9 Things To Know When Buying A New Construction Home
There is a lot of new development going on in the area, and if you’re looking to buy a home, you might be wondering, is it better to go with a new build or an already existing house? That’s a great question, so today we’re going to walk through nine things to consider when buying a new construction home.
1. What is your experience in relation to selling or buying new construction homes?
I have been selling real estate for six years and have been the number one agent in my market for three years. I sell both resale and new construction. I’ve sold big national production builders like Quadrant down to local builders like Azure Northwest and Garrette Custom Homes, as well as custom builders like Zetterberg Custom Homes.
2. Why would a home buyer choose a new construction home over a home that is already built?
The simplest answer is that they are the newest homes. They are typically on trend with contemporary floor plans and upgrades that more modern construction offers, such as upgraded internet wiring, Smart home options, modern finishes, and, if a buyer gets in on the opportunity during construction, they can even choose their own finishes for a more custom experience. Additionally, depending on the timing of the purchase, builders may be offering incentives that resale can’t offer, such as a rate buy down, funds towards closing costs, or even just a lower price.
3. Do new construction homes typically come with any kind of guarantees or warranties? If so, what do these cover?
Most builders will offer a 2-10 Home Buyers Warranty. This gives peace of mind to the buyers that small cosmetic items will be handled through the first year, systems are covered for two years, and structural issues will be addressed up to 10 years out through a third-party insurance company. You should ask to review the warranty prior to getting into contract.
4. Should a buyer of a new construction home have a home inspection? Why or why not?
Yes, but note that oftentimes it is not contingent on the sale, it’s just for your information and to guide the builder’s last-minute touch-ups for the final walk-through about 10 days before closing. You want to find an inspector who will also do a follow-up inspection at your one-year mark so you can note any cosmetic issues to the builder, like settling cracks or nail pops, and they can tidy those up too. Most often the home inspection finds “blue tape” cosmetic fixes.
5. Can a home buyer expect that a new construction home will be completely without issues? What are some issues that might happen, and why do they occur?
No home is perfect. An appliance may malfunction and need to be repaired or replaced, or a larger issue like incorrectly installed flooring might come up. Drainage is another problem that some have had to handle with the builder after closing.
6. What can a new construction home buyer expect will need to be done to their property in the first five years of ownership?
There are always things that you are going to wish you’d done differently, since no home is perfect. We aim to hit 85% of perfection when home shopping, even with new construction. For the most part, in five years you can expect some appreciation in equity and peace of mind that you are in the housing market.
7. Do new construction homes tend to increase in value from purchase, or are they more like a new car, where some value is lost initially?
No immediate loss can be counted on, and they will increase in value long term. However, reselling right away could be harder if you are in a community where more new construction homes are being sold, unless you undercut the price of the builder. Buyers will most often pick a new construction home so they can make their own personal choices rather than buying resale, unless the resale home is built on a premium lot.
8. What would you caution a new construction home buyer about before they closed on their home?
Shop local for an agent and get pre-approved so you can know your budget for your monthly payments. Oftentimes the big builders will have a preferred lender that will offer great rates and rebates, so those are worth comparing with the lender you have. But always know your budget and shop local—the best local agents will have experience with every builder and they will know how to get the freebies thrown in like blinds, appliances, and other smaller upgrades.
Pro Tip #1: The cost to sell a home is expensive, so if you aren’t planning on owning it for more than two years then you should consider renting instead.
Pro-Tip #2: If you are shopping a big national builder, look at houses around the end of the quarter when they need to report numbers to shareholders. That could be an opportunity to possibly negotiate on price or receive a builder credit on closing costs.
9. Do you have any stories about new construction purchases that didn’t quite go as expected?
Oftentimes the issues are with completion date and not hitting those targets, so be flexible and know it’s probably going to get delayed, but it should be worth it in the end.
Paige Schulte, top real estate agent in Gig Harbor and your neighborhood expert, has all you need to know about our wonderful community. Visit Paige’s Gig to learn more.
Interested in selling your current home or starting the search for your dream home? Call us today at (253) 313-4093 or book a call at your convenience.