While many prospective buyers like the idea of being the first owners of a newly built home to imprint their personality on it and to make lasting memories there, some shy away from new construction. Fears about the process or the cost are common, along with other misconceptions that can inadvertently lead them astray or to view only resale properties as a viable option.
“New construction is not always more expensive,” says Cliff Stahl, vice president of national sales training for Meritage Homes. “Home builders work hard to be competitive in today’s marketplace, along with offering a variety of options to help first-time buyers find their dream home at the right price.”
Here are eight common misconceptions homebuyers can have about new construction homes. Have any of these crossed your mind? Read on to separate the myth from reality.
Newly built homes cost more than resale properties.
Fact: While the base price of new homes sometimes costs more than a resale, buyers need to consider the full operating costs of both types of homes.
“You get better value with new construction, especially because you don’t have to budget for a new air conditioner, which costs $6,000 to $8,000 or a new roof,” says Lynn Charlas White, a broker assistant with Coldwell Banker Residential Brokerage in Naples, Fla.
Not only is everything new, but you also get a warranty with a new home. Buyers should also assess the energy cost of a home when comparing homes, according to Stahl. A savings of even $60 on your monthly energy bill can roughly equate to improving your purchasing power by $10,000.
“Buyers don’t always think about it, but new construction pays off when you want to sell it because you could be selling a 10-year-old house vs. a 40-year old house,” says Bob Kulpinski, vice president of sales and marketing for Taylor Morrison Homes and Darling Homes in Houston.
New construction takes too long for buyers who need to move fast.
Fact: All builders have some inventory on the ground to capture buyers who need to move within a certain timeframe, Kulpinski says. Buyers can find homes that are complete and ready for someone to move in as well as those that are 30 to 60 days or slightly longer from completion.
Meritage Homes’ LiVE.NOW homes, which are designed for first-time buyers, are always available for quick move-ins, Stahl says.
You need more cash for a newly built house.
Fact: The amount you’ll need for a deposit and down payment depends on the builder, the house you choose and the options, says Gary Gentry, a Realtor with Keller Williams Realty in Austin, Texas, but generally you don’t need any more cash than you would when you buy a resale.
“You can finance new homes with conventional loans, jumbo loans, FHA loans and even VA loans, which don’t require any down payment at all,” Gentry says.
You only need to make a bigger deposit if you upgrade to over-the-top options or build a custom home, Kulpinski notes.
You can’t negotiate when you buy a new home.
Fact: While builders often want to keep their base prices consistent, buyers can usually negotiate on other items, says Pamela Keyes, a sales associate with Coldwell Banker Residential Brokerage in Naples, Fla.
“It always depends on the builder and market conditions, but you can often negotiate to get upgrades that aren’t advertised such as the next level up of tiling or cabinets,” Keyes says. “Sometimes you can get extra closing cost assistance or have a lot premium waived.”
While builders sometimes offer cash incentives, Stahl says upgrades and options are better for buyers.
“If you negotiate for upgrades like blinds or landscaping, which you know you will need and have to pay for in your new home, you’re getting the full value of the item upfront,” he says. “You are truly saving that money rather than having to spend it out of pocket or financing it on higher interest credit cards that add to your monthly bills.”
You can’t have a home inspection on a newly built home.
Fact: While there are always multiple inspections as a new home is being built and when it’s complete, White points out that buyers can also hire their own home inspector prior to their closing to make sure nothing has been missed during the other inspections.
You have to make too many decisions on a newly built home.
Fact: Some buyers relish the chance to choose everything in their new home, but others think that experience could be overwhelming. However, homes are available for those that want new but don’t want to make a lot of decisions.
“You can find a nearly complete or totally complete home from most builders, so all the choices have been made and match what most buyers want,” Gentry says. “You can also choose a builder that offers just one or two packages with everything that complements each other, so all you have to do is pick a package.”
Buyers often don’t realize that most builders have a designer on-site and knowledgeable salespeople who can make the selection process much easier and help them stay on budget, Keyes says.
You can’t use a real estate agent when you buy a new home.
Fact: Most builders welcome buyers’ agents as a partner in the process of buying a new home. White, Keyes and Gentry all assist buyers with new homes as much as they help them purchase resales.
“The builders pay our commission, not the buyers, so it doesn’t cost any more to have someone representing the interests of the buyers,” White says. “We can help people decide which lot to buy, which upgrades they should invest in and help them evaluate community amenities and HOA fees.”
It’s hard to visualize what your home will look like.
Fact: Most builders have at least one model home on-site, but Gentry says buyers can also visit model homes in nearby communities or look at virtual reality tours of models. Another option is to have the sales professional ask recent buyers of the floor plan you’re interested in if you can view their home so you can get a feel for the room sizes and ceiling height.
Long-term thinking about the value of newly built homes, such as floor plans that match the way people live today, energy-efficient systems and the most up-to-date construction materials and techniques, can tip the scales for buyers weighing new and resale homes.