13 Pros And Cons Of Utah New Construction Homes

Utah’s new construction homes are in high demand. But, like anything, there are pros and cons to building your next house.

Utah home builders offer buyers customization options that existing homes don't.  As a discount Realtor with years of experience working with builders, I understand the ins and outs of new construction.

This article will break down the good, the bad, and the ugly side of new construction homes.  

After reading this article, you'll understand why you should not work directly with the builder's agent, the potential health effects of chemicals used in new construction, and who the top builders in Utah are. 

Higher Cost

Brand new homes in Utah come with a hefty price tag, both in terms of the overall purchase price and the cost per square foot. Every builder I've worked with incorporates a clause that grants them the right to raise the purchase price if their material expenses increase.

These high price tags don't include upgrades. Adding upgrades at the design center can result in a home the buyer can no longe afford.

Most buyers spend 5%-10% of the home price on upgrades. These upgrades are more expensive than hiring a contractor to make similar upgrades in an existing home. The biggest benefit is the home buyer doesn't need to have the cash to make the upgrades.

The downside of simply baking the cost of the upgrades into the loan means you're paying interest on the upgrades for the life of the loan.

Don’t Forget About The Unfinished Basement And Landscaping.

There are still a few more major expenses home buyers are left to deal with after closing on a new construction home.

The unfinished basement and the landscaping. Home buyers will need to budget at least $25 per square foot to finish the basement. 

Landscaping costs depend greatly on what you do to your yard. Plan on a minimum of 5% of the purchase price for landscaping after you close on your new home.

Negotiating with a home builder

Builders may not be willing to negotiate on the price, as it could negatively impact their future real estate prices. In fact, builders are selective when considering which homes they list on the multiple listing service (MLS). This prevents agents and appraisers from accessing lower home sale pricing data. 

Utah is a non-disclosure state which means the final price real of estate sale is private information.

Preferred Lender Incentives

Certain home builders may have a preferred lender they work with that offer buyers credit towards closing costs to reduce the money needed at closing. With interest rates on the rise, some lenders may offer temporary or permanent "interest rate buy-downs" as well. 

Other common preferred lender incentives include upgraded countertops, an upgrade credit to be used at the design center, or lower upfront deposit amounts.

For example, if you use the builder's preferred lender the deposit might be $5,000 but if you use a lender of your choice the non-refundable deposit is $20,000. The problem is the lender is spoon-fed from the builder and has no incentive to compete on rates or be accessible by phone since you'll lose your deposit if you don't close on the home.

Build Time

When you buy existing or quick-move in homes you'll typically close on that property in 30 to 45 days from acceptance of the contract.

Buyers should plan on new construction to take nine to twelve months the purchase contract is accepted.

Another issue is you won't know what the interest rate will be until you lock your rate 60-90 days prior to closing.

Builders are notorious for missing their deadlines. If they miss their completion deadline, they incur no penalty and you'll be forced to pay for a rate lock extension. 

Strict HOA

Homeowners Associations (HOAs) communities are becoming more common. This makes sense since the amount of new construction increased drastically due to housing demand in the state of Utah.

When a community with an established HOA introduces a new regulation, it must vote on it. Since it is easier to establish HOA regulations in the beginning rather than revise them later, new development typically have strict HOA rules and regulations.

Make sure you review the HOA minutes, budget, and CCRs during your due diligence deadline(cancelation window).

Smaller Lot Size

Smaller lot sizes equal greater profit for the builder. They want to squeeze as many houses into a new community as possible so they can sell more homes. 

You'll need to play well with others if you purchase a house in a newer community. There will be little space between you and your neighbors. 

Off Gassing 

Love that new home smell? Well, it may not love you back. That smell comes from all the volatile organic compounds (VOC) in the materials used to build your new house. 

Formaldehyde is one of 10,000 VOCs used in building materials with health effects ranging from watery eyes and skin irritations to increased risk of cancer. 

VOCs will go away over time. Heavy ventilation is recommended for the first month.

VOCs are found in the following building materials.

• lumber
• paints
• stains
• adhesives and glues 

• Formaldehyde
• butane
• toluene
• acetone
• methyl chloride
  

Builder’s Contract

Utah builders have very one-sided contracts. 

• The buyer's earnest money becomes non-refundable weeks after the contract is accepted even though the house will take 9-12 months to complete.
• The builder has 18 months to complete the home in case of weather or supply issues.  
• The builder has no financial penalties for missing the completion deadline.
• The buyer will pay a penalty of $150-$300 per day for a delayed closing.

Why Do I Need To Tell The Builder's Agent I Have A Buyer's Agent?

Register your agent with the builder's model home agent for every community you visit. If you fail to register your agent while touring the model home, the builder may prevent you from using a buyer's agent to represent your best interests if. 

Always remember that the builder's model home agent may seem friendly, but their ultimate goal is to protect the seller's (the builder's) best interests.

Register Aaron Peters as your real estate agent by providing the following contact information to the builder's agent and receive a commission rebate.

Aaron Peters
801-243-8900 
NetLogix Realty
License # 6390407-AB00
Aaron@DiscountAgent.com

Should You Have An Inspection On New Construction?

Every new home has defects. Waiting until after the mandatory one-year home warranty deadline to identify issues is not recommended. 

Contact an inspector before or immediately after purchasing your new home to identify all potential issues early.

An independent inspector will likely identify problems the county building and builder's inspector may have overlooked.

Who Are The Best Builders In Utah?

Here's a list of my favorite Utah home builders. Quality, integrity, accessibility, value, and experience are the criteria I used when considering which builders deserve to be on this list.

My Favorite Utah Builders

• Edge Homes - Utah based builder
• David Weekly
• Oakwood Homes
• Sage Homes (Luxury)
• Lennar
• Toll Brothers
• D.R. Horton
• McArthur Homes

This post was about the pros and cons of new construction homes in Utah.  Now you have all the information you need to decide if working with a builder is the right path to your next home.