Many people jump at the chance to buy a new-construction home because it lets them buy a custom home. 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.
For this discussion, we're talking about the latter scenario -- new construction that gives you a chance to design the home of your -- or a potential renter's -- dreams. But if you're going to buy that type of property, be sure to avoid these mistakes that could hurt you in the long run.
1. Investing in upgrades that won't raise your 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. Not understanding the cost of upgrades
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.