Pros and Cons of Buying New Construction

By
Real Estate Agent with RE/MAX Executive Realty 91362

Advantages and Disadvantages of Buying a New Home

Are you thinking about buying a new home? The decision to take the route of buying new construction property can be an exciting one. You can have the home fit your specifications exactly, but there are potential problems as well.

Whether you are getting a construction loan yourself to build your dream home or working with a builder, it is essential to understand the pros and cons. If you'll be doing your own financing it will be imperative to understand how new construction loans work. You'll get a top to bottom guide by reading the detailed resource at Maximum Real Estate Exposure.

Let's review the pros and cons of buying new home construction properties.

First, let's look at the pros of buying new construction.

Brand New Equals Fewer Issues

Living in a brand new home that no one has lived in before, means that everything is going to be clean and fresh. You won't have to worry about any surprises the former owner might have left, and you'll be sure that everything is really clean. All of the major systems in the house including the kitchen appliances will be new and to your specifications. It is extremely rare that you will find the kinds of problems you'll find in an older home as well.

Typically, in order to get a use and occupancy agreement, a builder will need to have passed various inspections from city or town officials. Building codes are much more stringent today than they were in years past. Obviously, a significant benefit if you are buying a new home.

Customizing a New Home

Buying new construction should allow you to make customizations to the details of your home. This is going to be better and closer to your ideal home than a property someone else had lived in could ever be.

There are a lot of things that can be customized to meet your requirements. Select the color of the exterior, choose your kitchen layout, and the appliances you want. You could even go as far as choosing where you want light fittings and electrical outlets positioned.

The floor plan can be custom-tailored to your exact living needs.

Save Energy With a New Home

Newer homes should be more energy efficient when compared to properties built to the standards of the past. Buying new construction properties offers homes with better insulation, more efficient heating, and cooling, as well as appliances that are cheaper to run. New construction today is greener than it has ever been.

You can help this further by choosing more energy-efficient options for your home. You could specify things like LED lighting, smart thermostats, and more efficient flushing toilets if your contractor doesn't already offer them.

Fewer Maintenance Issues

With a new home, the likelihood that you will have to spend on repairs will be reduced. It isn't impossible that there could be problems with a new build, but you are less likely to run into issues. Your contractor may include a warranty or give you the option to purchase one. This further removes the stress of buying a new home and should make sure you don't have to worry about maintenance for the first few years of owning the property.

There are some downsides to buying new construction, however, let's look at the cons.

The Builder Might Not Be The Best

All building contractors are different, with different standards and experience. If you choose badly, your new home could be more of a nightmare than a dream.

You might be tempted to use a less expensive builder, but if they don't have a good track record, you could be in for trouble. You should instead, look for a contractor with a good reputation and many happy customers. Make sure that they produce quality homes on a reliable basis. Check what previous customers think of them and search for complaints.

There are numerous questions to ask a builder before ever committing to building a new home with them. Read one of the best new construction guides you'll find based on years of experience.

Your Options Could Be Limited

Customization may be more limited than you might have imagined. The builder might limit you to certain changes, or only a few color choices for the interior or exterior. This might be because the plans limit you, or the builder has only factored in certain options. If you want anything different, you will have to make the changes after closing.

The lack of customization is especially true when you are dealing with a large national builder. Some of these franchises have strict guidelines and limited customizations available to buyers.

Making an Upgrade Can Be Costly

The initial price you are given by the developer is only the standard price, if you want anything above the minimum, you will have to pay more. Making sure the property is everything you want can start to get very expensive. Perhaps you would like wooden flooring when the standard offering is carpeting. If the kitchen isn't quite as good as you want, the extra costs to upgrade appliances or countertops will add up.

Many buyers have no idea that upgrading to what they really want can be significantly more expensive than the base price. When buying new construction it is super easy to find yourself with an "extras bill" running upwards of tens of thousands of dollars and more!

Discounts Are Usually Limited

When you are purchasing direct from builders, there isn't normally any room for negotiating discounts. There will be a standard price for the home with upgrade costs added on top. The builders are unlikely to want to negotiate their price down. Of course, this isn't the case when you are buying a pre-owned home where the market value and other factors allow for negotiations.

When it is a strong seller's market, builders rarely ever discount their pricing.

Final Thoughts on The Upsides and Downsides of Buying a New Home

When looking at the pros and cons of buying new home constructions, the benefits do outweigh the negatives, though it will depend on your particular situation. It is important to know as much as you can about the process and make sure your builder is going to be reliable before you commit.

It can be beneficial to have someone more experienced to help make sure you get the home you want. Having a real estate agent act on your behalf in discussions with the builder's sales team can make things run more smoothly.

Hopefully, you have found the advice about the advantages and disadvantages of buying a new home to be helpful.

Other Useful Active Rain Real Estate Articles

Get more handy real estate guidance in these previously published articles at Active Rain.

  • Benefits of an FHA mortgage - when buying a home one of the most popular financing choices is an FHA loan. In the article, you'll see why so many first-time homebuyers choose to go with an FHA mortgage as their financing of choice.
  • Downsides with renting to own - are you considering a rent to own arrangement? Before jumping into this type of real estate contract it's vital to know the downsides. See what you should know about leasing to own.

 

Posted by

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

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Re-Blogged 3 times:

Re-Blogged By Re-Blogged At
  1. Barbara Todaro 08/04/2020 11:46 AM
  2. Ginger Harper 08/05/2020 09:04 PM
  3. Joe Jackson 08/06/2020 06:22 AM
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Show All Comments
Rainmaker
5,390,398
Barbara Todaro
RE/MAX Executive Realty - Retired - Franklin, MA
Previously Affiliated with The Todaro Team

Hi Bill....oh, do I miss those days....that's all I did for the last 15+ years in the business... and the buyers who came into the subdivision with agents who didn't know their ass from their elbow were fortunate that I was the listing agent....although my job was also to sell extras in those new homes, and I did!!! the agent who was not familiar with selling new homes, and selecting items that would be beneficial when reselling, were silent... I sold them the items that had the greatest profit margin for the builder.... he loved having me as his agent....  I was doing my job!!!!  

 

Aug 04, 2020 11:38 AM #1
Rainmaker
1,081,630
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Like any great listing agent Barbara Todaro ! Selling new homes has always been one of the most enjoyable parts of the business for me as well.

Aug 04, 2020 01:02 PM #2
Rainmaker
3,678,060
Michael Jacobs
Pasadena, CA
Los Angeles Pasadena 818.516.4393

Hello Bill - a nice look at the differences.   The local market plays an important factor. 

Aug 04, 2020 01:31 PM #3
Rainmaker
102,100
Leanne Smith
Dirt Road Real Estate - Golden Valley, AZ
Relocation to NW AZ with elbow room & more freedom

Bill Gassett your posting is quite timely as I am encountering a less than thrilled buyer who just fired the selling agent/buyer's agent and hired me.  What a mess to say the least.

Aug 04, 2020 02:24 PM #4
Rainmaker
895,871
Gail Robinson
William Raveis Real Estate - Southport, CT
CRS, GRI, e-PRO Fairfield County, CT

I saw your post on Barbara's site and was shocked to find out I wasn't following your blog.  I've corrected that oversight.  

Aug 04, 2020 03:53 PM #5
Rainmaker
2,200,847
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

Good evening  Bill Gassett - that is a good listing of pros and cons.  I personally fee the pros outweigh the cons.

Aug 04, 2020 08:42 PM #6
Rainmaker
2,868,376
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It’s a lot of work but it’s definitely worth it if you’d like some work to do to keep yourself busy, and some people do actually like that I guess. :)

Aug 04, 2020 08:52 PM #7
Rainmaker
2,868,376
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It’s yours cost you that much for it to be yours to do whatever the heck you want to it is my thing, Grant Schneider

Aug 04, 2020 08:53 PM #8
Rainmaker
1,081,630
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Thanks for the comments guys. I grew up in new construction with my father being a builder. It gives me a bit of a bias for the desire to have new homes for sure.

Aug 05, 2020 04:42 AM #9
Rainer
591,871
Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

I have mixed opinions about new homes! Mostly not in favor only due to cost overrunns and budget overrunns

Aug 05, 2020 06:03 AM #10
Rainer
85,421
Erik Hiss
Keller Williams Capital Partners Realty - Worthington, OH
You can trust me for all your real estate needs!

This is always something to consider and advise on. Many buyers assume that newer always means better...not necessarily. Depending on price and location it may not work oout. Plus there is the builder, contractors and limited options in certain price ranges. Many things to consider.

Aug 05, 2020 06:18 AM #11
Rainmaker
1,092,041
Sam Shueh
(408) 425-1601 - San Jose, CA
mba, cdpe, reopro, pe

Buying new homes is the easiest role as a buyer agent. You can get seller credit back. Any issues you pass to the builder.  No need for multiple offers counter back and forth. In our area it is often 6 figures increase. You are tired. 

Aug 05, 2020 07:51 AM #12
Ambassador
4,259,716
Kathy Streib
Room Service Home Staging - Delray Beach, FL
Home Stager - Palm Beach County,FL -561-914-6224

Hi Bill- good list of pros and cons!  My husband is a retired builder but oddly enough, we've only had one new construction home. 

Aug 05, 2020 11:35 AM #13
Rainmaker
247,402
John Henry, Florida Architect
John Henry Masterworks Design International, Inc. - Orlando, FL
Residential Architect, Luxury Custom Home Design

Good comparison.  There is something to be said of older homes and construction quality.  Also, vintage homes have details that are difficult to replicate.  Even old interior plaster is very nice.  Walls are thicker and quieter.  Wood has aged and shrinkage is done with.  Newer homes framed with green wood shrink and crack the sheetrock.  New homes may have unforeseen foundation issues, plumbing and electrical problems that have not been worked out, issues with flashing, etc.  New houses are theoretically more energy efficient; there are more interesting and up to date layouts and spaces.  Older houses not built on slab will tend to have wood rot under raised floors over crawl spaces.  On sloping lots, a new house may not have gone through an entire season to see how water runs up to and around the house.  A new house built in the summer up north with green wood will react to extreme cold temperature shifts and cause separation of finishes.  An older one will have weathered this and have been remedied, etc.

Old houses, if air-conditioned, may have issues with duct work and low insulation values.  Windows may leak a bit more but you don't want a zip tight house due to VOCs, especially in new houses as it would be better to have some infiltration.  Older homes have fewer quality of air issues of this kind but may have mold build up in attics that will seep into the conditioned part of the home.  An older home with gas lines may have leaking joints.  Underground waste lines may be rusting, copper plumbing may have leaks, etc.

Aug 05, 2020 05:29 PM #14
Rainmaker
1,400,718
Sheri Sperry - MCNE®
Coldwell Banker Realty - Sedona, AZ
(928) 274-7355 ~ YOUR Solutions REALTOR®

Hi Bill Gassett - As a consumer, I owned 4 brand new homes. All I was able to get the options I wanted...unless the builder was too far into construction.  They could do it but it could also cost you.  

My biggest regret is... I never realized I could be represented by an agent.  So I don't know if I could have had a better negotiation stance. 

Also, I advise buyers not to buy model homes.  Those are the "templates" for the rest of the subdivision.  This is the home or homes they make their mistakes on.  I saw this in my last purchase.  I bought in phase 4 and paid more but had absolutely no problems compared to the same model in phase 1 and the model home. 

Aug 07, 2020 07:35 AM #15
Rainmaker
469,368
Matthew Klinowski, PA
Downing-Frye - Naples, FL
Golf Community Real Estate Specialist

Good morning Bill, great list of pros and cons on new construction. Quite a bit of new construction in our area. I always encourage people to make sure they work with an agent since they can help you negotiate more for your money. Enjoy your weekend!

Aug 09, 2020 05:41 AM #16
Rainmaker
596,567
Linda D. Pufford
Stage with Divine Style - Home Staging - Novato, CA
ASPM, Marin/Sonoma Home Stager

Hi Bill!
Great information about the pro’s and con’s of new construction homes.
I’ve bought both (new construction and resale) and I appreciated your evaluation of the pro’s and con’s on each!

Aug 10, 2020 02:04 AM #17
Ambassador
4,253,062
Jeff Dowler, CRS
eXp Realty of California, Inc. - Carlsbad, CA
The Southern California Relocation Dude

Hi Bill:

Lots of good education here so potential buyers of new construction can be well informed. There are some big differences from buying a resale.

Jeff

Aug 15, 2020 08:45 AM #18
Rainer
169,607
Adam Feinberg
ANCHOR ASSOCIATES - Manhattan, NY
NYC Condo, Co-op, and Townhouse specialist

Buying new construction in a vertical environment such as NYC is far more complicated. I bought a new construction- and it was poorly built. The various inspections by the city are a joke, and their are no protections like a car lemon law, despite the fact that these apartments will be far more expensive than buying a new car. The owners in our building (just 12 apartments) had to pay well over $600,000 to fix the problems in a new construction building.  We still have some items that we should address over time- but at least we fixed the core issues. I wasn't an agent at the time I bought my apartment, but at least I can use my experience to advise buyers on what to look for and various norms.

Sep 02, 2020 07:28 PM #19
Rainmaker
3,423,347
Kristin Johnston - REALTOR®
RE/MAX Realty Center - Waukesha, WI
Giving Back With Each Home Sold!

Great information.  Thanks for sharing and have a wonderful day!

Sep 16, 2020 07:08 AM #20
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Bill Gassett

Metrowest Massachusetts Real Estate
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