A new home is better than an old home or is it, or is it? For most people, this is a matter of opinion. When it comes to a home, many people prefer to purchase a brand new home and there are many advantages of buying new construction. Let me walk you through many of the advantages so you can decide for yourself.
First Advantage of Buying New Construction
A brand new home has not yet experienced any wear and tear. The appliances are new, the walls are unblemished, and the neighborhood will likely be filled with young families.
Second Advantage of Buying New Construction
New homes will comply with all current building, safety and environmental codes. New homes likely will be hi-tech-ready and the electrical system will be able to handle all of today’s hottest electrical components and gadgets.
Third Advantage of Buying New Construction
New construction homes typically include all the latest and greatest systems and components, making the new home less expensive to operate and maintain than older homes. Low flow toilets and show heads will save water and hopefully reduce your water bill. Likewise, energy efficient appliances should save you money on your electric bill. Everything inside your new home is also new therefore you won’t initially be incurring expenses for any maintenance-related or replacement projects.
Buying New Construction Tip: Research the Home Builder or Contractor
If you’re in the market to build or buy a new home, it’s important to research the home builder or contractor. Many home builders and contractors have very fine reputations, but others might not have performed as promised. The first thing I recommend to new home builders and buyers is to talk with three to five home builders or contractors in your area. Or you can talk with a real estate agent. They can help you chart out a course and go over a few do’s and don’t when buying new construction. I always direct home buyers to visit a few of the builder’s previously-built housing developments. There, talk with owners who bought their home brand new from the developer you are researching. Find out what troubles, if any, the owners had before the homes were built and what troubles, if any, they are having with the homes now. Find out if the homes were completed on schedule, if the homes already are experiencing structural problems and most importantly, find out if these owners would ever purchase a home from that builder again. Past performance can be a good indicator of future work.
There are things to be aware of when looking at brand new homes. Most importantly, you often will be looking at the model home. Here you are taken through a professionally-decorated home and treated like royalty. Model homes include all the amenities and the highest-level upgrades. You’re quoted an affordable price but then find out that to have your home outfitted like the model home it will cost you several thousand dollars more. Make sure you understand the full costs of all extras and upgrades before you sign a contract. Features such as corner lots, swimming pools, fireplaces, lots with views and upgraded appliances all have a premium.
Did you know that home builders often times make the most of their profit on the upgrades. They attract buyers with a low base price on a home, which often is non-negotiable and very close to their own costs of construction, and then profit from the enhancements that they convince you to purchase. To retain the value of the development, they’re more likely to offer discounts on the costs of any upgrades than they are on the base price of the home.
If the prices you are quoted for upgrades seem unreasonably high, then get some independent quotes on your own. It might be more cost effective for you to purchase the stripped-down version and then make the upgrades later on, after you’ve moved in.
Buying New Construction Tip: Factor in Annual Dues
One other thing that many buyers of new homes do not take into consideration is the way that homeowner’s dues are calculated and how soon and how often these dues will increase. New homes often require all residents of a development to pay dues to cover the cost associated with the overall upkeep of community amenities such as signage, pool, tennis courts, health and fitness areas, nature trails and other features. Dues can be the same amount per owner or the amount can fluctuate based on size or price of the home. Dues can and do increase. The way the homeowner’s dues are calculated and what the dues cover should be fully explained to potential buyers. Try to make sure that the dues that are collected from all add up to a reasonable and sufficient annual operating budget.
Buying New Construction Tip: Protect Your Interests
Another issue to consider when purchasing a new construction home is that you typically must deal with the builder’s team and use the builder’s contracts. A few builders will allow buyers to have their own Realtor represent them. This is called broker cooperation
My advice to you is before signing a contract on a brand new home, have your own lawyer review the contract and your own home inspector give you an unbiased report of the property. This cannot always happen, and if the deal does not seem right, then it might not be right. Even though brand new, you should be able to thoroughly inspect any home you are considering purchasing. If you cannot, then move on and continue your search. There are plenty more homes out there for sale.