If you’re in the market for a new home, you probably know that buying a property that’s already been lived in means having to make certain concessions. Chances are, that home won’t look exactly the way you’d like it to, and even with a thorough home inspection, you can never be quite sure what you’re getting into.
On the other hand, if you buy new construction, you’ll often get to customize your property to suit your specific taste. And because all of its fixtures and appliances will be brand new, you’ll have less to worry about with regards to costly repairs (at least initially). But while new construction might seem like a great deal, there are certain drawbacks associated with buying a home that’s never been owned or lived in. Here are a few to be aware of.
1. Construction delays
Some new-construction homes are purchased at the point when they’re already completed. But if you buy a new-construction home that you’re customizing, you’re at the mercy of your builder when it comes to making that home move-in ready. In fact, new-construction homes that fall into the latter category are often subject to lengthy delays that can cause all sorts of issues for buyers.
For example, if you’re buying and selling a home simultaneously, you may get stuck in a scenario where you’re forced to vacate your initial property before your new home is ready. At that point, you may need to bear the cost of storage and find temporary housing while you wait out those delays. Construction delays can also pose a problem if you’ve locked in a mortgage rate, because if you wait too long to close on your property, you risk losing that rate or having to pay a fee to extend your rate lock.
If you’re going to buy a customizable new-construction home, be sure to vet your builder thoroughly before signing a contract. Get a sense of that builder’s track record and, if possible, talk to other new homeowners in the development you’re looking at to see what their experience was like.
2. A higher purchase price
New-construction homes don’t always have higher-quality features than older homes, but the fact that they’re new tends to automatically drive their cost up. If you’re looking to buy new construction, you’ll likely need a higher mortgage, and a higher down payment as well.
3. Higher property taxes
New-construction homes tend to come with higher property taxes than similarly sized older properties in the same neighborhood. And since property taxes tend to rise over time, that could make your home more expensive to own in the long run.
Another thing to be aware of is that initial property tax values for new-construction homes aren’t always accurate because they’re often estimated before the homes are completed. As such, you might buy a new home with an estimated property tax of $5,000, only to have that number change to $6,500 once your home is completed and a more accurate assessment is made.