Be aware of all the costs of a newly built home
There's a certain excitement that comes with purchasing something "brand new." Whether it's the stylish look of a new outfit or that famous new car smell, you're eager to explore the item's untested potential and make it your own.
It's no different with purchasing a home advertised as new construction. These properties include the latest styles and building techniques, and are usually considered more reliable and less prone to defects than older, existing homes.
Buying a newly built home has the potential to save you money on maintenance and renovation costs, since you probably won't have to replace any systems or materials for several years. Still, you'll want to be aware of some unique costs involved in this type of purchase.
At the outset, you'll almost certainly find that a new construction home is more expensive than a comparable existing home. According to the National Association of Home Builders, the median price of a new home in 2016 was $313,200 while the median price for an existing home was $235,500.
There are several reasons for the higher price. Holly Johnson, writing for the financial advice site The Simple Dollar, says new homes tend to be larger and have more features than existing homes. The higher price also accounts for things such as the cost of the building lot, building materials, and the builder's profit margin.
You'll want to find out exactly what is included with the property. Jennifer Lyons, writing for the real estate site Zillow, says the builder may leave out several features in order to let the buyer choose items that fit their personal style. You might find that the newly built home does not include a refrigerator, washer, dryer, or window treatments.
Landscaping is often left to the buyer's discretion in new construction as well. Sometimes only the front yard will be landscaped. Amy Fontinelle, writing for the financial site Investopedia, says decks and fences may also not be included with the home.
Make sure you know what finishes are included in the price. A builder's model home often showcases high-end materials for countertops, cabinets, and other features, and these materials can easily increase your expenses. Alternatively, Johnson says a new home might include less expensive baseline materials that you'll eventually want to upgrade, increasing the cost of the home.
Just because the home is new, buyers shouldn't forgo a home inspection. Fontinelle says an inspector who is independent from the builder might uncover defects that could cost a lot of money to repair down the road. Find out if the property comes with a warranty and see what repairs it will cover.
Buyers of both new and existing homes can easily overlook costs associated with homeownership. Sara Rathner, writing for the National Association of Realtors, says these include utility bills, furnishings, and the cost to commute to your job.
Newly built homes are often located in communities with condominium or homeowners association fees, which cover services such as snow plowing and maintenance of common areas. If the property has these fees, you should make sure that you are aware of them and that they are included in your budget.
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