Pros and Cons of Buying a New Construction Home
July 10, 2023 | By Chuck Shaver
Is it better to buy new construction or a resale, a home that’s already built? This is a question my customers often ask and it’s a difficult question to answer because there are SO MANY nuances. Often, it’s a matter of YOUR needs. Over the years I’ve encouraged some of my customers to go the route of new construction and then there have been others that I’ve discouraged. So today I’ll be addressing a mess of pros and then even more cons to consider when purchasing new construction.
Over time I’ve tended to be someone that was generally opposed to new construction, but I’ve come to recognize some of the benefits of purchasing a new construction home. You’ll see that today I’m pretty much 50/50, so let’s get to work and look at some of these pros and cons and see which is better for YOU. These pros and cons aren’t listed in any particular order, so be sure to stick around and catch all of these because I’m betting that there are at least a couple that you may not have even considered, especially the last one.
PROS
1. Let’s start with the pros of buying a new construction home. The first and maybe most obvious pro is that you don’t get someone else’s leftovers. There shouldn’t be ANY scuff marks on the walls or stains on the carpet. There shouldn’t be any plumbing leaks that are hiding behind the walls, so there’s comfort there. If there ARE any issues, new construction homes often come with a warranty. You’ll typically have up to a year to point out any flaws that you find, and the builder will usually just come and fix them. Plus, you’re usually getting a workmanship warranty, which is usually a year, and you’ll often get a two-year systems warranty and a 10-year warranty on the structure of the home.
Because these homes are brand-new, you won’t likely have that “black cloud” of remodeling that you need to get around to. Your home is done-good to go for years to come. Yes, some resale homes are in tip-top shape too, but I’ve seen it many times that my buyers ended up doing some sort of remodeling that they hadn’t anticipated after they closed on their resale.
2. Speaking of remodeling and resales, another pro of new construction is that you can be assured that your home is built to code and that you’ll have the latest and greatest safety codes. That’s a big deal for some of my customers moving down from up north with concerns about the heat and the hurricanes here in Florida.
3. When my son was looking to buy a home a few years back Kyla and I encouraged him to buy new construction simply because he wouldn’t have the EXPENSE or the HASSLE of maintenance. He’s less handy than me-and that’s pretty scary, so the new construction route has worked out just fine for him.
Before I get to the issue of the cost of these new construction homes, if you’d like help with the purchase of a home anywhere here in Central Florida, pick up the phone and give me a call.
4. New construction homes generally are more energy efficient. They’ve usually got dual pane windows, radiant barriers and more efficient systems which lead to lower energy bills, saving you a good bit of money over the years. This isn’t like $2 a month, either, it could be a hundred or two hundred bucks on even a moderately sized new construction home to put towards your mortgage payment.
5. Another pro of buying a new construction home is that you get the upgrades that YOU want, not what that wacky guy that had it built wanted back in 1981. If you want a 4-pocket sliding door, ceiling fans, or closet shelving and you’re willing to pay for it, you can have it. The builders these days have more upgrade options than you can imagine.
It’s important to remember that you’ll need to start the process early on as builders usually won’t change a home’s features once they’ve been installed. You’ve got all sorts of floor plan options. Some new construction communities have multiple builders, which provides many options, and some builders offer more options than others. Smaller builders are often very flexible and can do pretty much anything you want, but some of the big boys will, too.
6. Because everything in a new construction home is new and everything should be up to the latest codes, the cost of insurance for these homes is usually less than that of a resale. This shouldn’t be understated, especially the way insurance costs have skyrocketed in the last few years. My son pays like $660 a year for his insurance, whereas a similar sized older home could cost well over $3,500 for the year.
7. Another huge pro of new construction is that because of the time it takes to build a home, you can lock in appreciation and have built-in equity as soon as you close. Of course, I suppose that could work against you in a declining market, but if it was that bad you might just walk away and leave your escrow, which is typically smaller with new construction homes, behind.
Many people that consider the purchase of new construction already own a home, and they’re likely already aware of the stress that can be associated with selling a home and buying a home at the same time. With new construction, there’s usually plenty of time to plan out the process and we often work backwards from the anticipated closing date before listing their current home. I’ve had sellers that were shocked when their home sold in a matter of days and they were freaking out, but when your new home won’t be ready for months, there’s often peace of mind that’s associated with new construction on this subject.
So far, we’ve talked about all the good stuff to consider when building a new construction home and so far, you might think that I’m trying to sell you on how good it is, but hang in there! You’ll see soon enough that it’s not all unicorns and daisies!
1. The first, and what I consider to be the most common con when building new construction, is the headache. When I’m working with buyers of resale homes, I mention the stress it can cause, but it’s a whole other ball game when I speak of new construction. I’ve had customers complain of broken promises and unsatisfactory work by the builders and I’ve seen homes that were promised to be completed in 6 months end up taking 15 months to complete. I’ve seen builders raise the price on buyers AFTER they were under contract, creating all sorts of problems.
If you’re buying a new construction home, be sure you look over that contract thoroughly. It’ll probably take a good bit of time to get through it and you may need an attorney to understand it all, but it’s time well spent. I’m sorry if I sound like Debbie Downer here, but if you’re considering the purchase of new construction, you NEED to be aware that these things have happened. It doesn’t mean that it will happen to you, but it’s a possibility.
2. When you purchase a resale, you typically know exactly when you’re closing. Yes, I know things happen there, too, but most of the time it’s within a couple days anyways. But with new construction, I’ve had customers with delays of over 6 months. Think this delay is just a matter of your inconvenience? I don’t think so. Interest rates can vary widely during that time and have a huge impact on your mortgage payment. These days, some builders aren’t even taking offers on homes until way later in the process, maybe when framing or even later. This helps them more accurately determine a closing date AND cover for increases in supply costs like wood, windows, and all that, which they can then pass along to you and me.
3. The next con is the cost. New construction homes tend to cost more than resales, so you’re paying a premium for that brand-new home. Speaking of the cost of the home, when you drive by a new community and it tells you that homes are starting starting in the, say, $350s, that is WITHOUT ANY upgrades, but I can almost guarantee that you’ll purchase at least some of the upgrades.
These builders are often major corporations and they’ve got professionals working to ensure that they extract the most from your wallet to improve their profit margins. They’re not evil, or bad, or anything like that, they’re a business, just like the one that charges you $13.00 for a fast-food chicken sandwich and fries that you pay so gleefully for.
And these upgrades are NICE! I’ve been with customers that are resolved that they aren’t purchasing what they called “glitz”, but they still ended up spending over $20k for upgrades and I’m no different as the things they do with these new homes are pretty amazing. It’s not uncommon for a regular Joe to drop an extra $50k to $80k on a new construction home, so don’t think you won’t do it.
4. Another con of new construction homes is that a huge majority of them include homeowner associations. Yes, you can have a home built on a private lot and I’ve helped customers with those over the years, but the buyer typically has to purchase the land and then still have the financial strength to afford the home. Of course, you could always do a construction to perm loan or some other option, but that’s a whole other topic. An upside to the homeowner’s association is that IF you get into the community early and you’re an eager beaver, you can potentially have a greater say of what happens in YOUR community.
Speaking of getting into a new construction community early in the process, failing to do so can get you a higher price tag on your home as builders tend to raise prices as they build out a community. I’m not sure exactly why they do this. Maybe it’s because the early owners have to PROJECT what the community will be whereas the later owners are able to SEE what the community IS. Plus, the early owners have a longer period without any amenities like swimming pools or pickleball courts having been built. So, keep this in mind when you’re looking at those advertisements outside the community like I spoke of earlier.
5. The next con is what I believe is the greatest con of all, and I believe it’s the one that nobody considers, and that is charm. Charm cannot be quantified, and I don’t even know if it can be clarified, but what I DO know is that MOST new construction homes lack charm. Most new construction communities are cookie-cutter types. Yes, some of them like Margaritaville have charm as a whole, and that’s a GREAT community, but I don’t even see much charm there. You can buy SOME charm, like one model home I was recently in up in The Reserve at Victoria, but it still doesn’t compete with that older home and the beautiful Live Oak in the front yard.
My wife and I occasionally find ourselves riding around in some older neighborhoods just gawking at some older homes, sometimes built back in the 50’s. Yes, the smaller homes and many rooms isn’t for everyone, but neither is the open concept that is seemingly in every new construction home these days. I don’t mean to hate, but I do LOVE me some charm with a home.
3 Beds
2 Baths
2,236 Sq. Ft
