The housing market is tough right now when shopping for a new home. Home inventory is low, and when new homes do hit the market, they seem to sell before you even have a chance to see them. If you do find a home that you love, it's increasingly more difficult to get it because if you love it, so does everyone else!
Here are four reasons why you might want to consider building your new home instead of buying an existing one:
Reason #1: Instant Equity
When you start building a home, the price you pay initially is not what it's going to be worth when you close. The contract price reflects the builder's valuation at that moment in time. Since building a home can take anywhere from 9 to 12 months, the property will likely appreciate. In a normal market, we expect around 3 to 4% annual appreciation. However, new construction can be even more lucrative. For example, over the last 12 months, home values in the Charlotte market have increased 8.8%. So, on a $400,000 home, that could equate to $35,000 in instant equity when you move in!
Reason #2: Warranty Offers
One thing that I really like about new construction is warranties. You generally have several of them:
Builder's Warranty: This covers just about anything that comes up in the first year.
Structural Warranty: Many builders offer a 10-year structural warranty which covers the structure or the framing and foundation of the home.
Mechanical Warranty: HVAC systems are covered by the manufacturer's warranty, often for 10 years. The same holds true for appliances.
Reason #3: Upgrades and Options
With new construction, most home builders offer different options and upgrades such as choosing the floor and paint colors, different countertops, or adding a covered porch, for instance. These are things you would have to do after you move in with a resale home.
Reason #4: Smart Investment
On average, people live in a home for five to seven years before selling. With new construction, you start with instant equity and comprehensive warranties, making it unlikely that you'll need to replace major items like appliances or air conditioners. If you do decide to sell in 5-7 years, you basically still have a new house, so the likelihood of an extensive repair request from buyers can be significantly reduced. Most buyers are likely to spend more on a newer home than a 15-20-year-old home with original equipment.
If you plan to finance your home, you can always bring your own lender, or if the builder has an in-house lender, you may get a slightly lower interest rate or closing costs thrown in.
Now, did you know that you can work directly with your real estate agent when building a new home? Many people don't. Real estate agents assist with reviewing contracts, generating timelines, and guiding you through the construction process. We can also accompany you on all progress inspections, such as framing inspections and pre-close walkthroughs. By the way, I am a real estate agent, but it just so happens that I’m also a former home builder, so I’m particularly good at new construction and progress inspections!
Keep in mind, it's unlikely you'll save money by not working with a real estate agent. Builders generally already have real estate commissions factored into their costs, so it really doesn’t make sense not to have representation when buying new construction. Furthermore, if you don’t have an agent, they don’t discount the price of the house. They simply retain that money as profit. The nerve!
So, should you one day find yourself stopping by a model home and decide to pull the trigger, tell them you have an agent—ideally me! Or your schoolteacher aunt who happens to have a real estate license if you’re the type that allows guilt to guide you. Just kidding! Once construction is underway, I’ll be with you at all progress inspections to point out things that could cause problems down the road. They love it when I do that!
I hope this information helps you understand why many people choose new construction over resale. If you have any questions about reliable builders in the Lake Norman area, please feel free to call, text, or email me. And if you like this video, leave a comment below and don’t forget to subscribe!
