When it comes to buying a home, often buyers feel that building new is the superior route over previously owned homes. What is often overlooked however are the sneaky hidden costs that drive up the price of new builds. Below are some of the expenses that often get forgotten when considering building a new home.
• The first big sticker shock when you are building a new home is that what is listed in that glossy brochure is not what you’re going to pay in the end. It might seem like a no brainer, but the big billboard teaser amount is nowhere near the amount you’re going to write on that closing check. Prepare yourself for the bottom line to be a much bigger number than you expect.
• Latent defects – Independent Home Inspection is still necessary. Even though everything seems shiny and new, builders do sometimes make mistakes, have oversights, or even sadly take shortcuts. Protect your most valuable investment and make sure you have an inspection done. Making sure the inspector is not affiliated with the builder is also key to a thorough inspection.
• Upgrades – Basic amenities come standard, but upgrades will cost you. Is it worth the price the builder is charging, or would it be more cost effective to do the upgrade yourself after move in? You might also want to take into consideration whether upgrading might make your home over improved for the area.
• Costs won’t stop after you close. Budgeting a cushion to make the house your own is a must. Now might be the time to do those upgrades you decided were too costly for the builder to do. Consider also the cost of running new utilities into your home for the first time, and landscaping your barren front and back lot.
• Home Warranty – It’s a brand new house, so why spend big dollars on home warranty service? You definitely don’t want to skimp here. Houses settle, and you’ll want to be sure you know your coverage and length of coverage so that any unanticipated bumps, breaks, or cracks can be covered by the builder in the early days.
• Lacking essentials – Where are the curtains, and, wait, where is the refrigerator? What exactly was included in the purchase price? Budgeting for necessities like major appliances and window coverings is a cost of new builds.
• Mortgage – Will the builder’s terms be the best? Sometimes, but it isn’t a given. It is always best to have representation of your own to navigate the terms of your mortgage and make sure you are getting the best.
• A new community is wonderful. Or is it? You have no idea. There is a downside to building/buying in an unestablished neighborhood. Previously owned homes come with neighbors and neighborhoods with established histories. You can research school districts, crime statistics, and get a feel for the neighbors themselves. New builds offer a blank slate. While that is not necessarily a bad thing, it is a cost to consider.
Overall there are pros and cons to both new builds and previously owned homes. Armed with resources like knowing potential hidden costs, home hunters can make the choices that best suit their needs.
