Yesterday I was on the road showing houses with a couple of buyers. We saw both 20-year-old homes and recently built homes.
When you compare the quality and cost of these properties, you realize that often-times you get a better deal buying an existing home than building a new one.
Why Buyers Prefer New Homes
Here are some reasons why buyers prefer a new home over a “used” one:
- You can design the layout, pick the colors of walls and carpets, choose your appliances and personalize decorations. A new house represents YOU.
- A new house is warranted by the builder, so you can rest assured that someone will come and fix major items when they break.
- There’s no competition when you select a new home. You don’t suffer the frustrations of losing to other buyers in a bidding war.
- You live in a place that’s completely clean and fresh.
Reasons Why Buyers Pay Too Much
When you build a new home you typically spend more than for a similar existing property.
Case in point – yesterday, we saw a 1-month old condo listed for $200 / sqft, while a comparable 15-year-old condo was on the market for $150 / sqft.
Why do buyers pay more for new construction?
- Building materials and labor are way more expensive than 10 years ago. That’s why most new construction homes start at $180 / sqft.
- There’s a “builder bonus“. You pay more for a new home just because of the hype surrounding a new subdivision. That’s especially true when you buy during “phase 1” of a development.
- Options increase the base price of a new home by 20 to 30%. Let’s be honest, when you build your dream house you don’t want to be cheap. You want expensive trims, granite counters, upgraded carpets, the best appliances, 10 ft ceilings, bay windows, and more. These options come with a price.
When Paying too Much Becomes a Problem
If you plan to live in your dream home for more than 10 years you should pick the features you really like, even if they are more expensive. After 10 years your property will have appreciated, you will have more equity and will be able to sell for a gain.
Buyers who sell a new built home in 5 years or less will probably lose money.
- The “builder bonus” I mentioned above is gone. Buyers are not willing to pay a bonus for a 2-year-old home. Often, they can build a new one for the same price.
- Options and upgrades are not worth 100% when you sell. A potential buyer may not value the upgrades you selected. Appliances or carpets will have a much lower value after 2 years than new ones.
- The cost of selling a house is roughly 10% of the sale price. New built homes hardly appreciate in the first 2 to 3 years. Just like new cars, many even lose in value as soon as you move in.
How Can You Get the Best Deal on New Homes?
There are good deals to be had on new homes. I can help you find them.
I have represented many buyers on new construction homes. Some saved more than $100,000 as compared to the builder’s retail price.
Here’s how I will help you get the best deal:
- Finding inventory homes that builders need to sell quickly and are willing to discount.
- Knowing when builders run specials and promotions.
- I can often negotiate upgrades for you.
- We know what buyers are looking for, so I will recommend options that will truly increase the value of your property.
Call or text me at (614) 975-9650 before you talk to a builder!
Susanne Novak has been a Realtor since 2007. She is the broker and owner of RE/MAX 24/7 in the Dublin Historic District. Susanne typically helps 50-60 families each year with their real estate needs. She's your trusted advisor when you search for your dream home, and a skilled negotiator when she lists your property to get top dollar when you sell.