Are you new to the home building process? Some of the lingo may be new to someone who's never gone through the process of building a new home before, so we wanted to cover some of the most commonly used terms in the home building industry! If you come across other terms during the home building process that are not on this list and you are not aware of, it's always good practice to ask a Landmark employee to further explain!

Allowance

A sum of money set aside in the contract for items that have not been selected and named in the contract, such as a sum of money for flooring, light fixtures, kitchen and bathroom backsplashes, tiles, and more.

Appraisal

An estimate of the value of the property by a professional appraiser.

Blueprint

A drawing of a floor plan that is used for planning, designing, and building a home. Builders often use it to estimate the price of a home and request permits.

Build On Your Own Lot (BOYL or Spot Lot)

A new home built on land already owned or newly purchased by the buyers.

Builder Warranty

A period of time in which a builder will replace, repair, or fix certain elements in the home. Builder warranties can vary - many builders offer a one-year warranty on materials and a ten-year warranty on structural issues. New homebuyers may also have warranties provided by manufacturers such as a 20- or 30-year roof warranty or appliance warranties.

Builder's Risk Insurance

Insurance coverage that protects the builder during construction. Extended coverage may be added to the contract for the customer's protections.

Building Codes

Rules established by a local or state jurisdiction that cover how a house can be built or modified. Newly built homes must meet the most recent codes but existing homes are not required to be brought up-to-date before they are sold.

Building Insurance

Insurance that covers the building itself during construction.

Certificate of Occupancy

Also referred to as a "CO", this certificate is issued by the local jurisdiction after all inspections have been passed and meet code. Until the CO is issued, no one can move into a new home.

Change Order

A written document typically at the request of the homebuyer that modifies the original plans for the home's features, floor plan, or finishes. Change orders can add to the price of the home and the length of time it takes to build it.

Closing

Also called the "settlement", closing refers to the final step in a real estate transaction. This is when all papers are signed and the ownership of the property transfers from one owner to the next.

Construction Loan

A mortgage used to buy land and build a new home.

Contractor

A licensed company that provides building services. A newly built home will often have a general contractor to supervise the project along with specialty and subcontractors who handle specific elements of the home-building process, such as electrical work. 

Deposit

A sum of money due at the time the contract is signed. The amount of the deposit varies from one builder to another and can range from a few hundred dollars to thousands of dollars depending on the home price and whether the buyer is working with a production or a custom builder. 

Draw

The amount of money available to a contractor at different established periods of the building process. Custom home builders typically arrange access to a draw on the construction loan taken out by the buyer. 

Elevation

A two-dimensional drawing of the exterior faces of a building. This can also include features of the home that project flat surfaces such as cabinets and fireplaces.

Extras

Work that a homebuyer asked the builder to do during the construction process that was not in the original contract. A builder has the right to decline the request, however, if it is approved, it will cost you "extra".

Good Faith Estimate

An estimate of the entire cost of buying a home, including the down payment, interest payments, and closing costs associated with a loan; to be provided by the lender within three days of a loan application. The estimate is divided into sections according to which fees can change at the settlement table and which cannot.

Homeowner's Association (HOA)

An association to which homeowners are required to belong if they own a home within the boundaries of the association; members must pay dues and follow the rules of the association. Homeowners living in communities with an HOA pay a monthly fee that varies from community to community.

Permit

A required authorization from a government authority to build a house or proceed with particular phases of the building process. 

Recording Fees

Fees paid to the county or state for recording property ownership in land records. 

Redline or Redlined Prints

A set of plans showing changes to be made on the original blueprint, typically identified with red pen or pencil. 

Settlement

The process during which buyers and a representative of the builder sign legally binding paperwork and loan documents that transfer the ownership of the property; also known as a “closing.” A builder may offer incentives to buyers such as closing cost assistance when buyers opt to use the builder’s preferred settlement company. 

Spec Home or Quick Move-In (QMI)

A “speculative” home that a new home builder builds without a purchase contract. Most times they are already built or are currently under construction, and often feature popular design features and customization options.

Title

The formal document that proves ownership of property.

Walk-Through

A final inspection of the home by the buyers and their agent to check for any last-minute problems that must be addressed. The walk-through takes places shortly before the closing of the property.