The allure of choosing kitchen cabinets, flooring, adding a fireplace and being the only ones to inhabit a property drives many homebuyers to buy a new construction home. Before signing the developers contract consider some possible resale issues if you decide to sell your new home within two years of occupancy. Mark Nash author of 1001 Tips for buying and Selling a Home explores the pitfalls and benefits of purchasing new construction instead of a resale home. -Existing home cost versus new construction. Research by residential real estate industry sources concur that a newly constructed home can cost up to 20% more than a comparable existing home. The added cost reflects current land, building materials and labor costs versus the cost basis for a home even one year old. Study appreciation and market conditions to determine if you sell your home within two years or less if these factors will cover your sales costs. Buyers looking at your home might consider it over-priced relative to a home built as recently as 3-5 years ago based on square footage comparisons and original cost basis. -You dont want to be competing with the developer if you have to sell your home before the subdivision or building is sold out. Understanding that the majority of new construction homebuyers will want the same benefits of selecting finishes in their home will opt for the developers product instead of your lived-in recently built home. When purchasing a new construction home inquire when the development or subdivision will be realistically sold through. If you decide to sell your home before this sold through date, you will be competing with the developer. This could add market time and buyers might discount your home price because they might have to add or change finishes and upgrades to make it similar to the developers new construction product. -Under construction developments are not tranquil. Large-scale developments often take 2-5 years to complete, even if they are sold through. Being the first to occupy a new home, with the accompanying noise, truck traffic and lack of community might not be attractive to buyers of your new construction home if they must endure a couple of years of these annoyances. Check to see when schools, community centers and building or sub-division services will be available to residents. -Youll compete with model homes. Keep in mind that if need to sell and the project is not sold out your home will be competing with the developer, their marketing efforts could position their product more favorably than yours with prospective buyers. Most likely you saw the builders model and purchased your home from there professionally decorated and furnished which was filled with all the whistles and bells known as upgrades. Model homes are positioned to maximize the appeal of the space and features. Nearly empty cabinets, closets, garages and basements, fresh paint and carpet smells, shiny appliances and spotless cleaning move buyers to reproduce the model for themselves. Your home could present to potential buyers as the stripped down and all filled up reality of the model and be discounted accordingly. -Assess your situation before buying a new construction home. New homes offer buyers the flexibility of changing floor plans, choosing finishes and defining a brand new space. Satisfied new construction buyers are everywhere, but their satisfaction comes from a reputable builder/developer, strong warranties and the knowledge that they wont have to compete with the developer when they sell their home. |
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