Houston, unlike so many cities across the US, remains one of a few places where it’s still cheaper to tear down a property and build anew. In fact, for many areas inside the Loop, “new” is preferred—and affordable.

In fact, inside the Loop and west of downtown, in areas 16 and 17, there are over 154 newly constructed homes for sale right now. HAR.com shows 67 newly constructed homes over 3,000 square feet sold in 2009. Since January 1, 2010, 32 more sold. Even more impressive is that these numbers do not reflect homeowners who tear down their existing homes to rebuild in the same location. Check out West University, Bellaire, Afton Oaks, Medical Center/Braes Heights and River Oaks for great examples.

Remember, new can range from builders with slightly varying floor plans and who expect you to select from limited color palette options, to a true custom home where you start from scratch and select everything yourself.

New construction, as with anything else, requires buyers to do their research. Understanding how builders work is crucial to making a wise purchase, especially if the buyer is committed to not going over budget. Beware of builders who change their company names frequently or don’t have first-rate reputations.

There are many high-quality, reliable builders in our area, and the best way to learn more about a particular builder is to ask your real estate agent to get a list of referrals for homes the builder constructed in the past.

Call these homeowners and ask questions that focus on quality, service and warranty issues:

  • How did the builder handle change orders?
  • Was the builder organized?
  • Was the builder professional?
  • Was the quality of the work good and completed on time?
  • Did the builder discuss expectations, both yours and his?
  • How did the company handle warranty issues after 30 days? Within a year? After a year, if the foundation or roof, for example, needed attention?
  • Who handled the warranty issues? The builder or a third party?

The servicing, or warranty, of the property is very important, because builders often engage third-party vendors and contractors to complete various tasks. When a buyer takes ownership of a newly constructed home, the builder should provide him or her with a list of contact info for the vendors (or “trades,” for short) that worked on the house. Homeowners can run into problems when a warranty issue crops up because some builders make the homeowner responsible for contacting the third-party vendors, which doesn't always produce the desired result.

The builder warranty should address, at minimum, such issues as:

  • Performance standards
  • Clear explanations of the terms of the builder’s warranty
  • Who has which obligations to the home buyer
  • A fair dispute-resolution system
  • Homebuyer’s rights, under state law
  • Responsibility for certain maintenance items

Another important factor is to find out how the builder handles special requests and change orders. Buyers change their minds hundreds of times! If you have never been through the process of building from scratch, it can be nerve-wracking, time-consuming and hard on your budget. The building process can take anywhere from four months to much longer, depending on the size and complexity of the project. And, as your project nears completion, you’ll still need a professional to inspect the house before you take ownership, just in case.

The secret is to plan ahead and communicate with your builder so you can have a positive experience and get the house you planned—at an affordable price and in your chosen neighborhood.

For example, get a copy of your prospective floor plan and walk through it in your mind (if you can’t do it in a house that’s already built). Visualize everything, from landscaping and furniture placement, to wiring for audio inside and out, to dimmer switches, etc. Write it down or sketch everything out. Discuss it with others. Go over the plans and requests several times. Walk through your existing home and note the things you love about it. You will then be better prepared to know what you want and can thoroughly explain it to your builder.

New home construction is alive and well in Houston—even in the Loop! Will you be next?

By: Melissa Walters

Melissa Walters is the broker at MW Realty Group and co-author of Make No Mistakes™