Is New Construction for You? Weve Got the Pros and Cons to Buying New
Written By: Jaymi Naciri
Monday, November 11, 2019
Con: No haggling allowed
Negotiating is a key part of buying a resale home. But if youre looking to negotiate the price on something new, you may be disappointed. Builders and developers dont generally like to lower the price of homes since it tends to aggravate those who purchased previously and didnt get the benefit of a discount.nbsp;
Pro: But there may be different perks
That doesnt mean there isnt room for negotiation. Working with real estate agents who have experience with new construction is key here because they can negotiate things like closing cost help and upgrades.nbsp;
Con: Principal, interest, taxes, and insurance arent everything.
New-home communities typically have homeowners associations HOA, which means youll have to tack another payment onto your monthly tally. In return, you get some built-in protections for your home value, but if your budget is unforgiving, youll want to factor this in.nbsp;
Pro: You can personalize your floorplan.
Depending on the home and community, you might be able to make some changes to the floorplan to make it work better for your household. Perhaps you want to turn a den into a bedroom or vice versa or add a loft or extra garage bays. The floorplans online or in the community brochure will display the available options, but if theres something specific youre looking for that isnt offered, be sure to ask. There may be more available than what you can see.
Con: Every change you make will cost you.nbsp;
If youre planning to make floorplan changes, you can throw out that home price they gave you.nbsp;
Pro: You can upgrade pretty much everything.
One of the huge perks of buying new construction is being able to customize it to your liking. Want a fancy backsplash? Go for it. Hand-scraped wood floors? Yes, please. You want it, you got itas long as the sales agent and design center says you can have it. And, you can pay for it, of course.nbsp;
Con: There goes your budget, and your cushion.
You may be surprised how much some of this stuff costs. That 350,000 house you thought you could afford? Its now 100,000 more.
Pro: You can roll the extra costs into your mortgage.nbsp;
Even though the number might sound exorbitant, its not so bad when you consider the monthly difference it makes in your mortgage payment.nbsp;
Con: Itll take a while to build.
The advantage to buying resale is that you get to move in as soon as you close escrow. Buy new and it can be many months before you get your keys.nbsp;
Pro: But youll be the first to live there
That makes it worth the wait, right?
Con: The neighborhood will be a mess for a while.
Unless youre purchasing when few homes are left to build, expect to be living with construction trucks and construction dirt for a period of time. While this will likely be a blip compared to how long youll live in the home, it can feel interminable when trucks are making noise and kicking up dust.nbsp;
Pro: It can be easy to meet people when youre all moving in at or around the same time.nbsp;
This is great for families with young kids or those >
Con: Higher cost
Most homebuyers wont be surprised to learn that brand-new homes almost always cost more than resale ones, said NewHomeSource. Historically, newly built homes cost about 17 percent more than resale ones, based on national median price data that date back to the 1960s.
Pro: There may be amenities
Having a community pool and maybe a park or other amenities can make it even more rewarding to live in a new-home community.
Con: Nothing comes for free.nbsp;
Youll pay for those amenities through the HOA.
Pro: Your home may appreciate faster
Studies have shown that well-built homes in popular communities can earn equity faster than some homes in some older neighborhoods.nbsp;
Con: This could also make your property taxes go up.nbsp;
Property taxes can rise due to reassessment of value after a home is purchased, said Street Directory. Property taxes on new construction are based upon the assessed value of the land until a certificate of occupancy for the home has been issued by the local government. Once this occurs the property will be re-assessed as a home for the next complete property tax billing cycle.
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