3 Tips for Buying a New Home from a Builder
|
I've helped many buyers purchase brand new homes from builders. New home purchases are very different than resale purchases in many ways, below are some topics to consider if you're considering buying a new home from a builder. Please note, every buyer has different needs and priorities and for some people buying from a builder may outweigh the drawbacks. I can provide you with additional information that will help you evaluate whether buying a new home or resale home is best for you. Also, new home builders pay me a broker coop fee, so I'd be happy to share my past clients' new home builder experiences with you if that is the route you choose to go. If you don't have a Realtor, I'd love to help you with your home purchase, please call me at (800) 477-0075 x 3 or complete online inquiry form, click here. - Kevin Nakano
|
1. VISIT RESALE HOMES BEFORE YOU VISIT NEW MODEL HOMES.
You should consider viewing resale homes for sale first because you don't want to buy a new home from a builder on impulse. You will want to do all of your homework before you visit a builder because your emotions may take over when you visit a model home and you may purchase a home on impulse. In my experience, buyers typically pay 10% to 20%+ higher sales price for a new home versus a comparable resale home. I helped a buyer that was looking at buying a new home from a builder in $430,000 price range, but I showed him several resale homes and he ended up buying a resale home in the same neighborhood for $365,000. The $365,000 home needed some updating, but buyer believed the upgrades would cost a lot less than $65,000. And, the $365,000 home had backyard landscaping already installed...more savings since typically a new home from a builder does not include backyard landscaping. I had another client, retirees, that wanted to buy a new home, but needed a larger home to accommodate their kids and grand kids living with them. The only homes that were available with new home builders that could accommodate their needs were two story homes. So, I was able to find them a large one story home that had a fully landscaped backyard, they were happy because the one story home helped them avoid walking up/down stairs and helped them avoid having to move and buy a one story home in the future.
2. NEW VS. RESALE CLOSING COSTS AND OTHER COSTS TO BUY?
Did you know that when you buy a new home from a builder you will typically be paying for closing costs that sellers typically pay for when you buy a resale home? Also, new homes typically don't include backyard landscaping, all you get is a dirt lot. Now, if you happen to work in the landscaping industry, then the cost to install a functional backyard would probably be low, but for the average person installing a backyard can add up. Also, if you want a pool/spa, its typically a better idea financially to buy a house with an in ground pool/spa versus paying to install a new in ground pool/spa.
3. SOME NEW HOME DEVELOPMENTS RISKS
If the new home development is in a developing neighborhood, then you'll want to make sure you're comfortable with living around construction activities for an unspecified period of time: dust, noise, etc. Also keep in mind, if something changes on the builder side, you may end up with an unfinished development or land that is developed in a different way than you were originally told by the builder. If you have kids, you'll want to know if there are schools close by or if you'll have to drive your kids to a school further away until a school is built closer to your new home. You'll also want to make sure there are sufficient amenities close by (such as grocery stores, restaurants, hospitals, salons, banks, gas stations, entertainment, etc.), otherwise you may have to drive to another community or city for these amenities that you'll use on a daily basis. You'll also want to consider how many similar homes are being built or are present in the immediate neighborhood because if the home you are buying is unique (few or no other similar homes in the neighborhood), this could pose issues for appraisal value for purchase/refinance and for future resale.
OTHER CONSIDERATIONS...
If you would like me to help you purchase a new home from a builder, some of the other considerations that we'll discuss are:
- What to say and not say when you meet with a new home builder sales person?
- When can you negotiate sales price with a builder?
- What other things that you can negotiate when buying from a builder?
- When are incentives offered and what form do they come in?
- And much more.
You should consider viewing resale homes for sale first because you don't want to buy a new home from a builder on impulse. You will want to do all of your homework before you visit a builder because your emotions may take over when you visit a model home and you may purchase a home on impulse. In my experience, buyers typically pay 10% to 20%+ higher sales price for a new home versus a comparable resale home. I helped a buyer that was looking at buying a new home from a builder in $430,000 price range, but I showed him several resale homes and he ended up buying a resale home in the same neighborhood for $365,000. The $365,000 home needed some updating, but buyer believed the upgrades would cost a lot less than $65,000. And, the $365,000 home had backyard landscaping already installed...more savings since typically a new home from a builder does not include backyard landscaping. I had another client, retirees, that wanted to buy a new home, but needed a larger home to accommodate their kids and grand kids living with them. The only homes that were available with new home builders that could accommodate their needs were two story homes. So, I was able to find them a large one story home that had a fully landscaped backyard, they were happy because the one story home helped them avoid walking up/down stairs and helped them avoid having to move and buy a one story home in the future.
2. NEW VS. RESALE CLOSING COSTS AND OTHER COSTS TO BUY?
Did you know that when you buy a new home from a builder you will typically be paying for closing costs that sellers typically pay for when you buy a resale home? Also, new homes typically don't include backyard landscaping, all you get is a dirt lot. Now, if you happen to work in the landscaping industry, then the cost to install a functional backyard would probably be low, but for the average person installing a backyard can add up. Also, if you want a pool/spa, its typically a better idea financially to buy a house with an in ground pool/spa versus paying to install a new in ground pool/spa.
3. SOME NEW HOME DEVELOPMENTS RISKS
If the new home development is in a developing neighborhood, then you'll want to make sure you're comfortable with living around construction activities for an unspecified period of time: dust, noise, etc. Also keep in mind, if something changes on the builder side, you may end up with an unfinished development or land that is developed in a different way than you were originally told by the builder. If you have kids, you'll want to know if there are schools close by or if you'll have to drive your kids to a school further away until a school is built closer to your new home. You'll also want to make sure there are sufficient amenities close by (such as grocery stores, restaurants, hospitals, salons, banks, gas stations, entertainment, etc.), otherwise you may have to drive to another community or city for these amenities that you'll use on a daily basis. You'll also want to consider how many similar homes are being built or are present in the immediate neighborhood because if the home you are buying is unique (few or no other similar homes in the neighborhood), this could pose issues for appraisal value for purchase/refinance and for future resale.
OTHER CONSIDERATIONS...
If you would like me to help you purchase a new home from a builder, some of the other considerations that we'll discuss are:
- What to say and not say when you meet with a new home builder sales person?
- When can you negotiate sales price with a builder?
- What other things that you can negotiate when buying from a builder?
- When are incentives offered and what form do they come in?
- And much more.
I'd love to help you with your home purchase, please call me at (800) 477-0075 x 3 or complete online inquiry form, click here. - Kevin Nakano
Return to Homebuyer Resource Center, click here.