Pros and Cons of Building New Construction

The market is ever-changing. While many would prefer to build their home to their exact specifications, new home premiums (which can be as high as 40% in certain markets) may prevent some from being able to go that route. When inventory is low for resale homes, many buyers look to new construction despite the extra costs.

There are different ways to purchase a newly built home. Some may choose the land, pick out the architect to draw up the home plans, find the contractor to build the home, and manage it from beginning to end. However, the majority that purchase new construction homes will find a home in a development, where the homes have similar styles. The home could be already built (but never lived in), in the process of being built where you can still add your custom touches, or you can choose the lot and the model and customize it how you wish.

Pros and Cons of buying a new construction

Whether your home is a pre-built new construction or one that you have your hand in the entire process, that new home smell may give you the sense of accomplishment. But is it worth it?

Let’s look at the pros and cons of buying a new home.

Pros of Buying New Construction

  • The biggest pro is that you can customize your home as you wish, especially when you manage the home building experience from the beginning. Therefore, you can choose your style, layout, number of bedrooms and bathrooms, all the way down to light fixtures, faucets and flooring.
  • The next biggest advantage is there’s nothing to fix! You just close on the home, and move right in. The high likelihood that you won’t have to think about maintenance issues for quite a while.
  • New homes come with a warranty, in the unlikely event that something needs repair. Newly built homes are typically more energy efficient, and therefore usually come with lower utility bills each month.
  • New construction allows you to own a home that is current and trendy, with the open layout, large master with big walk-in closets, and other must have features that many desire. Some older homes won’t even allow you to add the large customized shower due to restraints in the layout.
  • New homes typically come with the latest technology must haves — such as wiring for speakers, cable and internet, alarm systems, etc. It’s also much cheaper and easier to add items like whole house vacuum or heated floors in the construction phase than trying to add it to an existing home.

Cons of Buying New Construction

  • The number one disadvantage is that new construction typically costs a lot more than a comparable existing home. Every time you add an upgrade or an amenity, you add dollar signs to your overall cost.
  • Of course, another con to buying new construction is that it may take much longer to close and move in. It could potentially take up to a year, or sometimes even more, to find the land and builder, and get the home built and complete. And, there are often delays.
  • Location can be a huge disadvantage when going with new construction. Many newer developments are built far from the city, far from the schools and grocery stores, and farther from work, causing longer commute times.
  • New homes in developments are often built on smaller lots so if it’s land you crave, you’ll need to start from scratch.
  • When buying a new home in a subdivision or development, if you are one of the first to move in, realize that you are going to be living in a construction zone for some time and you’ll have no sense about the neighbors.
  • Another thing to think about is the lack of landscaping that will come with your new construction. Mature trees and full grass are typically not part of the package. If you are a homebuyer that likes architectural details and that old charm, you may find disappointment in a brand new home in a development which typically has less character than many older homes.
  • There isn’t as much room for negotiation on price as there sometimes is with existing homes for sale. Builders and are usually pretty firm on their asking price.

It isn’t necessarily better or worse to choose new construction over an existing home. The choice will depend on your needs and your specific situation at this point in your life. Buying a resale home and building a new home both have advantages and disadvantages. There’s something mystical about building a brand new home that you have designed just the way you want it. The choice is yours, and here at Nestiny, we hope you weigh the pros and cons and base your decision on what is best for you.

p.s. Some helpful tips if you decide to go new

  • Find a Real Estate Agent familiar with new construction that is not affiliated with a builder. Typically, when you are looking around at different developments and model homes, they are staffed with Agents that represent the seller. You need your own Agent who will look out for your best interests and be sure to involve your agent in every step. They will have your back. If you're thinking to yourself, "Do I really need a Real Estate Agent when buying a new construction?" read this article.
  • Choose the builder first, then pick the home. Research the builder — look for testimonials and reviews, contact owners or the HOA in the development you are interested in, contact the county, check with the Better Business Bureau, and ask your Agent. A reputable builder will live up to expectations. Your biggest risks are delays, poor quality construction, and non-completion, so do research to assure these issues do not happen.
  • Get creative when negotiating cost. Builders are typically firm on their prices, so ask for closing costs, options or upgrades. Because prices are documented, builders do not want future buyers to expect a discount, so they are more willing to negotiate on the back end. Ask your Agent to research other deals done with the builder to see their negotiation methods.
  • Be careful about adding on options. Builders advertise starting prices, but the add-ons add up quickly!
  • Get everything in writing. Don’t sign anything until you have been able to discuss and agree to everything. List how the home will be finished, what happens if deadlines are not met, and establish a reasonable date to be able to cancel the contract and receive a full refund if the home isn’t complete and delivered by that time. Or, set up an escrow account that says if the work isn’t complete by a specific date, the money in escrow will go to hire someone else to complete the work. Just make sure everything is in writing.
  • Ask for a guarantee, since you will most likely close before the home is completed. Also, make sure you have a home warranty, and find out what the warranty covers.
  • Get a home inspection prior to moving in — that’s not just an important step when buying a resale!
  • Have your Agent help you find the best lender, even if the builder offers incentives to use his lender. Research and get quotes from several lenders. You owe it to yourself to find the best deal. This is a huge commitment and investment.
  • Expect changes in products, and in time frames. Things happen. Flooring is discontinued, bad weather comes. Be flexible.

And, here at Nestiny, we wish you GOOD LUCK in making your new construction dreams come true!

Want more advice about all things home — including homebuying or selling advice? Nestiny is a great place for homebuyer education and to help you gauge how ready you are to buy a home. Journey Homeward allows you to enter all your wants and needs while the True Affordability Tool will break down your budget, showing what you can comfortably afford. You will also receive a Ready Report that will give you a vital head start in the home buying journey, saving you valuable time and money.

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