According to the U.S Department of Housing and Urban Development production of single-family homes is estimated to reach 840,000 units in 2016, that is an 18% increase since 2015. So if you are in the market for a brand new home then you have plenty of options, unfortunately new residential construction is coming to a steeper price. The average price for a new home jumped $100,000 since 2009, according to the National Association of Home Builders (NAHB), making the average price around $350,000. It can seem a bit high but still affordable and you could still save some money if done correctly. Here are a few questions to ask the builders, these can help you determine if you are purchasing the right home at the right price.
What are the long-term goals for the community?
Developers will have long term plans on what exactly the locations will be once finished. But before that there has to be a lot of work done and depending on the size of the project there can be several subdivisions. This can definitely impact your decision to buy. I would suggest buying in a subdivision that is already finished and selling because if you buy and live in an area that is not fully built it can cause problems. For example, if you buy in an area that has built and sold only a couple of homes and the developers decide to build another 60 homes in that area, you will probably be dealing with a lot of loud construction for several months.
There can also be the risk that the initial developer looses funds and another company takes over. This could be bad news because if the new company develops lower-quality homes, then it can lower the value of your neighborhood as well as the value of your home. Always check what the plans are for the community, because it can have an impact on the value of your home.
What are the standard finishes?
When you tour a developers model home, most of the time you will preview the high-end version of the standard home. So it is good to find out from the builder, which options are standard, which are upgrades and how much do the upgrades cost. Builders charge a huge mark up on certain finishes and products, so it can be a good idea to move into the home without certain upgrades and hire a contractor to do the work. The only negative part is that you will have to pay the contractor in cash most of the time; some would rather pay the builder because they can roll that payment onto the loan amount. So look at the upgrades and prices they have, search for your own upgrades and see how much you can potentially save.
What are the warranties?
Most builders have a one-year workmanship warranty and 10 year structural warranty, but always make sure what the builders warranty will cover and not cover and the limitation for damages. Also check if you receive the manufacturers warranties on all the kitchen appliances, washer & dryer, air conditioner and roof. They don’t last forever but it helps to take advantage of the warranties when needed.
Always check references when reviewing builders and if you want to go a step further, you can contact past clients and ask them on their experience with the builders. These are all good thoughts to consider and questions to ask before you buy a NEW home. And if you need help in search of a new home or have more questions, feel free to contact us at Predictable Management.