Buying new construction in Arizona

How new construction works

You’ll see three kinds of homes for sale:

• Move-in ready. Already built or close to it. You pick from what’s there and can close fairly soon.
• To be built. You pick the plan, the lot and your finishes, then wait for the build.
• Coming soon. A neighborhood that isn’t selling yet. Prices and plans can still change.

The price you see is usually the base price of a plan. The lot premium and the options you choose come on top. You buy from the builder, on the builder’s contract, usually through their sales team at the model.

Contracts and earnest money

Builders use their own purchase contract, written by their attorneys. It’s less flexible than a resale contract, and the details live in the addenda. Read every page.

• What’s the completion window, and what happens if they miss it?
• When does your earnest money become non-refundable? Same question for design deposits.
• Is there an appraisal contingency? What happens if the appraisal comes in low?
• Can you bring your own inspector?
• Is there an arbitration clause?

Ask where your earnest money goes. If it isn’t going into escrow, Arizona has you initial a separate paragraph in the contract saying so.

Read the public report. In a new subdivision, the builder has to give you the Arizona Department of Real Estate public report before you sign. It covers things like utilities, flood risk and nearby land use.

Sources: ADRE property buyer’s checklist, A.R.S. 32-2183.

Lot premiums and upgrades

Lot premium. Some lots cost more: bigger, a view, no neighbor behind, a cul-de-sac. Ask what the premium is and what you’re really getting for it.

Design center. This is where budgets break. Get the price list before your appointment and walk in with a number.

• Worth doing now, because it’s behind a wall: layout changes, extra windows, electrical, plumbing rough-ins.
• Often cheaper later: light fixtures, blinds, backsplash, paint, landscaping, closet systems.
• Ask which choices can be financed and which need cash.

Builder incentives and your own lender

Builder incentives come in a few forms: a price cut, help with closing costs, a rate buydown, or a design credit. Most are tied to using the builder’s lender, and many to closing by a certain date.

That can be a good trade. It can also cost more than it looks. Get a Loan Estimate from the builder’s lender and from at least one other lender, then compare the payment and the cash to close both ways.

• A permanent buydown lowers the rate for the life of the loan.
• A temporary buydown lowers it for the first year or two, then it goes up.
• A rate lock has an end date. Ask how long it lasts and what an extension costs if the build runs late.

Official help: Loan Estimate explainer, compare Loan Estimates (CFPB). Want to run your own numbers? Try the payment calculator.

CFDs and HOAs in Arizona

CFD stands for Community Facilities District. It’s a special district that pays for things like roads, water and sewer in a new area, and it’s paid back through an extra line on the property tax bill of homes inside it, often for many years. Plenty of new Arizona neighborhoods are in one.

Ask the builder if the home is in a CFD and what it adds per year. Your city’s page explains its districts:

• Buckeye
• Goodyear
• Peoria
• Phoenix

HOA. Most new neighborhoods have one, and big master plans often have a master association on top. Ask for both dues, what they cover, and whether an increase is planned.

Inspections

The city or county inspects a new home for code. That’s not the same as someone checking the work for you. Hire your own home inspector.

The usual timing is about two days before your walkthrough, so you can bring the report with you. Builders have their own rules about outside inspectors, so ask before you sign. The full order of things is in After you sign.

Builder warranty

Most builders give a written warranty in tiers. A common setup is one year for workmanship, two years for systems like plumbing and electrical, and ten years for structure. Yours may differ. Get the actual warranty document, not the summary.

• Send warranty requests in writing and keep copies.
• Around month 11, have the home inspected again and send the builder one list before the first-year coverage ends.

If a real defect isn’t fixed, Arizona has a notice-and-repair process before any lawsuit, and the Registrar of Contractors takes complaints about licensed contractors.

Sources: A.R.S. 12-1363, Arizona Registrar of Contractors. General information, not legal advice.

Timeline

A move-in ready home can close in weeks. A to-be-built home usually takes months, and the date can move with weather, labor and permits. Ask the builder for their estimate in writing, and plan your lease and your rate lock around it.

Here’s the usual order: contract, design selections, the build, your own inspection, the walkthrough, sign-off, signing at title, then keys.

General information, not legal, tax or lending advice. Confirm details with the builder, your lender and the title company.