Why consider buying a newly constructed home?
Put simply, homeowners aren’t selling unless they have to. The housing market has seen its first decline in active listings since February of this year, headlined by a 17% year-over-year decline in newly listed homes.
With so many homeowners holding out for a change in the market before they list their homes, new construction and recently renovated homes (flips) have become one of the only viable, and certainly most attractive, sources of housing inventory.
Buying new construction & renovated properties
Buying a new construction home can be an exciting experience, as you get to be the first person to live in the home and have the opportunity to customize it to your liking. However, there are also potential pitfalls to be aware of when buying a new construction home. Here are some common mistakes that first-time homebuyers make when buying a new construction home.
Common Mistakes When Buying New Construction & Renovations
- Not hiring a home inspector: Even though the home is new, it’s still a good idea to have it inspected by a professional. This may help you identify any issues with the build quality and make sure everything is functioning properly prior to moving in. Water tests are also advisable if the home includes well water.
- Underbudgeting: New construction and newly renovated homes typically come at a premium, and may tempt you to stretch your budget. This can often be harmless, but make sure you budget for routine homeownership costs, such as landscaping and snow removal, as well as surprises along the way, like mechanical failures, property tax increases, and other living expenses.
- Not checking the builder’s reputation: The reputation of the builder can be a good indicator of the quality of the home. Be sure to research the builder and read reviews from previous customers before you buy the home. Some builders may cut corners or may even leave parts of the project incomplete if they run out of time or money. These can often be dealt with after the fact, but cause huge headaches and may have extra expenses, so they’re generally best to avoid.
- Not comparing lenders: Builders will often have in-house lenders that may offer attractive incentives, but it’s always best to compare lenders in order to find the one that best fits your needs.
- Not negotiating the price: Even on new construction or renovations, the price may still be flexible. Check to see how long the property has been on the market. If it has been on the market for two months or more or has had any previous price reductions, this may be an indication that the sellers are open to negotiating.
- Not getting a home warranty: A home warranty can protect you against unexpected expenses if something goes wrong with the home. Though they’re not necessary, they may provide some nice peace of mind as you enjoy the comfort of your newly renovated home.
Summary
Buying a newly constructed home or newly renovated home can be a great opportunity, but it’s important to be aware of the potential pitfalls. Be sure to hire a professional inspector, consider hidden costs, research the builder’s reputation, read the fine print, negotiate the price, and get a home warranty. By avoiding these common mistakes, you can be confident that you are making a smart and informed decision.
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Source: totalmortgage.com