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Pondering a New House: New Construction or Existing?
By Craig Axelrod Published: 09/08/2009
Are you thinking buying a new house in a newly developed community? Are you tempted to the sparkle and style of new construction? Are you set to make the move to a newly built home, but don't know what questions to ask?
purchasing new construction is significantly different than buying a used house. It isn't necessarily harder (in many ways it's easier) however you do need to consider various factors and ask various questions.
With older construction, you need to bring in an engineer to inspect the home and look for shortcomings. Every older home will have problems, and very often the repair will fall on the new housebuyer. From the seller's perspective, their offering it at this price for the condition it's in; while the condition is not perfect, you're not paying for new construction.
In other words, they're charging less for a older home because it needs repairs.
New construction, in contrast, should be handed-over in excellent condition. While you will definitely want to do a walk-through inspection prior to closing, the procedure is much simpler. During construction, you can very often inspect the progress of building as it is being done. If you find something that is an problem, you are able to promptly correct it during the building phase as opposed to going back and repairing it at a later time. Since many repairs and existing homes are the product of the age-such as cracked foundations, sagging walls, leaky ceilings, and broken pipes, damaged faucets, broken tiles, drafty windows, lack of insulation, etc., you could have very little of these problems with a newly built home.
While you can certainly hire an engineer to inspect a newly built house, they're usually looking for issues that generally are not present in a new home. Also, since many new houses carry a warranty, you have a level of protection you would not have with a old house.
Don't be fooled by the price of an old home. The purchase price is only one piece of the picture. The remodels and repairs necessary to get the house in the condition you need can add tens or hundreds of thousands of dollars to the cost of that house. Additionally, you often need to come up with that money "out of pocket." In contrast, the newly built home is in as ideal of condition as possible, which is built into the purchase price, and could be paid for with your mortgage.
Let's look at an example: a new construction in Commack New York that is over 3500 sq.ft. is just over $1 million. The house is in brand-new perfect condition and ready to move-in. A similar "old" house in the neighborhood of the same size may be $950,000. While it may seem that you "save" $75,000 on a old home, you're purchasing a house that's twenty years old, will last twenty years less, and already has twenty years of wear and tear. Since most houses have a useful life of 60-80 years, you'd be buying a house with less long term value.
With existing homes, you could need to remodel. The kitchen may need to be fixed, bathrooms updated, and serious repairs made. The older house may not be the exact design you want. This may require architectural changes to the house - which could warrant six months of renovations while you're living in the house. These additions may cost $50-$100,000 and will be money you will have tocome out of pocket. Had you purchased the new home for slightly more, you would not need to come up with an additional $75,000 out of pocket, would not need to live free six months of construction, and would have a perfect ready to occupy a house on the day you close.
So does this mean new houses are perfect? No. However generally speaking, they are the better option. When talking about something this size and the scale of the new house, there will always be problems. It is sometimes easier to deal with those problems with a reputable builder during the construction process than it is to deal with them on your own after you have purchased the home and have no one to go to. Items such as a leaky faucet or broken tile can easily be fixed or replaced by the builder at no additional cost whereas doing the repairs on your own with the used house needs time and cash on your part.
TIP: Be sure to work with a dependable builder in your area who you can turn to with questions and ideas. Try to produce as many ideas as possible at the very beginning of the process before construction; relocating walls after rooms have been built can be extremely expensive, whereas moving them before construction is started will carry relatively low cost.