Buying A New Construction Home vs Existing Home
If you feel stretched thin on your home search and feel wary about starting a remodel, you should consider a new construction home. With a new construction house, you simply move in. That’s it. There is no need to budget for a big kitchen remodel or take a big risk with a fixer-upper.
At Felix, we know that new builds aren’t for everyone. We’ll break down the pros and cons of buying a new construction home. We’ll compare new construction homes to existing houses, so you can find the type of home that works best for you.
What Are The Pros And Cons Of Buying A New Construction Home?
Here’s a rundown of some of the pros and cons of buying a new construction home.
Pros of buying a new construction home
- Maintenance costs tend to be lower.
- More designs that appeal to modern lifestyles like open floorplans and light interiors.
- Often no bidding wars for new construction.
- Builder warranty gives peace of mind.
- Get a home customized to your exact tastes.
Cons of buying a new construction home
- Less room for negotiating price.
- Small lot size with sparse landscaping typical.
- Aside from "move-in-ready" homes, it can take 6-9 months to build.
- No quirky and unique details.
We’ll dive into more detail below. You can evaluate the pros and cons of buying a new or a resale home.
Financial Considerations – What Are The Costs Involved In Buying A New Construction Home vs An Existing Home?
Let’s break down the cost differences between an existing home and new construction. The costs will be different for everyone depending on what you find most important.
What costs come with an existing home?
Let’s start at the beginning of the sales process: your offer and financing. There are a variety of financing options for both new construction and existing home purchases. But your bottom-line purchase price may be lower for an existing home. You’re dealing with a single seller, and they are more likely to make a deal. You will need to have cash on hand for an earnest money deposit and a down payment, but your overall home loan principal could be lower.
No house is perfect, and you will find unique issues after your home inspection since building codes have likely changed. Once you move into an existing home, you will want to upgrade, customize, and repair parts of the house. So while you may get a better deal on the house, you may have to pay for things like renovations, paint, bathrooms, kitchens, landscaping, or the HVAC down the line. Homeowners also find that utility bills are higher since older homes are less energy efficient, so you will need to factor in the additional costs.
You have to figure out which works best for you: more upfront money or paying more money along the way.
What costs come with a new construction home?
When you buy a new construction home, you pay a builder deposit upfront, and then, depending on financing, you pay a down payment on the closing day. So the upfront costs of building are comparable to buying an existing home. Builders are less likely to give a deal on the home price, but with the right Realtor (here's where Felix comes in), you can negotiate other incentives such as builder upgrades during the building process or reduced closing costs. So it’s not always effective to compare the sales price of new and existing homes. Plus, with our Buyer Savings Program, you could save 1.5% off the sales price of any home in Tennessee!
Once you move into your new construction home, you will notice the savings. All those early weeks or months of doing repairs and updates on an older home will not exist for you in a brand new home. Your walls will be the color you want, your kitchen will be brand new, and your big-ticket items will be under warranty. Your dream home will feel like a custom home. You will continue to feel those savings when you get bills each month. New homes are more energy-efficient due to modern building materials like better insulation, double-paned windows, more efficient appliances, and LED lighting.
You may see one additional expense in the early stages of living in your new home: landscaping. Your home will likely not be a part of an established neighborhood. So you may have to spend a lot of money to make your yard lush and beautiful like an older home. If this is a priority, you may want to consider an older home or set aside a budget for landscaping.
When you are trying to decide between buying new construction and an existing home, there are a few questions to ask yourself:
- What is the cost difference in the short-term vs. the long-term?
- At what point will a new home cost less than an existing home?
- How much money will you make at resale based on the housing market?
Design Considerations – Are New Construction Homes Designed Better Than Existing Homes?
A brand-new home just feels different from an existing home. If you’re more attracted to new construction homes, it’s because you’re attracted to the architectural differences. Let’s break down some of those differences.
Lighter & Brighter Interior
It just feels lighter and brighter when you walk into a new construction home. That’s because new homes come with open floorplans, tall ceilings, more windows, and airy interiors. Even though you’re not necessarily getting a bigger home, you’re getting a home with better-used space. For example, instead of having more formal spaces, you may notice new homes have more bathrooms. You will be sacrificing old home quirks and character for a new construction home, but the layout makes up for it.
Premium Kitchen & Bathrooms
You will also notice the difference in the details. Most new homes do a great job at making the kitchen and master bathroom feel premium with soft-close premium cabinets and granite or quartz countertops. New construction homes come equipped with large storage closets and walk-in closets that you will definitely notice if you have ever lived in an older home.
Small Yard & Sparse Landscaping
Finally, there are some differences with newer home yards. Most new construction homes don’t have a large lot size since builders try to squeeze as many homes on a lot as possible. You will also have to deal with sparse landscaping. It’s hard to compare with decades-old mature landscaping in an existing home.
Convenience Considerations – Does Moving Into A Newly Built Home Present Less Of A Headache Than A Pre-owned Home?
When you purchase a new construction home, you know what you can expect. You will also have peace of mind from the builder warranty. Everything is brand new in your new build so you will not have to replace big-ticket items like the roof, HVAC, and water heater. You are truly on your way to a low-maintenance home when you go the new construction route.
The downside is that a new construction home can take time to build. (The average build time is 6-9 months.) If you’re not able to swing a sale of home contingency with your builder purchase agreement, then you will likely need a backup plan like a bridge loan, or a rental. But these inconveniences are temporary. You can also go the construction loan route if you plan on building a custom home. Then once you close on the home, get a loan with the best mortgage rates for you. If you work with the right lender they will help you find the right loan with competitive interest rates. Ask the builder if they have a preferred lender who may offer a long-term rate-lock, reduced closing costs, or a slightly lower rate.
What Is The Best Way To Find Your New Construction Home?
The best way to find new construction homes for sale is to reach out to Felix. We’ll alert you whenever a new home that matches your criteria is being built. At Felix, we’ll learn a little about what you are looking for in a home. Then, we will guide you throughout the home buying process, from choosing the best area to picking a reputable builder and managing the sale. We help first-time home buyers and experienced home buyers alike.