Should I Buy a Brand New Home?

While having a real estate agent is not required for buying a newly built home, an agent costs you nothing and can keep you out of contractual trouble while saving you thousands in negotiating terms and upgrades. An agent can also guide you through the plusses and minuses of buying a new home verses an existing one, tour you through a number of each, and help you make a more informed decision. But is buying a new home a good idea? Well, it depends. Here, we explore the advantages and disadvantages of this approach to property ownership.

Advantages of Buying a New Home:

Origin of Community: In a new neighborhood, everybody is relocating around the same time. Many neighbors are also in the same stage of life, which might mean starting out as new families, settling in for retirement, or both of those right across the street from one another. Focusing on customizing their new homes and landscaping, neighbors often compare notes, help each other as needed, and make new friends in the process.

Modern Design Choices: Builders may offer several models to choose from so buyers can choose the ideal layout. Most new homes feature open-concept designs that lend to easier entertaining. Options exist on items like flooring, countertops, appliances, and hardware to match your tastes. Must have the grays and whites? Done. Want that upstairs carpet to be pink? Sure thing.

More Energy Efficient: Newer homes are built to the latest code standards, which means dual-paned windows throughout, better insulation, and more efficient heating and air conditioning units. New California Law ensures all new homes built from 2020 onwards will have solar panels to cover roughly one third of their energy consumption.

Less Maintenance: New homes are, well… new. Aside from some initial glitches during the break-in process, you have a new roof, new plumbing, new wiring, new lighting, new appliances, new paint, new insulation, new hardware, new flooring, new everything! You should expect few if any major surprises and enjoy ultra-low maintenance concerns for years to come.

Warranty: Different builders have different warranties, but each usually extends ten years or more on all major structural components and one year or more on everything else. Should issues arise during these timeframes, the builder is obligated to address each of them for you.

Disadvantages of Buying a New Home:

Expensive: New homes are not cheap. The costs of building supplies and labor are always increasing. Fall in love with the model home they showed you? Better prepare to make it rain for all those upgrades that caught your attention such as: window treatments, better appliances, hardwood flooring, higher quality fixtures, quartz countertops, recessed speakers, crown molding, and on and on. Most of the time, you ’ll also be expected to pay for designing and landscaping your own backyard (if you have one.) Impressed by the model home’s in-ground hot tub, waterfall feature, palm trees, ferns, flowers, BBQ area, stonework, statues, and lighting? That’s all extra.

Mello-Roos: This point is going to sting. Cities, counties, and special districts (such as school districts) add extra property taxes on newly constructed homes to finance community improvements like: roads, schools, police stations, libraries, fire stations, public parks, ambulance services, baseball fields, and basketball courts. And these projects are costly! New home buyers in California will discover their property taxes are as much as three or four times greater than had they purchased in an older established neighborhood! A new online Property Tax App enables you to look up an address in Orange County and check on its property tax breakdown. You can try it out and look up your current home to see where every single dollar of your property taxes is going. This app does not yet include every subdivision or incomplete homes, so it’s incredibly important to ask the sales agent or your realtor what the total percentage of taxes will be on the new home before making a decision to purchase.

Location: In Orange County, new developments are typically farther from the most desirable areas as these are mostly already developed. This means you probably won’t be walking or riding your bike to the beach. It could otherwise mean longer commutes to downtown and work. And in terms of creating wealth down the line, the land value of the best locations is what appreciates the most.

Time: According to the United States Census Bureau, it takes an average of seven months to build a new home. A single custom home could take even longer.

Noise: Buying a new home means living in a construction zone with all the dust and noise and heavy equipment involved as the builder completes the phases and neighbors work on their landscaping at around the same time. But after awhile, you’ll get used to the feeling of dirt in your teeth.

Contracted Restrictions: New home contracts heavily favor the builder. The clauses often stipulate the following: completion time can be delayed without compensation, different materials and colors can be substituted, various problems can arise, and final dimensions and square footage can vary by as much as 100 square feet. Also, these contracts carry habitation restrictions. For example, you most likely will not be allowed to lease the property to somebody else for the first two or three years of ownership. You’ll want to make sure you review the contract thoroughly with your real estate agent and attorney (we have both on our team!)

Still considering buying a new home? Make sure the first time you visit and view a new development you arrive with your real estate agent. Otherwise, they will not allow you to have an agent as your representative.

Yes, they can do that.

If you are already stuck without an agent because you went the first time on your own, be careful waiving contingencies, especially the appraisal contingency. Know the market and negotiate for additional upgrades and better contract terms wherever possible. Hire your own third-party home inspector and do not take possession until you are fully satisfied that every detail is addressed. Remember to shop around for competitive rates on lenders and other necessary closing services. Don’t simply go with whomever the builder suggests, but do consider them. Check that the builder has to consult with you before making any changes or alterations to the finishes or design. Make sure the builder’s warranty is adequate and matches that offered by their competitors. Be wary of non-refundable deposits.

If you’re looking to buy a new home in Orange County and don’t have an agent, we would love to represent you! We have an attorney on our team who will dissect the builder’s contract point by point and we know the absolute best lenders and service providers. Click here to reach out to us. If you are not in Orange County and don’t have an agent, don’t worry. We have approved affiliates across the nation whom we can refer you to. Wherever you are, we would love to answer whatever questions you might have. Drop us a note anytime regarding this article or for help otherwise.

Whatever your choice, happy house hunting!