Many home buyers enter the market focused on location. As they learn the market they may have the opportunity to buy a new home, directly from the builder. There are pros and cons to new and "used" homes.
Buying new construction has its advantages, but you will likely pay more for it
Maybe you’ve seen ads for pristine custom-built homes and wondered if this is a possibility for you. You may have asked yourself, "Can I afford it? What are the pros and cons?" If that’s the case, here are some factors to consider.
The advantages of being shiny and new
Besides the fact that a newly built home is aesthetically the newest, cleanest, best version of itself that it will ever be, there are several other upsides. One is that, since the materials in the home are new, repairs for something like a roof, which typically lasts 15 to 20 years, won’t be needed for a long time. That fact alone could push many would-be buyers to sign a contract.
Another plus of being the home’s first owner is that you get to put your stamp on it from the very beginning. And builders offer a variety of ways for you to customize many aspects of the home. That includes your choice of flooring, floor plans and bathroom and kitchen fixtures, such as backsplash tile, cabinets and faucets. The options vary in quality and cost, which also gives you some flexibility in the overall price.
Even if the home isn’t built yet, you can see firsthand what your home might look like by visiting the builder’s model homes and touring the builder’s showroom. Taking your agent with you to get his or her feedback is a good idea.
Builder home prices focus on demand
Now look at the possible downsides. When it comes to price, home builders and real estate developers focus on their cost margins and what’s selling. This could mean higher prices than a traditional home and price instability.
Here’s one reason why. Let’s say buyers have quickly snapped up homes in a new community. Builders will want to capitalize on the high demand by raising the price of the remaining homes in that same subdivision. The increase could put the price tag over your limit.
Although you can try to be one of the first buyers in a new subdivision, there are still other downsides to consider. Mainly, it’s risky. New communities are just that – new. That means their success is unpredictable. There’s always a chance that after you buy a home the other homes in the neighborhood won’t sell. That kind of loss could force a builder out of business and you out of a home before you’ve even moved in.
If buying a newly built home still fits your needs and risk tolerance, begin your search. Look in your newspaper’s real estate section or on real estate websites. As you progress, rely on your agent for guidance. Keep in mind that buying a home when the real estate market is slow could help you negotiate a lower price or, perhaps, an upgrade in home features, like a higher-end cabinetry finish or hardwood flooring.
During the process, enjoy the newness of it all, but remember to take your time and consider all your options.