What is a plan and how is it different from a plot? Why are COs and CC&Rs so important?

While these terms are everyday language for builders and real estate agents who deal with new construction on a regular basis, first-time buyers may find them mysterious to begin with.

To help you as an educated consumer approach this market, we've put together an alphabetical list of some of the common terms you may hear when buying new construction. Consider this an important step that can help you find a good deal when buying a brand new home.

1. Allowance

An allowance is a specific amount set aside by a builder in a new construction contract for items of the purchaser's own choosing. These items may include flooring, light fixtures, kitchen backsplash, bathroom tiles and more.

"Allowances allow buyers to personalise their home from a variety of options," says Kimberly Garwood, director of marketing at Trawton Homes.

Just be aware that if you spend all your allowance, anything else you add will become an upgrade, which will cost you extra. So, as mum and dad always say, if saving money is your priority, it's best to stick to your allowance.

2. Certificate of Occupancy (CO)

A Certificate of Occupancy is a legal document issued by the local municipality that certifies that the home is safe for occupation.

It is an important certificate that is issued once the home has successfully passed all the necessary inspections and complies with the building codes for the area. (Codes are rules set by the local or state government that regulate how a home is built).

"A home cannot be occupied until that certificate is issued," says federal building and safety contractor Charles Chadwick Jr.

3. Change orders

A change order is an amendment to the original contract or work order that documents changes in construction, design plans, schedules, etc.

"A change order may or may not change the original contract, but depending on the scope of work, it may result in potential delays or speed up the construction of the home," says Chadwick.

Change orders can come from the homebuyer - which usually increases costs - or from the contractor's side, which can sometimes result in a loss of profit for the builder.

For example, Chadwick explains that if a buyer signs a contract for a specific brand or type of material that the general contractor cannot provide for some reason, then the general contractor must provide another option of equal or greater value at its own expense.

As a home buyer, you need to be careful with any change orders as they may change your out-of-pocket costs or the timing of completion of construction.

4. Covenants, Conditions and Restrictions (CC&Rs)

Many homeowners in new build communities belong to a homeowners association, which sets its own rules on how its members should maintain their homes. These rules are contained in the HOA's Covenants, Conditions and Restrictions, or CC&Rs.

Some examples of CC&Rs might include paint colours, street parking rules, pool hours, pet restrictions, or noise levels after midnight. You should always check the CC&Rs before deciding whether a particular new build neighbourhood is suitable for your needs and lifestyle.

5. Floor plans/house plans

While floor plans and house plans may sound interchangeable, they are not and you should know the difference. A floor plan is specific to the internal layout of a home, while a house plan includes the entire structure.

A floor plan "includes interior walls, room dimensions, stairs and other details," says Garwood." Floor plans enable clients to determine the placement of furniture, as well as the function and flow of the home for entertaining and everyday life.

A house plan, on the other hand, includes the entire structure of the home, which includes the façade and the interior.

6. Home builder's warranty

Sometimes referred to as a homebuyer's warranty, Chadwick says that this warranty states that the builder will replace, repair or fix specific things after the new construction home is built, and for how long. This warranty should not be confused with a manufacturer's warranty on items such as appliances.

Generally, a home builder's warranty covers materials and workmanship, as well as mechanical issues for the first year (sometimes two years) after the buyer takes possession of the home.

"Our homeowners have two warranty service appointments in the first year of ownership, the first for 45 days and the second for 11 months," says Garwood.

In addition, most homeowners have structural warranties on their newly built homes, which usually last about eight to 10 years.

7. Plats

A plat is an official map that defines the boundaries of different plots or parcels of land. Although plat and plot sound similar, you can think of a plat as a piece of land, while a plat is a map outlining the shape and boundaries of the property.

If you are looking at a potential home in a neighbourhood that is not yet built up, you may want to choose the plot you want and you especially want to understand these terms.

A survey of the parcel may be necessary to confirm that a map adheres to government zoning guidelines and restrictions, which may also include setbacks, easements and other legal descriptions.

8. Pre-sold homes

A pre-sale home is a home that can be purchased before it is ready for occupancy.

You may encounter this term when visiting a planned community where a home is not yet completed, or even during construction. In either case, it refers to a home whose construction is not yet complete.

9. Packing list

The punch list includes items that need to be repaired or fixed by the builder.

"Basically, it consists of things that need to be completed in order for the construction aspect to be considered complete and payment to be issued to the contractor or subcontractor," says Chadwick.

According to Chadwick, a punch list may include patching, repairs, painting/finishing chips or dents in walls or throughout a room, etc. Items on a plumbing punch list might include making sure pipes that go through walls or under sinks are covered. The electrical punch list may include tightening panel covers.

Often, homebuyers will develop this checklist during the final construction phase of a new home.

10. Rough-in

Rough-in is the laying of mechanical, electrical and plumbing wiring in a home being built. This term is important as far as the schedule of progress of new construction is concerned. It appears after the framing of the house, which is where you can start to see the structure and walls of the house.

According to Chadwick, rough-in includes things like the installation of water and gas lines, electrical wiring (although not yet connected) and HVAC systems and plumbing.

This stage is a bit like installing the 'guts' of a new home and must be completed before the builder can move on to adding things like flooring, painting and appliances. It is usually somewhere in the process of building a new home.

11. spec house

According to Garwood, a spec room is also known as a stock room. It is a home that the builder starts building before a contract is signed - the builder believes that a home buyer will show up at some point in the process.

A Quick Move-In (QMI) home is a special type of spec home that will be completed within the next 30 days. This is particularly attractive to buyers who want to buy a new home but don't want to wait months to complete 'from scratch'.

However, bear in mind that those choosing a QMI or spec home may be sacrificing some personalisation options in exchange for speed.

"The choice between building a home from scratch and a move-in ready home," says Jennifer Landers, community manager at Kolter Homes, "is very often dictated by your time needs." The more you need to move, the less time you have to wait to build your home."

12. Walk-through

This is often one of the last exciting steps in the process of building a new home. Before closing on the property, the buyer and builder will usually walk through the home to make a final inspection.

"The walk-through is simply an opportunity for someone to see how their new home is working and to discover items that need to be corrected or adjusted," explains Chadwick.

It's also a time for buyers to ask the builder any questions they may have about the home.

And once the walk-through has been completed, closing and moving in is not far away!