Thinking About a New House: New Construction or Existing?
Are you considering buying a new home in a newly developed development? Are you attracted to the sparkle and style of new construction? Are you ready to make the move to a newly built house, but don’t know what questions to ask?
purchasing new construction is significantly different than purchasing a used house. It isn’t necessarily harder (in many ways it’s easier) however you do need to consider many factors and ask different questions.
With older construction, you need to bring in an engineer to inspect the house and look for defects. Many older home could have problems, and very often the repair will fall on the new homebuyer. From the seller’s perspective, their offering it at this price for the condition it’s in; while the condition is not perfect, you’re not paying for new construction.
In other words, they’re charging less for a used home because it needs repairs.
New construction, in contrast, should be handed-over in excellent condition. While you will definitely want to do a walk-through inspection prior to closing, the procedure is much simpler. During construction, you can very often inspect the progress of building as it is being done. If you find something that is an problem, you are able to promptly correct it during the construction phase as opposed to going back and fixing it at a later date. Since most repairs and existing homes are the result of the age-such as split foundations, sagging walls, leaky ceilings, and broken pipes, damaged faucets, broken tiles, drafty windows, lack of insulation, etc., you will have very little of these problems with a newly built house.
While you may certainly hire an engineer to inspect a newly built house, they’re generally looking for defects that usually are not present in a new home. Also, since most new homes have a warranty, you have a level of protection you would not have with a used house.
Don’t be misled by the price of an used house. The purchase price is only one piece of the picture. The renovations and repairs necessary to get the house in the way you want could add tens or hundreds of thousands of dollars to the cost of that home. Furthermore, you often need to come up with that money “out of pocket.” In comparison, the newly built house is in as ideal of condition as possible, which is built into the asking price, and can be paid for with your mortgage.
Let’s look at an example: a new construction in Commack NY that is over 3600 sq.ft. is just over $1 million. The house is in brand-new excellent condition and ready to move-in. A similar “used” house in the neighborhood of the same size may be $950,000. While it may seem that you “save” $75,000 on a old house, you’re buying a house that’s 20 years old, will last 20 years less, and already has twenty years of wear and tear. Since most houses have a useful life of 65-75 years, you’d be buying a house with less long term value.
With existing homes, you may need to renovate. The kitchen may need to be replaced, bathrooms updated, and other repairs made. The older home may not be the exact layout you want. This could require structural changes to the home – which may warrant six months of additions while you’re living in the house. These remodeling could cost $50-$100,000 and will be money you will have tocome out of pocket. Had you purchased the new home for slightly more, you would not need to come up with an additional $75,000 out of pocket, would not need to live free six months of construction, and would have a perfect ready to occupy a house on the day you close.
So does this mean new homes are perfect? No. But generally speaking, they are the better option. When talking about something this size and the scale of the new house, there will always be problems. It is far easier to deal with those issues with a reputable builder during the construction process than it is to deal with them on your own after you have bought the house and have no one to turn to. Items such as a leaky faucet or cracked tile can easily be repaired or replaced by the builder at no additional cost whereas doing such repairs on your own with the older house needs time and money on your part.
TIP: Be sure to work with a creditable builder in your area who you can turn to with questions and ideas. Try to produce as many ideas as possible at the very beginning of the process before construction; moving walls after rooms have been built can be extremely expensive, whereas moving them before building is started will carry relatively low cost.
