A couple months ago, I met with a young couple who would be first-time home buyers. For certain reasons, they thought they only wanted to buy a new-build home. They had even met with a lender to become pre-qualified. They had very specific requirements for the floor plan of the new home and they knew exactly what section of southern Delaware County where they wanted the home to be.
Sounds like they’re doing everything right, doesn’t it! Well, yes, sort of.
The specific requirements they had for the new-build home and the location they wanted to be in, would place the price of the home about $25-$50,000 more than they had been pre-qualified for. There would also be an issue with how they wanted to use the home in that it would be forbidden by most new subdivision’s deed restrictions.
I suggested that they consider an existing home that is not located in a subdivision, because it might be more likely that we could find something more closely aligned to their budget and requirements - and not get them in trouble with their neighbors by violating deed restrictions.
During our discussion of “new vs existing homes”, I mentioned that many of the after-costs of a new build are avoided by purchasing an existing home. One of the first major expenses required in a new-build are the blinds or window treatments which can easily add up to thousands of dollars. Another unexpected cost may be the water bill required to keep the new sod alive until it’s well-seated into the soil. Want a garage door opener? It’s probably yours to put in after closing. Dishwashers come with the home since they’re built-in, but the range and fridge may not, especially if people don’t want them added to their 30-yr mortgage.
Most likely a resale home comes with all these items already installed. Plus, you may also get a deck or fence or mature landscaping. So overall, an existing home can offer a better value than the same-price new build home.
When I began discussing these after-cost differences of new vs existing, the expressions changed on this young couple’s faces. They said they had never considered the things they would have to add to a new-build after they moved in. So not only could they not afford the specific style of home they wanted, they couldn’t afford to live where they wanted, and they didn’t have extra cash to be able to add the necessary extras after they moved in. Obviously, it was a disappointing realization for them.
So, if you’re a first-time home buyer, meet with your favorite Realtor® early. Have your wish list in hand, but be flexible to fine-tuning based on your pre-qualification amount, and keep a substantial amount of cash behind in order to be able to add all the extras that make a house a home.
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Elaine Reese
614-825-8860Real Living HER
2 responses so far ↓
Jeremiah Arn // July 22, 2008 at 11:08 am
Great tips, Elaine.
I have always wondered how those young couples buy a NEW home with no money down and little assets, then shell out for all the things they take for granted at their parents’ home.
And you only mentioned the girl’s stuff. Guys need tools, lawn mowers, ladders, shopvacs, etc.
It’s definitely something to be prepared for!
Elaine Reese // July 22, 2008 at 11:26 am
Jeremiah, you’re right, I didn’t mention those things because I was focused on the differences of new vs resale. The “garage stuff” is needed for all homes.
BTW, in my home, it’s ALL “girl’s stuff”. Be careful how you use that term - those are fighting words. As a lender, you should be more sensitive to that!
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