For many homebuyers considering a newly constructed home, having a say in the home’s design, and its fixtures and features is a really important selling point. The ability to customize your home is certainly an important factor when considering which home to buy, but it is not the only reason that a new construction home may be the best choice.
There are two types of new construction on the market: homes that are already designed and homes that are perhaps framed out, but completely empty. Most of the developments in South Florida contain homes that are fully designed and laid out, so customization may be limited to the selection of the fittings and fixtures.
As with all major life decisions, buying a newly constructed home has its pitfalls and potential traps that the unsuspecting buyer may fall foul of.
Over the years I’ve noticed buyers making mistakes that fall into five broad categories, so be sure to avoid these mistakes as they could hurt you in the long run.
1. DON’T SPEND MONEY ON UPGRADES THAT DON’T INCREASE THE PROPERTY VALUE
When you’re faced with an opportunity to design a home, it’s easy to go overboard on upgrades. If money isn’t an issue and those upgrades are for your personal enjoyment, you can stop reading this section right now. But if your goal is to one day sell your home at a profit, you should know that certain upgrades won’t do much to raise its value.
For example, you might want a high-end patio for your outdoor space. If you spend $15,000 on the highest-end stone available rather than $10,000 for stone that’s pretty much identical at first glance, you’re unlikely to get that money back. The same holds true if you spend money on things you want but many homeowners aren’t drawn to. Reconsider that sauna or swimming pool if they’re not popular in your area.
If you’re going to upgrade your new construction home, focus your funds on high-profile areas like your kitchen. You’re generally better off upgrading your countertops and appliances than you are springing for an in-ground hot tub that eats into your backyard space.
2. DON’T UNDERESTIMATE THE COST OF UPGRADING APPLIANCES AND FIXTURES
Many new construction homes come with builder-grade items included. “Builder-grade” is essentially another term for “minimally acceptable” in the world of construction. A builder-grade fridge, for example, might work just fine, but don’t expect it to be particularly roomy or energy-efficient. It’s common for buyers of new construction to upgrade certain items, like appliances and fixtures, so they’re not builder-grade. Before you do, make sure you understand how much money you’re signing up to spend.
You might think that the difference between the dishwasher you want and the dishwasher your builder plans to include might be $100, but it’s probably a wider gap than that. Remember that your builder is likely planning to include the cheapest model your local hardware chain carries.
Ask questions early about the cost of upgrades and budget accordingly.
3. KNOW YOUR BUILDER AND THEIR REPUTATION IN THE COMMUNITY
Not all builders are created equal. If yours has financial problems and runs out of money mid-construction, you could be out of luck in the worst possible way. That’s why it’s important to vet your builder before signing a contract.
Ask to see your builder’s financials and request references so you can talk to people who have worked with that builder. Be sure to review at least one live example of your builder’s finished product — either in your development or a comparable one.
4. READ THE FINE PRINT
When you buy a new construction, certain items you’d expect to be included in your home’s purchase price may, in fact, be on you to cover. For example, some new construction homes don’t include fixtures like towel rods, window treatments, or even hardware for your kitchen and bathroom cabinetry.
Review your contract carefully so you understand the expenses you’re liable for and what your builder will be providing.
Similarly, some builders put provisions in their contracts that let them charge buyers for unexpected costs during the construction process. Read these clauses carefully — if you don’t, you may find that your home’s purchase price goes up 5% for reasons outside your control.
5. IF POSSIBLE BE FLEXIBLE WITH YOUR MOVE-IN DATE
New construction homes can easily fall victim to delays. Weather issues can cause problems and hold-ups with permits and inspections can push back your closing date by weeks.
Recognize that delays are likely and aim to be as flexible as you can. For example, if you’re selling your current home to buy new construction, and the estimated closing date on your new home is Oct. 1, don’t expect to be in a position to move until Nov. 1 or even Dec. 1. Keep that in mind when you negotiate with your buyers.