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Down Payment for Buying a New Construction Home
A newly constructed home is an excellent option for new home buyers. It allows you to pick the features you want. They are move-in ready with new appliances. You could even pay a little more and add things like a fence. Buying a newly built home is more complicated than purchasing a resale house, but completing your own research and hiring a knowledgeable agent can help you through the process.
Benefits of Using a REALTOR®
A REALTOR® might not be your first choice when buying a newly constructed home, but you should seriously consider it. It’s easy to feel like paying an agent isn’t the best deal, but they will bring a wealth of experience to the transaction. However, the buyer doesn’t have to pay a commission when the home is newly built. The builder pays the commission to the REALTOR®. If you are buying a resale or new pre-construction property, this is the same in both cases. An agent would be familiar with the builders in the area and which ones to recommend or avoid. It is also possible to find an agent that specializes in new construction, and they can highlight the best deals on the market.
Research the Builder
In the age of technology, many resources are available to the buyer, such as doing your own research about a builder. Many websites offer reviews and allow people to make more precise choices themselves. However, hiring an agent can also be beneficial to cross-check facts and obtain a second opinion. There might be a few “popular” developers, but one should check the number of homes they have completed, if they were on schedule, or if they were cancelled or delayed.
Some builders’ homes might appear perfect, with all the wants a buyer needs on the surface, but read reviews to ensure they don’t cut corners or if previous buyers have had past issues. Another thing to keep in mind is that for the last two years, lumber prices have skyrocketed, and building materials have become scarce, which drives up the costs and adds delays in construction.
Higher yet Flexible Deposits
One advantage of buying a new build is to stagger the deposit payments, and you will end up paying up to 20% overall, compared to just 5% of purchasing a resale home. Most builders want a 5% deposit upfront, then the other “15%” payment schedules can vary between 4, 9 and 18 months, depending on the developer and schedule.
No Bidding War
The best part about buying new construction is paying a fair price and not going into a bidding war with other buyers. The price on the market is fixed, and the home will be sold on a first come, first serve basis. If the home lacks a few things on your list, it’s relatively easy to make a higher offer to the builder and have those items included in the price, such as a fence, appliances or central air conditioning.
Immediate Appreciation of the Property Value
Completing the home will most likely add immediate value to your home, even if the wait to finish it is months away. If you are purchasing a new build townhouse or condo, the value may have decreased by completion. Property values depend on various factors, including location, finishes, size, etc. The finishes of a home will add the most comfort and resale value to your home, plus the added touches will help show off your personality. Be on the lookout for current real estate trends and choose wisely.
Better Choices, Fees and 10-day Cooling-Off Period
When purchasing new, there is a 10-day “cooling off period,” which allows the buyer 10 days to decide if they want to back out on their offer with no penalties.
The condo location choices are better, such as which floor you will live on and the location.
Often, the condo fees of a new condo are low because management has yet to see how much it costs to operate and maintain the building. However, be wary and consider those condo fees could rise steeply over the years.
Buying a newly constructed home can be beneficial, but building delays are likely due to supply shortages and changes. Ensure that your down payment and finances are all in order before purchasing a new home. A local REALTOR® can help you find the right solution for you.