Title Insurance & New Construction

Title insurance is a must-have if you’re buying a home that someone else has owned. But what if you’re paying for a brand new home to be constructed? Or one that has just been built? It may not seem necessary because no one is selling the house, because there is no house, or no one has lived in the house, so why would you need title insurance?

Although a brand new home has no previous owners, the unimproved land may have had prior owners. A title search reveals any existing liens on the land. Title insurance also protects against potential contractor liens from a builder who may have failed to pay his suppliers or subcontractors. To ensure a clear title, lenders require buyers to purchase a Loan Policy of Title Insurance. The Loan Policy only protects the lender’s interest. You can protect yourself from overlooked title threats by purchasing an Owner’s Policy of Title Insurance.

The Bottom Line: In the end, it is advisable to make sure that the title is clear. Anyone buying a new construction home should get title insurance. So much goes on with new construction which could affect the title: potential issues with new boundary lines, potential liens from subcontractors, outstanding construction loans, etc.

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Tips For Buying a New Construction Home

Buying a new construction home can be quite different than buying a previously-owned home. The negotiation might be easier because you don’t have to whether emotional homeowners, but you will have to deal directly with the builder. He has built the home with the sole purpose of selling it at a profit. He will need to move the new home so he can move on to his next project. A few things you should do:


Finding a top local Realtor who is experienced in negotiating with builders is going to be one of the most important things you do in the home buying process. Realtors aren’t just used for previously owned homes, they are also very helpful to buyers in new construction.

Realtors can also help the buyer handle builder contracts and in some cases make changes to it. An experienced realtor will be able to help ensure that the buyer gets exactly what they want and for an affordable price.

Many people think buying new construction will save them money from having to pay Realtor fees but builders are actually the party that pays the realtor commission fees. There is no extra cost for hiring a realtor when you purchase new construction.


There is a cost for upgrades and the options and add-ons are abundant. It’s best to only pick upgrades that will boost the home’s value.

  • The kitchen – make sure there are good bones. Upgrade for taller cabinets, kitchen island, and lighting.
  • Deeper basement – especially if you are buying it unfinished – you may want to finish it one day. Get a deeper pour.
  • Roughed-in plumbing for a future full or a half bath. Even if you don’t end up adding another bathroom, you will be able to offer it to a future buyer as an asset.
  • More lighting – you can never have too much light especially in bathrooms and the kitchen.
  • Energy savers – windows, appliances, etc.
  • Larger garage – depending on the lot size and if it can be done? Do it.
  • Storage options – built-in cabinets, pull out trash/recycling bins anything that can make the function of the home better.


Many conversations will be had with the builder and the onsite agent throughout the entire buying process. Make sure you get everything they’ve agreed upon in writing. Including it in the contract is always best, but even an email or letter can work in your favor if something goes wrong. After important conversations, your experienced Realtor will tell the onsite agent to send them all the details in an email, but if yours doesn’t, make sure they follow-up with an email asking for confirmation.


With a new house, you will be receiving a stack of instruction booklets all at once. Have someone show you how to operate all of the kitchen appliances, the heating and cooling systems, the water heater, and other features in the home. Learning about maintenance and upkeep responsibilities is very important. Most new homes come with a one-year warranty on workmanship and materials. However, such warranties do not cover problems that develop because of failure to perform required maintenance. Many builders provide a booklet explaining common upkeep responsibilities and how to perform them. It is important that you be very thorough and observant during the walk-through. Carefully examine all surfaces of counters, fixtures, floors, and walls for possible damage. Sometimes, disputes arise because a buyer may discover a gouge in a countertop after move-in, and there is no way to prove whether it was caused by the builder’s workers or the buyer’s movers.

The Bottom Line: If you are going to be buying a new construction home, the builder’s agent on-site will be ready to help you with the process. That agent will always have the builder’s best interest in mind. You should have your own Realtor. You are going to want someone representing your side of the deal.

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