How homebuyers can spot cut corners in the new construction boom

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New home construction is booming as builders try to meet demand and address the long-standing housing shortage. Persistently low inventory, rock-bottom mortgage rates and loosening pandemic restrictions have made this spring an especially busy buying season.

With new houses popping up in many markets, buyers need to make sure they identify any potential construction issues before they move in. So now is not the time to skip your home inspection. New homes can have hidden problems just like older ones.

What are some of the most common defects?

For homebuyers, it’s important to go into a property visit with eyes wide open. Little things that look out of place or appear improperly finished can hint at bigger problems below the surface.

“Look for things like little sheetrock cracks over doorways or around windows. If the house is settling a little bit or it has foundation problems, that could be an issue,” said Dan Bawden, president and CEO of LegalEagleContractors.com. “Be sure that everything is working properly.”

He said some relatively easy things to check include crown molding that appears to be separating from the wall, cracks in garage or driveway concrete of more than a quarter inch, or any patches on the wall that aren’t blended properly into the paint scheme.

“Sometimes in construction there will be a problem with the plumbing behind the new sheetrock,” Bawden said, so you want to make sure the builder has addressed whatever might be going on behind the wall.

Other things to look out for include dripping faucets, non-functioning lights and anywhere that looks like water could get in from outside.

“It’s a good idea to check the fit and finish of a new home by opening drawers and closing them to make sure they operate smoothly,” he said.

What other shortcuts should homebuyers look out for?

Because of strong demand for building materials, some contractors may have to substitute different finishes, so it’s best to make sure that things like stone counters or hardwood floors aren’t changed to lower-quality options at the last minute.

“Synthetic marble countertops are much cheaper but they scratch really easily and they’re not that easy to live with,” Bawden said.

Nick Gromicko, founder of InterNACHI, the International Association of Certified Home Inspectors, agreed.

“Material has gone sky-high. In the past labor was worth more than material,” he said. As a result, he added, if a contractor makes a mistake when cutting a piece of wood, “they’re less apt to correct the mistake by switching out the lumber or the product. They’re more likely to patch.”

Patches are fine if done properly, but can be a weak point in a newly-built home if they were rushed.

“Because of the housing shortage right now, there’s not much inventory, builders are doing everything they can to speed things up,” Gromicko said. “It’s hectic,” and that can lead to more mistakes, which can be expensive in the long run for a new homeowner.

What can you do to avoid these problems?

Above all, Gromicko and Bawden agreed, the best thing any homebuyer can do is to get their home inspected before closing.

“Your inspector is going to find something wrong. Brand new homes are not like brand new cars,” Gromicko said “Every home is really built individually.”

Bawden added that a professional home inspector will take time to test every fixture and will know how to identify problems that may not be obvious when you first walk in the door.

“Psychologically, when you walk into a new house, your brain is bombarded with images and surfaces, and you’re trying to process: do I like the room layout? Do I like the colors? You’re not going to notice a little sheetrock crack,” he said. “Get a good home inspector who will do a full inspection. He’ll test all the outlets, for example.”

Beyond hiring an inspector to check on everything before you move in, Gromicko said, it’s usually a good idea for people buying new-build homes to occasionally make unannounced visits to the construction site.

“Observe your house being built as it’s being built,” he said. He acknowledged that without your builder’s permission, making a site visit is technically trespassing, but because you assume all the risk if you go without an escort, it can be easier from a liability standpoint for the contractor, and more productive for everyone involved.

“It’s ok to ‘accidentally’ alert the builder that you’re doing this,” he said. “The builder wants to fix it.”

Any problems you or your inspector find should be addressed well before closing.

“What you can do in the purchase paperwork is have the builder provide assurances and a specific warranty,” Bawden said.

How do you find an inspector?

Your Realtor may be able to help connect you with a reputable home inspector, and you can also search for one on the InterNACHI website. It’s important to make sure your inspector is independent from your builder and has experience with new construction in your area.

Bawden also recommends getting a termite inspection, even for newly-built homes, because they may sit uninhabited in some markets for a few months before a sale closes.

Bottom line

The white-hot housing market is leading some builders to take shortcuts on newly-constructed homes. If you’re considering purchasing such a property, it’s important to identify any potential issues before you get the keys, or you could be on the hook for expensive repairs down the road.

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Written by
Zach Wichter
Mortgage reporter
Zach Wichter is a mortgage reporter at Bankrate. He previously worked on the Business desk at The New York Times where he won a Loeb Award for breaking news, and covered aviation for The Points Guy.