New homes have some very appealing advantages:
- Choosing a new home produced by a reputable builder of high-quality
properties gives you the peace of mind of knowing that your home
doesn't contain asbestos, lead-based paints or formaldehyde. Furthermore,
you can rest assured that your new home complies with current
federal, state, and local building, fire, safety, and environmental
- A properly constructed new home should be cheaper than a used
home to operate and maintain. Operating expenses are minimized
because a new home should incorporate the latest technology in
energy-efficient heating and cooling systems, modern plumbing
and electrical service. And with a quality new home, your initial
maintenance expenses are practically nonexistent because everything
- New homes have enough wall and floor outlets to accommodate
all your high-tech goodies. No unsightly, hazardous tangle of
extension cords for you.
- New homes are only as good as the developers who build them.
Visit several of the developer's older projects. Ask homeowners
in older developments whether they'd buy another new home from
the same developer. See what kinds of problems, if any, they've
had with their home over the years. Inquire whether the builder
closed the sale on time and honored all contractual commitments,
including the completion of any unfinished construction work,
New homes also have some disadvantages:
- What you see usually isn't what you get. You see a professionally
decorated, exquisitely furnished, beautifully landscaped model
home. When touring a model home, ask the salesperson to explain
exactly what is and isn't included in the no-frills base price.
- Prices are less negotiable. Developers maintain price integrity
to protect the value of their unsold inventory of homes and to
sustain appraised values for loan purposes. Rather than reduce
their asking prices, developers bargain with you by throwing in
free extras or giving you upgrades in lieu of a price reduction.
- Some developers attract buyers by pricing bare bones houses
very close to their actual cost, and then make substantial profits
on extras and upgrades. If, upon doing some comparison shopping,
you find that these items are outrageously overpriced, buy the
bare-bones house and purchase extras from outside suppliers.
- New homes are usually more expensive than used ones on a price-per-square-foot
basis. Land, labor, and material costs are higher today than they
were years ago when the used homes were built. And don't forget
that you're buying a home without any wear and tear.
- New homes may have hidden operating costs. Developments with
extensive amenities usually charge the homeowners dues to cover
operating and maintenance expenses of common areas such as swimming
pools, tennis courts, exercise facilities, clubhouses, and the
like. Some homeowners associations charge each owner the same
annual fee. Others prorate dues based on the home's size or purchase
price -- the larger or more expensive your home, the higher your
dues. If the development has a homeowners association, find out
how its dues are structured and what your dues would be.
- Sometimes homeowners-association dues are set artificially low
to camouflage the true cost of living in the development. When
that happens, sooner or later homeowners get slugged with a special
assessment to repaint the clubhouse, resurface the tennis court,
or whatever. Make sure that the homeowners association you are
considering has adequate reserves and that its dues accurately
reflect actual operating and maintenance costs.
- You may have to use the developer's real estate agent to represent
you. Developers always have their own sales staff and their own
purchase contracts. Some developers, however, will let you be
represented by an outside real estate agent, which is called broker
cooperation. Others insist that you use their agent.
- If you've fallen in love with a new home but the developer won't
cooperate with outside agents, we recommend that you pay for an
independent appraisal to get an unbiased opinion of the home's
value. It's also wise to have your contract reviewed by a real
estate lawyer of your own choosing.
- Just because a home is brand new doesn't mean that it's flawless.
Moreover, builders work for profit and may be tempted to cut corners
to maximize their short-term profits. Even a brand-new home should
be thoroughly inspected from foundation to roof by a professional
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