Thinking about building a new home or cabin in Tennessee? But not sure where to start? And don’t want to end up in a lawsuit, bankrupt or homeless?
You’ll be well on your way to the right path of completion after watching this video on Where to start if you’re thinking about building a New Construction home. And stick around till the end to get my pro-tip on vetting builders and contractors for free!
If we haven’t met before, My name is Lucy Hood and I’m a top producing Realtor that has bought, built, managed, and sold a great number of properties. It’s my mission to bring you wealth and understanding through real estate, right here in the smokies.
New Construction is THE MOST dangerous & volatile thing I deal with as a realtor. From an entire house falling into a sinkhole, divorces, floods, bankruptcy, homelessness, or lawsuits, I’ve seen it all.
Have you ever read a book and when you see the movie it’s never as good as the book? That’s what New construction is like. Reality can never achieve, what your mind can conceive. So from the start let me say - Custom Home Building… DO NOT DO IT! I DO NOT RECOMMEND IT. . . If you’re still here … Let’s dive into THE FIRST THING TO DO - if you are dead set on building your own home.
There is a difference between a new construction SPEC HOME and CUSTOM BUILT.
Spec homes or are typically built by big companies or developers like DR Horton or Smith Built. They buy a big swath of land and chop it up into little parcels, build a house on it, and then sell each house to make a profit.
You, the buyer, choose from a list of their Lots & floorplans, and you close on the house when construction is completed. You may be able to make a few small changes by paying allowances, but you can’t choose your own land or floor plan. It’s kind of “what you see is what you get.” Typically these are in cookie cutter style neighborhoods. You don’t need any type of special financing with this. it’s just like buying a pre-existing home & pretty smooth process overall. It can go conventional, FHA, USDA, THDA, or VA.
Custom Home New Construction is where you choose your own lot or land & can choose your own floorplan. It’s totally customizable. Whether you draw it up yourself or hire an architect, and then hire a builder to build the house for you. This type of New construction requires special financing so that the builder can pay for labor & materials as the phases of the construction progress. This is typically VERY expensive, especially compared to pre-existing or spec homes.
Now lets talk about step 1 - FIND YOUR BUILDER -
This is THE MOST IMPORTANT STEP! Do not skip over this. Your builder selection determines everything in your life for the next 6 to 12 months. Their level of dedication and accuracy will be 100% responsible for the end result. If you google new construction home prices in Tennessee - it’s WAY WAY WRONG. Like so wrong that it was even wrong back in 2018 before everything went nuts with everything.
The 2 BIGGEST questions you need to ask with Custom Home Builder…
- How many square feet are you planning building?
- What is your builder’s estimated cost per square foot? (DON’T GO OFF OF GOOGLE. ITS WRONG)
Just like anything else in life, this is a numbers game. So I recommend calling & talking to as many many builders as possible. You can even pre-interview them with online research. Verify.tn.gov will tell you if they’re licensed or not, how much value they are licensed and insured up to build, and if they’ve ever had a complaint or violation against them. For a list of the WORST builders, go to what I like to call the “Business Just Busted” page. This will tell you everyone that’s been in trouble & you should avoid them. https://www.tn.gov/commerce/dar/rb
Several builders in our area will dissolve and old LLC and create a new one every time they get in trouble to avoid a bad reputation. If you search by their name and city- instead of their LLC name - most likely you can find those old dissolved LLC’s.
I always look for a builder that has been licensed for atleast 3 years, is insured for over my build price, and has no violations or complaints. It even lets you see how much continuing education they’ve done. If it’s a contract that’s been in business for a long time, no troubled past, great communication skills and is insured for triple the price of your build ; they’re probably a great fit!
Now that you have THE MOST IMPORTANT step done, finding your builder - How does the money work?
Stay tuned for our video next week that explains how to finance a new construction home build.
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