Even if you’ve never purchased a new construction home, your gut tells you it’s much different than buying a resale home. And your gut is right. There are some positive things and not-so-good things to know and consider before purchasing a new construction home.
There are also pros and cons to buying a resale home, but those are more common knowledge than the new construction list.
At Point Equity, we always share everything we know about buying, selling, and financing homes here on the blog. In this article, we’re breaking down the pluses and minuses about buying new construction. It’s a lot to consider - but buying a home is a big decision, and the more you know, the better decision you can make.
The Best Things About Buying New Construction
There are so many positive reasons to buy a newly-built home in a new development. First of all, it’s New - and who doesn’t like new? Being the very first owner of a brand new home is very enticing because:
- New means it’s super clean. No cobwebs in the ceiling corners or grime on the baseboards. And no lingering pet or mysterious cooking odors. New smells fresh, looks sparkling and is a blank slate for your family to write on.
- Newly constructed homes come with the latest eco-friendly building standards - and more standard energy efficiency features. Your new home will probably have energy-saving windows, more energy-efficient HVAC systems, and even energy-saving appliances. This all adds up to tangible savings on monthly utility bills.
- New homes are equipped with and ready for today’s technology demands. This includes everything from pre-wired security systems, robust (and fast) internet wiring, and massive flat-screen TV mounting ready. Having all of this built into a new home saves money for the home buyer.
- Little to no maintenance! Chances are, the new HVAC system, appliances, plumbing, and flooring - to name a few - won’t require repairing or replacing for another decade. And just in case - most builders provide buyers with warranties that cover several years. The most challenging thing for buyers to do is keeping track of the warranties.
- New homes are designed with more of a modern, contemporary look. There have open floor plans with kitchens, dining, and living areas connected. You might also find large master baths, walk-in closets, and large kitchen islands. While in older homes, it’s more common to see each living area confined to separate rooms: dining room, kitchen, living room, etc.
- Another budget-friendly feature of newly-built homes is lower homeowner insurance rates. With built-in security systems and fire-retardant building materials, fire risk goes down and so do the premiums.
- Buying a home customized for you is a huge benefit of new construction. Having the option of choosing the countertops, light fixtures, flooring, and wall colors is something you don’t get with a resale home. Just remember that the model home has every upgrade available included - and upgrades cost extra. As you walk through the model, write down the finishes and fixtures you like. Then when you’re ready to customize your home, add prices to your wish list and choose accordingly.
Other Things To Consider Before Buying New Construction
When considering purchasing a new construction home, it’s important to know the things that might night be so great. Then you can sit down with your real estate agent and weigh everything out before making a decision.
Some things you should know and think about:
- Lot sizes tend to be smaller in new developments. If you have a minimum buffer/privacy requirement, make sure you understand how close your home will be to future next-door neighbors. And visualize how the neighborhood will look when all the new homes are occupied, especially the traffic and cars that will live there.
- The new property might be in a special tax assessment area requiring you to pay a Mello Roos tax on top of property taxes. Depending on the city and the custom build features, there will also likely be other supplemental taxes due on the new property.
- If you’re going to be one of the first home buyers in a new development, you can expect more dust getting into your home and dirty streets while construction continues. It can take several months to a year+ or longer until all the houses and finished and occupied.
- Once you’ve purchased and closed on your new home, the spending doesn’t stop there. New homes require some high ticket items right away, including window coverings and meeting minimum landscaping requirements. Take a look at this schedule for window covering costs from HomeAdvisor to understand the expense involved. Make sure to budget for these costs ahead of time.
- Expect delays. Builders have to work with the weather and with outside suppliers and labor timelines. Everything is subject to unexpected and unplanned delays. While you can stay in your existing home until the new one is finished, some things need to be done at specific points in the timeline - like locking in an interest rate and having the home appraised for the mortgage. Unexpected delays can cause problems, and your only course of action might be relying on your patience.
Final Best Tips for Buying New Construction
We believe there are some critical steps buyers can take to approach when making a new construction purchase.
- Before you visit any potential developments, find your real estate agent. The builders’ agent will be helpful, but they represent the builder legally, not the buyer. Once you visit a new development on your own and register with the builders’ agent - you won’t be able to use your agent. And having your agent gives you representation and negotiating power.
- Before you settle on a builder, please work with your agent to research them. Learn about other homes and developments they’ve built. Working with an agent experienced in representing buyers purchasing new construction is another plus. Your agent will know of any red flags to watch for with the builder and will also be comfortable with negotiating for you.
- And finally, take the time to interview both the builders’ lender and one or two other lenders before allowing someone to pull your credit report. Find the professional you feel most comfortable with and review unique loan offerings from the builder with another lender to see if they can compete or have something comparable.
For more details on buying a newly constructed home, check out this blog post. New construction might be the perfect answer for your new home in times of low existing housing inventory and competition from multiple buyers.