjust language as needed to reflect your particular situation. Highlighting the willingness to brainstorm options makes conversations smoother.

Hidden Costs as a red flag

Buyers should be aware of any potential hidden costs associated with the new construction. These may include fees for building permits, utility connections, landscaping, and other expenses that are not included in the initial price.

Buying a newly constructed home often comes with some hidden costs that buyers should be aware of. Some potential hidden costs include:

Lot premiums – For certain more desirable lots in a development (corner, cul-de-sac, views) builders may tack on premiums of $5,000-$100,000+ over the base price.

Landscaping – The yard may require grading, installation of grass/plants, trees, fencing or retaining walls that can add $5,000 to $15,000+ to your final costs.

Driveway – Builders often leave driveway as simple base. Upgrades like pavers, extensions can cost over $10,000 more.

Additional utility hookup fees – Electric/gas meter, water meter, sewer/septic may carry extra one-time charges from the utility companies.

HOA and community fees – Especially new condo developments often have association fees that kick in after sale. $100-300+ per month.

Appliances – Even if pre-wired, the home may require appliances purchased separately, which could be $5,000 or more.

Flooring upgrades – Base flooring is often cheap carpet. Hardwoods could be $8-15/sq.ft more.

Window coverings/treatments – Blinds, curtains and hardware needed in each room. Easily $5,000+

Furniture/storage – With empty new rooms, furniture and storage needs add up quickly.

Permit and assessment fees – Local governments may levy taxes/fees that are passed on at closing.

In the end, a new home purchase price is often just the starting point, with thousands in additions needed to actually move in. Knowing these ahead of time prevents budget surprises.

A lot premium refers to an additional charge added to the base price of a new construction home due to the desirability, location or attributes of the individual lot the builder will construct the home on. Some examples of situations where lot premiums occur include:

– Corner Lots – Being on a corner location often commands a premium price for the improved visibility and side-yard access. Typically $5,000-$15,000 extra.

– Cul-de-Sac Lots – Low traffic and larger space at the end of a cul-de-sac lot allows for bigger landscaping features. Premiums run $5,000 to $25,000+

– Golf Course Lots – Backing right up to the course brings more tranquility and better views. $25,000+ premium quite common.

– Waterfront Lots – Lakeside or oceanfront locations incur premiums from $50,000 into the millions based on frontage.

– Larger Lots – Extra square footage over standard lots in a development usually calls for premiums around $10-25 per square foot.

– Hillside Lots – Views afforded by elevation may warrant $25,000 to $100,000+ premiums depending on the market.

– Irregular Lots – Odd shapes may allow for larger homes or more backyard space. Also upcharge $10,000+ typically.

So in short, lot premium refers to extra price bumps due to advantages of the lot over a standard plot of land in that same community. They directly increase the purchase price.

Exit Clauses

Exit clauses are provisions in the contract that allow the buyer to cancel the agreement under certain circumstances. 

These may include delays in construction, failure to obtain financing, or other issues. Buyers should carefully review the exit clauses in the contract and ensure that they are comfortable with the terms before signing.

Common New Construction Exit Clauses

Financing contingencies allow buyers to cancel the purchase contract due to loan denial or appraisals lower than the contract price. Transitioning to the next category, inspection contingencies enable exiting if defects are discovered or specialty inspections have concerning findings.

Home Inspection Clauses

To exit the purchase agreement based on inspection results, general inspection contingencies broadly cover major deficiencies while specialty inspection contingencies allow cancellation due to specific concerning issues like roof condition, septic problems, or mold.

Title Contingencies

Title clouds or defects additionally give ground to terminate the contract per contingency terms. Boundary and survey contingencies furthermore permit the buyer to walk away if encroachments come to light once a formal survey is conducted.

Conditional Approval Clause

Conditional  clauses empower the purchaser to cancel the deal if contingencies like HOA approval or zoning variances do not come through as stipulated in the contract.

Earnest Money Deposit Refunds

Outlined conditions for full or partial earnest money deposit refunds serve to protect buyer deposits if they choose to exercise established exit contingencies.

Essentially “clouds on title” refer to limitations, uncertainties or problems around legal ownership rights. They must be resolved to ensure the buyer receives full title rights without liabilities attached. Even minor title issues can delay closings. That’s why title contingency clauses allowing buyers to exit upon discovery of clouds are common.

Some examples of potential title clouds include:

  • Liens – Outstanding mortgages, tax liens, mechanics liens or judgments against previous owners can “cloud” the title until cleared.
  • Easements/Encroachments – Title issues like overlap with a neighbor, utility easement, or unclear property boundaries.
  • Missing/defective documents – Problems with deeds, surveys, recordings, vestings or conveyances in the chain of title.
  • Probates/claims – Unresolved estate or inheritance issues that affect property rights transfer.
  • Fraudulent recordings – In rare cases, falsified or illegal document recordings.

Buyers should carefully review the contract and pricing details before purchasing a new construction. 

By understanding the payment schedule, potential hidden costs, and exit clauses, buyers can ensure that they are making an informed decision and avoid any surprises down the road.

Neighborhood and Location RED FLAGS

An open book with red lines on it, highlighting plot boundaries on a new construction.
An open book with red lines on it, highlighting plot boundaries on a new construction.

When buying a new construction, it’s important to pay attention to the neighborhood and location. Here are some red flags to watch out for:

Future Development Plans

Buyers should research the area’s future development plans to ensure they align with their lifestyle and preferences. If there are plans for a highway or major construction project nearby, it could lead to increased noise and traffic, which may not be ideal for some buyers. 

Additionally, if there are plans for a new commercial development, it could lead to increased foot traffic and noise in the area.

Local Amenities

When considering a new construction, buyers should also take into account the availability of local amenities. If there are no nearby grocery stores, restaurants, or entertainment options, it could be inconvenient for buyers.

It’s important to research the area to ensure there are enough amenities to meet the buyer’s needs.

Traffic and Accessibility

Buyers should also consider the traffic and accessibility of the area. If the neighborhood is difficult to access or there is heavy traffic during peak hours, it could be a red flag. Additionally, if there are no sidewalks or bike lanes, it could be dangerous for pedestrians and cyclists.

Buyers should carefully consider the neighborhood and location of a new construction before making a purchase.

By paying attention to future development plans, local amenities, and traffic and accessibility, buyers can make an informed decision that aligns with their lifestyle and preferences.

Resale Value and Market Trends

When buying a new construction, it’s important to consider the resale value of the property. According to HomeLight, some of the factors that affect the resale value of a property include the home’s location, size, age, and condition. It’s important to keep these factors in mind when making a purchase to ensure that the property will hold its value over time.

Another important factor to consider is the current market trends. Understanding the current market trends can help buyers make informed decisions about their purchase.

For example, if the market is currently experiencing a downturn, it may be a good time to buy as prices may be lower than usual. On the other hand, if the market is booming, buyers may need to act quickly to secure a property before prices rise even further.

To stay up to date on market trends, it’s important to do research and work with a knowledgeable real estate agent who can provide valuable insights.

Additionally, buyers should keep an eye on factors such as interest rates and economic indicators, as these can also have an impact on the real estate market.

Buyers should take a comprehensive approach when considering the resale value and market trends of a new construction property. By doing so, they can make informed decisions and ensure that their investment holds its value over time.

Homeowners Association

When buying a new construction, it is important to consider the homeowners association (HOA) that governs the community.

An HOA is responsible for managing the community or building and can have a significant impact on the homeowner’s experience. Here are some red flags to watch out for when evaluating an HOA.

How Do You Know Your Home Needs a Makeover project? You can find out in Home Makeover Guide.

HOA Fees

One of the most important things to consider when evaluating an HOA is the fees that homeowners are required to pay. HOA fees can vary widely depending on the community and the amenities offered.

It is important to carefully review the fee structure and understand what is included in the fees. Homebuyers should also consider whether the fees are reasonable and whether they are likely to increase in the future.

HOA Rules

Another important consideration when evaluating an HOA is the rules and regulations that govern the community.

Review the HOA’s governing documents, including the covenants, conditions, and restrictions (CC&Rs), to understand what is expected of them as homeowners. It is important to consider whether the rules are reasonable and whether they are likely to be enforced fairly.

Meeting Minutes and Financial Health

Consider the financial health of the HOA as a red flag. Its ability to manage the community effectively or not. Homebuyers should review the HOA’s meeting minutes and financial statements to understand how the HOA is managed and whether there are any red flags.

It is important to consider whether the HOA has adequate reserves and whether it is likely to be able to maintain the community effectively over the long term.

When evaluating an HOA, homebuyers should carefully review the fee structure, rules and regulations, and financial health of the HOA. By doing so, homebuyers can avoid potential red flags and ensure that they are making a sound investment in their new home.

Frequently Asked Questions

Red flags in the basement when buying a new construction home direct from home builder

An open book with a door in it, signaling potential red flags as plan changes when buying a new construction.
An open book with a door in it, signaling potential red flags as plan changes when buying a new construction.

Carefully inspecting the foundation walls and floor, layout, electrical, plumbing and HVAC systems can help spot any red flags. Enlisting a professional home inspector can provide an experienced eye as well.

Here are some potential red flags to look out for when inspecting the basement of a new construction home you may buy:

  • Signs of water intrusion or dampness – Look for any signs of water leaks, efflorescence (white powdery minerals) on the walls or floor, musty smells etc. This could indicate drainage issues outside that are allowing water into the basement.
  • Cracks in walls or floor – Some small cracks may be normal as concrete cures, but large, uneven cracks may indicate a foundation problem.
  • Sloping floors – If the basement floor slopes significantly towards a corner or downward toward one wall, it could suggest settling issues.
  • Insufficient access or room – If the basement layout makes accessing certain areas difficult or leaves very little usable space, it may limit how useful the basement can be for storage, an extra room etc.
  • Exposed insulation or ductwork – Finished basements should have insulation and ducts covered properly to prevent moisture damage or mold growth on the materials.
  • Poor ventilation – Without adequate exhaust fans or openings, moisture can accumulate and lead to mold growth. There should be ventilation accounted for.
  • Bad smells – In addition to musty smells, rotten egg odors could suggest problems with the sewer line.
  • Signs of pests – Look for any openings in walls or gaps around utilities allowing pests to enter. Also check for signs of termites or carpenter ants.

What are red flags according to building codes?

There are a number of visible red flags that would violate common building codes:

Electrical:

  • Exposed wires without conduit
  • Outlets without faceplates exposing electrical connections
  • Light switches loose or pulling away from wall

Plumbing:

  • Leaks from pipes or fittings
  • Improper venting such as uncapped drain lines
  • Absence of shut-off valves under sinks and toilets

Framing:

  • Major visible wall bowing or sagging
  • Large gaps between structural members
  • Cracks wider than 1/4 inch in foundation

Stairs:

  • Improper dimensions like tall risers or narrow steps
  • Railings spaced too far apart vertically or horizontally
  • Lack of gripable continuous handrails properly mounted

Fire Separation:

  • Penetrations in firewalls lacking proper sealing
  • Doors with holes or gaps opening into attached garage
  • No fire blocking visible in vertical and horizontal spaces

Basically, anything indicating imminent safety hazards, major structural flaws or clear violations of jurisdiction codes would raise immediate red flags to inspectors. Let me know if any other building code breaches come to mind!

How can I identify signs of poor workmanship when inspecting a new build?

Poor workmanship can manifest in many ways, such as crooked walls, uneven floors, or poorly installed fixtures. Look for any signs of sloppy or rushed work, such as gaps between tiles, paint drips, or loose hardware. 

Pay attention to the details, such as the quality of the finish work, the fit and finish of doors and windows, and the overall cleanliness of the construction site.

What are common red flags to watch for in newly constructed homes?

Any buyer walking through a new home should not see such glaring installation or finish flaws right off the bat. Water damage, mold, messy caulking, nail pops and sloppily painted walls signal builders cut corners.

New construction should look truly pristine upon viewing – not require excuses about “easy fixes” for visually apparent defects!

Here are some very noticeable issues a typical buyer might see:

  • Crooked walls or uneven floors clear upon entering, indicating improper framing or foundation work
  • Floor materials visually cracked, badly chipped or outright broken
  • Poorly installed cabinets/fixtures clearly misaligned or falling apart already
  • Leaking water near sinks/toilets/showers with actual drips or ponding visible
  • Bad smells throughout indicating bigger issues like improper ventilation
  • Holes or large gaps in ceilings, walls or trimwork – beyond normal settling
  • Exterior brickwork or siding with massive cracks or pieces missing
  • Doors/windows that are visually crooked and impossible to open/close
  • Water drainage issues with gutters clearly overflowing when raining
  • Large water stains on ceilings or walls indicating leaking issues
  • Visible mold or mildew on drywall around windows and vents
  • Messy caulking or missing grout around showers and tubs
  • Gaps between baseboards and floors, or missing trim pieces
  • Nail pops clearly protruding from drywall
  • Drywall cracks wider than a hairline
  • Paint drips, splatters or missed spots on walls and trim
  • Dirty construction debris, nails or screws left behind radiators/fixtures
  • Uneven carpet seams or vinyl flooring not flat against subfloor
  • Electrical outlets or light switches not sitting flush or aligned in wall boxes

These defects can lead to costly repairs and maintenance down the line, so it’s important to identify them early on.

What to do if builder refuses to amend the shoddy work?

You have several options if a builder refuses to properly fix shoddy or defective work in a new construction home:

  1. File a Complaint with the State Licensing Board: Most states have licensing boards that oversee builder licenses and set standards of practice. You can file a formal complaint detailing issues the builder has been unwilling to resolve. This creates a record of grievances that can ultimately threaten the builder’s license if unresolved.
  2. Send Formal Demand Letter from Attorney: Hiring a real estate attorney to send a professional demand letter tends to spur reputable builders into action to make things right. The letter should identify defects, provide evidence like photos, demand repairs by a set timeline, and state further legal action will follow if ignored.
  3. Hire 3rd Party Inspector as Expert Witness: Paying for a neutral 3rd party professional inspection from a home inspector, structural engineer etc provides unbiased documentation of defects as an expert witness. This evidence strengthens your case in negotiations or actual court if you end up in disputes or litigation.
  4. Initiate Alternative Dispute Resolution: Most state consumer protection laws require builders offer methods like arbitration, mediation or review boards to avoid court. Compel the process through official notice channels outlined in your purchase contract.
  5. File Lawsuit for Breach of Contract/Warranty: As a “last resort” option, filing a lawsuit may be necessary if the builder refuses to fix major defects covered by warranty. Make sure to thoroughly document all defects and correspondence with the builder first.

Having a paper trail is vital, so continue notifying the builder of defects in writing even if initially ignored. Ultimately if the builder refuses to remedy shoddy work, consulting an attorney helps outline the options above.

How to tell if there's insufficient insulation or a new home?

Detecting insufficient insulation in a new home can be challenging if the issues aren’t visible. However, here are some signs a typical homebuyer may notice:

  • Feeling drafts from the walls or around windows on windy days could indicate gaps in the insulation coverage. Drafts from outlets and light switches can also happen frequently.
  • Certain sections of the wall feeling cold during winter and hot during summer compared to other areas can point to spots overlooked or missing insulation.
  • Significant differences in temperature between rooms also signals potential gaps or uneven insulation coverage in attic.
  • High utility bills for a home’s size and features may reveal inadequate insulation not preventing energy loss. Comparing to neighbor’s similar style house could provide a clue.
  • Condensation or frost forming on the inside of exterior windows during colder weather hints the walls may not be properly insulated to mitigate thermal bridging.
  • Noisy ductwork and operational sounds from plumbing traveling easily through walls could mean insufficient noise barrier insulation between rooms or from mechanical systems.

Going up in the attic to look for framing cavities lacking insulation as wells as checking crawlspaces would provide more confirmation, but the signs above can give homeowners a first indication if the insulation coverage was significantly skimped on or neglected in areas.

What critical questions should I ask a builder before purchasing a new construction property?

Before purchasing a new construction property, it’s important to ask the builder about their experience, their track record, and their warranty policies.

Additionally, ask about the materials they use, the quality of their workmanship, and their process for addressing any issues that arise during construction.

How does a 'sold as-is' clause affect my purchase of a new construction home?

A ‘sold as-is’ clause means that the buyer takes the property in its current condition, with no guarantees or warranties from the seller.

This can be risky for buyers, as it means they may be responsible for any repairs or maintenance that are needed after the sale. It’s important to carefully review the terms of the sale before agreeing to a ‘sold as-is’ clause.

Should you ask the homebuilder to deep clean before the contract completion?

Yes, it’s highly recommended to request the builder perform a deep clean of the entire home before officially completing the contract. Here are some key reasons why:

  1. Remove Construction Debris & Dust – New homes commonly have drywall dust, splattered paint, wood shavings, leftover hardware, dirt/debris from various trades – much harder to clean yourself after move-in.
  2. Clean Surfaces Before Damage – Drywall dust and debris can quickly damage newly installed finishes and surfaces as you move in. It’s the builder’s job to deliver the pristine condition promised.
  3. Easier Access to All Areas – Builders have scaffolding and tools to access awkward areas like wall cavities, venting, high ceilings and light fixtures to fully deep clean.
  4. Establish Repairs Needed – A proper deep construction clean may reveal new defects like nail pops or appliance damage during install for the builder to repair before closing documents are signed.
  5. Peace of Mind Before Move-In – There will be enough last-minute moving stress without having to immediately deal with heavy full-home cleaning or apparent damage right off the bat.

Don’t feel shy requesting this service – a professional builder should have standard deep cleaning built into their process before handing over the keys. Just be sure it’s in writing and completed in advance of contract finalization.

What not to tell the home builder?

Here are some things you generally should not tell the home builder:

  1. Your Maximum Budget – This allows them to try pricing to the top of your range, rather than determining fair pricing for the market and features.
  2. Must-Have Features or Location – Keeping these private gives you more leverage negotiating. Don’t enable a builder to limit options or price according to special preferences they uncover.
  3. Specific Timeframes or Deadlines – Making rigid closing deadlines or time constraints for life events like a new baby known allows less flexibility negotiating if permits and construction fall behind.
  4. Desperation or Urgency – Seeming overly eager or desperate can weaken your negotiation position. These are major purchases requiring shrewd negotiation.
  5. Future Renovation or Addition Plans – Uncovering intentions to remodel aspects of the home down the line signals areas they may feel they can cut corners now. Hold future plans close.

The less background builders uncover about personal motivations, limitations and emotional ties, the better leverage you have establishing fair market value.

Be friendly but tight-lipped around these key financial and life details. The more mystery around your true bottom line, the greater advantage.

Use escalation clauses in the contract if the building is not to standard

Including escalation clauses in a new construction contract is wise to protect your rights if the building quality does not meet contractual standards.

Here are some tips:

  • Require deadlines for inspections and correction of any discovered defects after each major phase – foundations poured, framing and roofing, plumbing and electrical, etc.
  • Insert clauses that if major defects are not properly remedied by predetermined deadlines, extra inspections can be ordered at the builder’s expense.
  • Add language that permits having an independent inspector review any disputes about defect severity or repair quality proposed by the builder.
  • Have clauses that if severe defects or code violations surface, you can enact additional retains from payment, halt further construction starts until remedied, or exercise right to terminate if breaches remain uncertified by extra inspections.
  • Make sure timelines apply such that if the certificate of occupancy date is seriously delayed by rework, you can exit and expect refunds.
  • Specify conditions where you collect liquidated damages due to delays or unwarranted occupancy prevention by uninsured events or negligence.

Well-crafted escalation clauses put you in greater control to demand contract performance for quality standards, rather than allowing corner-cutting or endless dispute of obligation. They are well worth negotiating into original purchase agreements.

What not to look for when buying a new build home?

When buying a new build home, here are some things you generally should NOT overly focus on or make deal-breaking issues:

  • Minor cosmetic flaws – Things like small drywall cracks, nail pops, scuffed floors, or minor paint defects that are common and easy for the builder to fix.
  • Landscaping – Bare dirt or lack of plants/trees that have not had time to be added or mature yet. This can always be added later.
  • Decor and furnishings staged in model homes – Do not make decisions based on furniture, art and decor which will not convey. Judge the structure.
  • Small design changes – Builders may tweak initial plans with equivalent substitutions for appliances, materials etc. Functionality is what matters most.
  • Diminished views years in the future – Surrounding vacant land will eventually get developed so don’t overvalue views that will inevitably change.
  • Perfect alignments – Reasonable tolerance for things like cabinetry levels, tile grids, or ceiling lights varying slightly is normal and has no functional impact.

The structural integrity, mechanics, utilities functioning properly as intended, disclosure of materials, and conformance to contracted specs should remain your focus when evaluating new builds.

Minor variances, unfinished landscaping and eventual neighborhood changes over time matter less.

How do you tell if a house is poorly built?

Signs of a poorly built house an amateur can spot include new construction walls that are visibly not straight, electrical hazards like loose wires or uncovered junction boxes, and insufficient insulation which can lead to mold and mildew.

Additional signs are large wall cracks wider than a quarter inch, doors and windows that stick and do not open or close properly, significantly unlevel floors, visible roof leaks, and low-quality construction materials like cheap siding or uneven brickwork.

Further red flags are overgrown vegetation against the foundation signaling moisture issues, poor drainage in the yard sending water against the structure, and uneven settling evidenced under fences, walkways or porches. 

Attempts at low grade DIY fixes may try to cosmetically hide deeper structural defects. If you notice multiple symptoms like crooked walls, chipped paint, decay, or water stains on top of functional issues with sticking doors and windows, hiring a structural inspector confirms if foundation or construction flaws are undermining the integrity.

How to do snag list in a new construction home?

When doing a snag list inspection for a newly built home, it’s advisable for buyers to hire a professional home inspector versus attempting to identify every construction defect alone. Some key aspects to note:

Red Flags Requiring Professional Assessment

Foundational issues like cracks wider than 1⁄4 inch, sloping floors and significantly unlevel surfaces could denote structural movement so warrant engineering assessment rather than basic finishing observations. Also post-tension foundation concerns, drainage deficiencies and facade elements showing water intrusion should involve contractor evaluation to gauge severity.

Visibility Limited Areas

Professionals with expertise plus tools to examine crawl spaces, attics, and roof assemblies catch more subtle issues compared to surface-level visible areas alone a buyer inspects. Thermal imaging, moisture meters and electrical testing reveal underlying problems.

Establishing Repair Timeframes

Whereas owners simply list finish flaws like paint drips or closet glitches, contractors better estimate realistic repair timetables for more complex mechanical, electrical and plumbing defects found. They determine priority order and coordinate crews.

While doing personal walkthroughs, buyers noting a few scratches or missing cabinet knobs remains reasonable for minor finishing touches. Significant visible defects, inaccessible areas and establishing timeframes warrant hiring an intermediary professional ensuring major items get professionally vetted and remedied.