Buying a New Home Build can be an exciting endeavor and buying an Existing Home can also be fun and rewarding. Let’s take a look at both and see if we can’t find the right fit for you:
New Home Build Advantages:
- Warranty – most new homes come with a one+ year warranty. The likelihood of any repairs in the first years is low. Many new home builders will have 5-10 year warranty’s on the foundation or other parts of the home.
- Design, materials and workmanship – You’ll enjoy the latest in energy efficiency, building techniques and appliances. Homes generally will be stronger and last longer.
- Landscaping – generally, the front yard will be landscaped. The backyard will be a blank canvas that you can create to your own choice. <The HOA will determine the timeline requirements for the backyard landscaping>
- Options – if you purchase a new build in the right stage, you will have numerous options for upgrades. Flooring, cabinets, kitchen and bath countertops, even changing a room into a den/office. Keep in mind most options have a 50% prepayment requirement. The balance of the 50% can be put on the loan.
- Closing Costs Credits – Most New Home Builders have a preferred mortgage lender. If you choose to use the preferred lender, they usually offer some closing costs credits. I’ve seen credits of $5,000. It should be noted that buying from a New Home Builder, you’ll have to pay all of the closing costs vs. buying an existing home, closing costs are shared between the seller and buyer. So the $5,000 might look good at the start, however, it’s a bit less than $5,000 in the end.
Existing Home Advantages:
- Price – generally the price of an existing home is less than a new build. How much less will depend on the location, area amenities, construction materials and upgrades in the home. And depending on the market, an existing home price might be negotiable. For sure the terms and conditions will be. <New Home Builds are non-negotiable, you buy and pay their fees or they will move on to the next buyer>
- Character – existing homes will probably have lots of built-in’s, a finished backyard, upgrades in the home. If these unique touches are to your liking, they can be very beneficial. It’s interesting to see different buyers and their preferences. Some like the idea of sweat equity (working on the property to build the value of the home) and others like a turn-key scenario (one that is finished, ready to live in and enjoy).
- Location – existing homes are plentiful and if you’re patient, you can find one in most communities. The challenge maybe to find one in your price range and to your liking.
- HOA/CIC – existing homes may not have an HOA/CIC. If you’re preference is to not have an HOA/CIC, you may want to lean towards an existing home.
- There is a new trend in the HOA/CIC area for new home builds. It’s called an LMA or Land Management Association. There is no governing board to oversee rules and regulations. It’s an organization that only maintains the public areas. While there is still a monthly fee for an LMA, it’s relatively low. Not very many LMA’s out there, but they are gaining popularity.
Top Tips:
- After you’ve decided on locations that you’re interested in, take a look at a few new home builds to see what they are like. Pricing, design, terms and conditions. I should caution you, please take your realtor with you on your first visit. If you don’t, the new home builder will lock your realtor out of the transaction. Keep in mind that the seller pays all realtor/broker fees so the new home builder has two advantages by locking out your Realtor:
- The new home builder benefits financially because they don’t have to pay the buyer Realtor/Broker fees.
- You have no professional representation during the contracting and inspection process.
- Presently, building supplies, materials and labor are in great shortage. I’ve seen buyers receive 4 notices of delays. What was supposed to be a 4-6 month window for move in, can become a 1-2 year wait. In fact, one of the clauses with a new home builder here in Reno is that it can take up to 2 years for the builder to deliver the home. If you go the new home build route, be prepared for delays.
- Existing home repairs – While you will certainly have a home inspection, there are no guarantees that an existing home will be completely trouble free. Also, the older the home, the more likely something could need repair in the near future. Just be cognizant of the situation and be patient when something breaks down.
- A home warranty can be of help in this area. There are several levels of home warranty that cover a number of different items in the home. Do your research and know the rules of that home warranty company and watch their service ratings.
- Meet with your spouse to discuss the priorities for your next home. Having an agreement on what you’re looking for is very important and yes you can change your mind and adjust as you go through the process. Having a starting point with agreement will make the process much smoother.
