Are you thinking about building a new home? While there are many benefits of new construction homes, buyers should keep a few cons in mind. New appliances and finishes are great, but the construction process can be lengthy and expensive. Before you choose a builder for your new home, it's important to weigh your homebuying wants and needs. Evaluate these pros and cons of new construction homes to decide between new build and resale homes.
The Advantages of Buying New Construction
Buying new construction offers many advantages. The ability to use entirely new appliances, customize the home to fit the buyer's needs, and possibly get a head start on appreciation could be excellent. These benefits can save homeowners money, time, and physical effort on maintenance.
It's Completely New
When people buy a new construction home, they know that everything in the home is entirely new. Designing a new construction home provides owners with a fresh start. All the systems are used for the first time, with no concern about the previous owner's care for them.
There are several benefits related to the age of the home at the time that a buyer occupies it. The buyer may not need to spend as much on replacements or energy efficient upgrades within the first couple of years. They would not need to test old paint for lead or old insulation for asbestos. Buyers also do not need to worry about figuring out the age of certain upgrades or remodelling projects because they know when everything was completed. They can also verify with the builder that all work was completed according to guidelines.
It's Personalized for You
A new construction home built according to the buyer's specifications will feel more customized for them because it is. Although some new construction communities follow a standard plan created by the builder, buyers usually have the option to customize at least a few things inside the home. It is typical for builders to ask buyers about an allowance they would like to spend for customization or upgrades for aspects like paint colour, flooring, or countertops.
Some builders specialize in truly custom homes, which allows for maximum customization. In some cases, buyers can come up with their home design, and the builder will use that information to create a set of building plans. Buyers should confirm that the builder is experienced in the type of new construction they are looking for.
Say Goodbye to Bidding Wars
Buyers who are exhausted by the bidding process may prefer a new construction home because they can avoid it entirely. Bidding wars frequently occur in high-demand areas with lots of resale homes. When there are far more buyers than available homes, sellers must consider several offers to determine which one is best. In many cases, buyers trying to purchase this market may spend months making several unsuccessful offers before succeeding.
By comparison, new construction has an entirely different method. Buyers who are looking to purchase a lot in a planned community may have to wait until they have the opportunity to make an offer. Once they do, they usually know what the price will be before they make the offer without having to compete against other buyers.
Buying Early Ensures Best Chances for Appreciation
Buyers looking for maximum appreciation in the shortest time may have a better advantage by purchasing new construction. Construction is a long process, sometimes taking several months or more than a year to complete. Home values appreciate quickly throughout that period in a hot real estate market. A buyer who secures a lot before construction may move into a home worth significantly more than what they paid.
Experienced buyers understand that the market does not always appreciate over the course of the year. However, starting the path to ownership earlier may provide an increased chance for appreciation over time. Additionally, in an area where prices are rising quickly, buying as early as possible may make it easier for certain buyers to purchase a home.
What to Know Before Buying New Construction
Although buying new construction has many advantages, there are a few considerations that buyers should keep in mind. These factors, such as time or financing, may create obstacles that require buyers to change their plans or priorities when buying a home.
Your New Home Build Will Take Time
Building a new home from start to finish may take several months at the least or a couple of years at most. The time needed to build a home depends on a variety of factors, including:
- Customization of the build
- Access to materials
- Labour delays
People who want a custom home may need the most time since the builder will need to create a unique home design.
As a general rule, buyers may want to assume that the actual finish date could be a couple of months after the intended finish date. The best home builders usually try to give an accurate and accommodating estimate for the most common causes of delays. However, builders cannot anticipate everything, and sometimes their best plans do not work out that way. Buyers who can be flexible are more likely to have less stress about the process.
What You See in the Model Might Not Be What You Buy
When choosing a new home builder, buyers can visit a model home to get a feel for the floor plan, finishes, and other stylistic elements. Buyers should avoid assuming that the model home only contains things included in the base price. Most of the time, the model home has plenty of high-end upgrades and sustainable home technology to show options, which could significantly increase the home's total price.
In some cases, builders may outline the upgrades they made for the model home. They can provide buyers with a list of those upgrades and how that would change the cost from the base price of the home. Buyers may want to visit the model home prepared to look at certain aspects. Buyers should write down the elements they like best and ask the builder how much the upgrades add to the final price.
Financing Can Be Challenging
Buyers looking to purchase a new construction home should remember that financing may not be the same as it would be for an existing home. For example, the down payment on a new construction home may be higher than it is for an existing home. Additionally, builders may expect buyers to make deposits on the down payment throughout the construction process. Buyers may not necessarily be able to wait to save up that money, to pay it all in a lump sum once they close on the purchase.
It is common for previous homeowners to use profits from the sale of their previous home to help finance the new one. However, those buyers might need to find alternate housing during the construction period if they need the sale proceeds to cover the initial deposit on the new construction.
Getting Ready to Build a New Home?
A house often involves deciding whether to purchase an existing home or new construction. Comparing the pros and cons makes it easier for buyers to determine if they are willing to wait for a new home or if they are better off choosing something that already has an owner.