In this competitive resale market, it's not a bad idea to consider new construction for your next home. Buying new means not having to rush to a decision after a 15-minute showing and trying to outbid ten other people. But before you write that check to the builder, consider a few things.
- Is your timeline very important? Some builders have inventory that is ready or nearly ready to sell. Others won't pull permits until they have a buyer under contract. A dirt start can take 7-9 months to complete, and most new construction contracts will give the builder up to 2-3 years to actually deliver the home.
- The prices advertised online are the base prices for the home, which buyers almost never pay. For most home builders, there are quite a few "extras" like central air conditioning that are not included in the base price. Certain lots in the development will have an additional premium for size, views or the proximity to open space. On top of that, buyers can sometimes spend up to 20% of the price in upgrades at the design center.
- Moving into a new house means everything is clean and shiny, with no one else's grunge to sit in. It also can mean some risk. Unlike older homes where issues like settling have already occurred, a new home is a bit of an unknown. Generally, new construction has a 10-year warranty for structural issues, but that may not make up for the headaches associated with rectifying a bad situation.
- Earnest money deposits that are due at the beginning of the contract period can vary from $1,000 - $10,000. This deposit is held in escrow and put toward the buyer's down payment at closing. But unlike resale properties, these deposits are often non-refundable. While a state-approved resale contract gives the buyer many opportunities to inspect aspects of the home and terminate the deal, the builder contracts typically only refund earnest money for a failure to secure financing. Home inspections are welcome, but a buyer's dissatisfaction with the results do not warrant an earnest money refund.
Home builders are usually very welcoming to buyer's agents, as long as the agent accompanies the buyer on their first visit. A good buyer's agent also knows the questions to ask to prepare buyers for the process and potential hazards. If you're thinking about visiting a new home site, it's very much worth it to have an experienced agent meet you there.
I would love to help you with your real estate journey.
Please contact me at 303-917-7143 or robbin@elevatedrealestate.com
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