Are you considering buying a brand-new home directly from a builder? As appealing as it sounds, this option can have its complexities and surprises. Here’s a comprehensive guide to understand the nuances of buying a home from a builder and what you should keep in mind before diving in.
Why the Surge in New-Home Sales?
With a frustrating lack of existing houses on the market, buying from a builder has become a popular solution. New-home sales have accounted for 15% to 20% of recent home sales and could even reach 30% in some markets, a significant jump from the historical average of 10%.
The appeal of brand-new homes is apparent in neighborhoods where homeowners are reluctant to sell their homes due to low-interest-rate mortgages. Moreover, the price gap between new and old homes has been the smallest in nearly 20 years. For instance, in June 2023, the median sales price for new houses was $415,400, compared to $410,200 for existing homes.
In addition, builders are offering various incentives to attract buyers. Hayley and Tyler Dupee’s recent purchase of a new four-bedroom home for about $312,000, including smart-home security and window blinds, exemplifies how such incentives can sway decisions.
Advantages and Challenges of New Homes
While new homes offer fresh, customized spaces, there are aspects that potential buyers must consider:
- Time Frame: Buying an existing home might be quicker, but new homes can require more than eight months to build. Delays are common.
- Cost: New homes are typically more expensive, and potential completion delays can impact moving dates.
- Customization: You’ll have the opportunity to select features and finishes, but misunderstanding contracts and cutting corners in the wrong places can create problems.
Here are five essential considerations when purchasing from a builder:
1. Determine Worthwhile Upgrades
- Essential Upgrades: Focus on features that are hard or costly to change later, like gas lines or electrical wiring.
- Invest in ROI: Spend in areas with a high return on investment, such as the kitchen and critical home systems.
- Smart Savings: Opting for a 36-inch upper kitchen cabinet instead of a 42-inch one can save about $600.
2. Choose Where to Cut Corners Wisely
- Roof Pitch: Lowering the roof pitch from 8/12 to 6/12 can save about $1,500 on a 2,000 square-foot home.
- Drywall Choices: Selecting square corners instead of rounded ones could save about $200.
3. Read the Fine Print
- Material Substitutions: Builders may change materials based on availability. Know your rights and what can be altered.
- Appliance Inclusion: Check if appliances seen in model homes are included in the standard package.
4. Have Extra Money Ready
- Price Increase Rights: Builders can increase prices based on material costs. Set aside 10% to 15% for contingency budgeting.
5. Don’t Expect Perfection
- Home Inspection: Even with a new home, pre-drywall inspections and thorough checks at various construction stages are essential. This can cost between $280 and $400 but is well worth it.
Conclusion
Buying a home from a builder can be an exciting opportunity to own a customized space that fits your needs. But it is vital to approach the process with caution and thorough understanding.
Embrace the chance to make your home your own, but be prepared for unexpected costs, delays, and the need for meticulous oversight. With careful planning and consideration of the points mentioned above, you can navigate the process more smoothly and enjoy the unique benefits of owning a brand-new home.
So whether you’re motivated by builder-included incentives or the chance to avoid bidding wars and expensive renovations in existing homes, take these guidelines to heart as you embark on this exciting journey into homeownership.
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