Buying New Construction in Huntsville, AL (Pros, Cons & Warranties)
🎧 Watch the Full Episode 📹
If you're relocating to Huntsville or Madison and are considering buying a brand new home, here are the crucial insights you need to protect your investment.
Mitigating Alabama's "Buyer Beware" Laws with New Construction
Buying a home in Alabama can be intimidating for out-of-state buyers because of its "buyer beware" (caveat emptor) nature. The seller is not obligated to disclose most issues with the property. However, purchasing a new construction home automatically provides you with a builder's warranty, effectively circumventing this risk.
It is important to remember that not all warranties are equal. While the state requires a baseline, individual builders set their own terms. You might see a strict one-year warranty from a luxury builder, while an affordable builder offers a 1-year bumper-to-bumper, 2-year mechanical, and 10-year structural warranty. Always review the warranty details before falling in love with a model home and signing a contract, and remember to follow your manufacturer maintenance guidelines so your warranty is not voided.
What to Expect from Production Builds in Huntsville
When looking at new construction communities across North Alabama, you will mostly find production builds rather than fully custom homes. These builders use economies of scale to keep costs down, meaning you will select from curated packages for cabinets, countertops, and flooring.
Additionally, these neighborhoods typically feature smaller lot sizes to maximize the builder's return. If your dream is to have a massive yard zoned for Madison City Schools, you will pay a significant premium. Most of these suburban communities are also located a 10 to 15-minute drive from shopping and dining. If you desire a truly walkable, urban lifestyle, you will need to look at specific revitalized areas—like Five Points or the Lowe Mill district—where smaller boutique builders are tearing down old homes and building new bungalows.
Thinking of Building or Buying New?
Navigating builder contracts and closing incentives can be complex. Connect with our team to have an expert advocate on your side for a seamless relocation experience.
Do You Still Need a Home Inspection and Radon Test?
Absolutely. Just because a home is brand new does not mean it is flawless. We highly recommend hiring a licensed, independent home inspector to check the property at various phases of construction. For our out-of-state buyers, we act as your eyes and ears on the ground, conducting video walkthroughs and ensuring the home is built to standard.
You also need a radon test. Radon is a naturally occurring, carcinogenic gas that is common across the Southeast. There is a myth that homes built on concrete slabs don't need to be tested. This is false. Radon can still enter the living space. We recommend testing during the inspection period and again near the end of your first year. If high levels are detected, a simple mitigation fan can be easily attached to the home's existing ventilation pipes.
Negotiating With Builders for the Best Incentives
Many buyers falsely assume that they cannot negotiate with new construction builders. While builders rarely lower the top-line purchase price (because it affects neighborhood appraisals), they frequently offer massive incentives to meet monthly or quarterly quotas.
Currently, we are seeing builders cover all closing costs and offer interest rates that are more than 2% below standard market rates. Combined with the high energy efficiency of modern builds—such as full spray foam insulation behind the walls and low-E windows—your total monthly payment on a brand new home can often be much lower than that of an older resale property. Having an experienced real estate agent on your side is key to knowing when and how to negotiate these perks.
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📜 Read the Full Episode Transcript
Cameron Walker: All right, you're watching Boomtown, a podcast about Huntsville's explosive growth both on and off the Arsenal. I'm Cameron Walker, your host. I'm the broker and owner of Cameron Walker Realty located right here in Huntsville, and you're joining me and my co-host, Megan. We love that you guys are here. We ask that you subscribe so we keep you informed of everything that's going on in Huntsville. Welcome back to Boomtown podcast. I'm here with my co-host Megan Hines, one of my agents at my brokerage, so welcome back.
Megan Hines: Welcome everyone!
Cameron Walker: All right, so in our last podcast we talked a little bit about the buyer beware nature of buying homes and moving to Alabama, how that can be a little bit scary, and ways to kind of mitigate some of that. One of the things we talked about, and this is something I've talked about for years, is new construction as a way to mitigate that. So I want to kind of dive in a little deeper and give people a little more background on new construction in the area, the pros, the cons, and what they can expect.
Megan Hines: Absolutely. And one of the reasons this moves so seamlessly into new construction is the fact that sometimes the buyer beware state is called a non-disclosure or a non-warranty state. With new construction, you automatically receive a warranty, so in a way it circumvents the buyer beware nature of Alabama for sure.
Cameron Walker: And that is something that's really important for people to realize: each builder has their own warranties. There are some legally required warranties in the state of Alabama according to the Builders Association, but each builder has their own warranty in excess of that. You're going to see a wide variety, and sometimes it's even just the individual components of the home, say like appliances or an HVAC system.
Megan Hines: Yes, so it is important when looking at new construction to read over that warranty and not to just assume that it's a blanket warranty. Maybe you talk to one builder and then you go and you like another builder better... don't just assume that what you were getting with that one builder is going to be the same in terms of warranty as what's coming with the next builder.
Cameron Walker: Absolutely. And it's one of those things where you can't even let price point determine it. A lot of times we think something's higher priced, therefore you get more. In the case of new construction, I know one of the highest-priced builders in the area has a strict one-year warranty on everything. And there are some of the absolute lowest-cost builders in the area that have a one-year bumper-to-bumper, two-year for mechanicals, and a 10-year structural warranty. So you really do have to pay attention to your point about what those warranties are for that specific builder.
Megan Hines: I have not run into circumstances where the same builder had different standards across communities, but I would think that would also be a question to ask. I would also urge people to come prepared when they go see a builder. Maybe get some of this information before you visit, because there is a tendency to walk into a builder, see the home you love, they see that you love it, you lock eyes... and then all of a sudden that home is going to be sold the next day, or the price is going to go up the next day, and you feel like you have to make a decision right there. That gets people to sign things without reading them through. Be ready when you go in there and understand that this is an active sales site.
Cameron Walker: Have that warranty ahead of time, take a look at it. There are two really good resources for that: us as your agent, and then also the builder's website. Most of the national builders, those top 10 builders across the country, generally have more of their warranty type information online, and it is more unified across their footprint. If a warranty is really important to you, getting out in front of that and having tangible access to the actual document is vital.
Megan Hines: I think something to go through right now for our viewers is the difference in what they're actually getting when they get new construction. We're not talking about custom builds; we're talking about production builds. These new communities benefit from an economy of scale. They buy in bulk things like their roof shingles, their granite for countertops. You go in there and you have a limited number of choices. You are not buying a piece of land and constructing from scratch and choosing everything.
Cameron Walker: Gosh, there's so much level of granularity even within that. A lot of times when people think about new construction, they do think about custom or semi-custom, and that's not always the case. The vast majority of homes are production. They're built by larger builders, they might build 10 or 20 at a time, and depending on the situation, you may only have four cabinets to choose from. Those are all coming from the same supplier. You'll have 30-year architectural shingles on a home, which is not a 30-year warranty on the roof. That's a separate thing; that just means the shingles will not degrade. If you have a tornado come through or hail damage, the warranty doesn't cover those things. That's a homeowners insurance claim.
Megan Hines: When looking at new construction, there is a lot of concern if you look online about certain builders. You hear horror stories all the time, and I talk to a lot of people who are concerned. They say things like, "I've heard that they don't make houses the way they used to. Should I buy new construction or should I buy something older?"
Cameron Walker: I think that all comes down to the individual and their risk tolerance. If you're buying a resale home in Alabama, you had the buyer beware aspect and you're going to have to really do your due diligence. Now if you're buying new construction, we don't really know what's going on behind the walls. We can do a thorough home inspection, and the one I work with in new construction is a licensed builder. He's very familiar with code and the requirements for building. You have to understand what's due to you on the contract, bring in the right inspectors at the right time frame, and keep your eye on that home.
Megan Hines: Absolutely. And something that I've just recently run across is a pretty high radon reading in a brand new home. A lot of times people will assume incorrectly that they don't even need to get a radon test because it's new construction on a slab. They think, "There's no way it could have high radon, I'll just pass." Well, that's not true. Radon can happen anywhere. The systems they put in once they find that you have radon work incredibly well, and having a system means you'll always be protected.
Cameron Walker: One of the things I've started recommending to people is that they have a home inspector come back and do a radon test a year in. For those of you who don't know, let's define radon: it's a naturally occurring gas from the breakdown of rock underneath the soil, and it's carcinogenic. It's radiation basically. If you build on a slab and there is high radon when you test for it, you absolutely need a remediation system, which is literally just sticking a fan on the existing PVC vent pipe to force the radon out of the home.
Megan Hines: I want to get back to talking about new construction because a lot of people are considering that when they're moving here. It does circumvent that buyer beware situation. You have warranties not only structurally but on every component of the house, so you can be pretty assured that for the next five to 10 years you're going to have minimal costs in terms of maintaining your home.
Cameron Walker: For sure, and some things people need to realize too is there are certain maintenance requirements for some of those items. Like a water heater, for example. If you have a tank water heater, you need to drain it. If you don't, and then two or three years in it fails, they may decline the warranty service. Another example is your HVAC. If you don't change the filter ever, it's going to be sucking against what effectively becomes carpet, and eventually that may kill your HVAC system.
Megan Hines: You have to jump through all these little hoops to keep those warranties going.
Cameron Walker: Absolutely. There's actually a really good book I'll link down in the description on how to maintain your home. It breaks it down by region and what you want to do seasonally to protect your home. I think that's a wise 20-buck investment.
Megan Hines: You know, one of the things with new construction in particular is that most of the time the yards are not as big. I'll have people come to me and be like, "I want a huge yard, I want new construction, and I want it to be in Madison City Schools." We have a mutual exclusivity problem here!
Cameron Walker: Absolutely, and if you find it, it's going to be considerably more expensive. Think about it from a builder's perspective: the more houses they can put on one street with smaller yards, the more money they make. What is the financial incentive for them to make two-acre lots versus quarter-acre lots? There's not really one. You may have community amenities like a pool, a clubhouse, or walking trails, but as far as getting to the grocery store or restaurants, you're going to have a 5 to 15-minute drive.
Megan Hines: If you want a walkable lifestyle where you can walk to lots of things, there are few of those at City Centers, but you're going to pay a premium for that, and you're not going to have the wide market of new construction open to you.
Cameron Walker: You make a great point. You have a handful of City Centers: Town Madison, Clift Farms, Providence. Where I will say a slight exception is we are seeing more one-off builders buying vacant lots in older communities or tearing down homes in areas like Lowe Mill or Five Points. They are building cute craftsman and bungalow styles right within the city limits.
Megan Hines: What would you say to people who are like, "I haven't even considered new construction because I think it's too expensive for me?"
Cameron Walker: I always tell people there are two prices we're looking at: the top-line price and your monthly payment. If you're going to be in the home 10 years plus, having a lower monthly payment is really important. As a general rule of thumb, I'm finding that new construction is as affordable as resale homes, if not more so, even for the same-size home.
Megan Hines: I am too, and I think that's very shocking to people. Depending on what time of year you purchase new construction or how the market's doing, you can get incentives on your interest rate, and that affects your monthly payments tremendously.
Cameron Walker: I had a call with a large national builder yesterday... they are offering interest rates that are over 2% below market rate right now. They're covering all the closing costs, and from an energy standpoint, they are doing full spray foam insulation behind the walls. At their price point, sub-$350k, I've never seen spray foam insulation. Their HERS energy scores are down in the 60s, meaning your power bills are almost definitely going to be less than if you buy a 20-year-old home.
Megan Hines: A lot of times people think that you can't negotiate with a builder because they're just too big. Even agents think that, unfortunately.
Cameron Walker: Right. New construction pricing is all supply and demand. The builder has incentives that roll over every month. If they're trying to make a quarterly or monthly quota, knowing who to call and when to walk away makes all the difference in negotiations. If people have questions about new construction, reach out to us! We'd love to talk to you about your specific situation and how we can bridge that gap for you.
Megan Hines: Absolutely, and thank you so much for joining us. If you have questions, drop them in the comments.
Cameron Walker: Thanks for watching or listening. You can always catch us on audio wherever you get your podcasts, be it Spotify or Apple, or watch our video on YouTube. Ask that you subscribe so we can keep you informed of everything going on here in Huntsville!