Evaluating New Construction Homes: Pros and Cons for Your Clients

Considering the current inventory of homes on the market today, you might want to look into "new construction," which is a speculative property offered by a home builder, and assess whether one of these options might fit the housing needs of a current or future client. Here are some advantages and disadvantages to think about before making a recommendation.

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The Advantages

1.     The most obvious benefit of buying a new construction home is that everything—from the roof and windows to the appliances and systems—is brand new. Many items, along with the house itself, often come with warranties. That means you can expect relatively low repair costs during the first few years of ownership.

2.     Operating costs are generally lower with newer homes because they tend to be more energy efficient. Energy Star appliances, more efficient heating and cooling systems, and energy-efficient windows can help you save money over time. Many energy-efficient upgrades might even qualify you for an income tax credit (but don't just take our word for it; check with your tax adviser).

3.     Another advantage is that if you buy a new construction property early in the preconstruction phase, you might be able to customize many features, such as paint colors, appliances, flooring, and countertops, to match your personal preferences.

4.     Here may be the best part: a builder might lower the asking price or include free upgrades and amenities. You might also find that a builder offers financing options for a mortgage. That said, it's important to understand that builders cannot require you to use their preferred lender. You still have the right to choose your home loan. However, an offer from a builder's lender can serve as another comparison point to consider when selecting the best mortgage for your financial situation.

The Disadvantages

1.     Don't get caught up in the appeal of "new" without considering some potential drawbacks. First and foremost, you can't assume that a new construction home is in perfect condition. You should still have the property inspected by a professional home inspector before purchasing to ensure everything is properly installed and in good working order.

2.     The second disadvantage: "location, location, location." Builders often develop communities in areas with open land. Therefore, if you purchase a new suburban development, you'll likely be farther from the city center. This can make a client’s commute to work or activities longer and more expensive. Additionally, the increased distance might make the home harder to sell later, especially if it’s up against newer houses with more modern amenities.

3.     Another disadvantage to consider is whether the home is in a new development. If that's the case, you don't necessarily know what the character of the neighborhood will be, unlike an established area that already has a "personality."

4.     Another disadvantage is that you might have to spend more money on exterior projects because there won't be mature landscaping.

5.     Finally, since we can't control everything—especially Mother Nature—remember that whenever there's construction, a homebuyer should be prepared for delays. So don't be surprised if your move-in date gets pushed back.

Armed with this information, you can present both the pros and cons of purchasing new homes and allow your clients to make an informed decision about whether to include new home construction on a house tour. It has been my experience that once a client understands the value of a new home, both the advantages and disadvantages, they will want to include at least one or two new home communities to tour and evaluate.

Interested in learning more about working and connecting with the new home builder community, you should give serious consideration to purchasing Building Partnerships: A Realtor’s Step-by-Step Guide to New Home Sales Success.

About the Author

Bob Hafer has been a leader in the housing industry for 50 years. His extensive experience gives him unmatched insight into the complexities and rewards of buying and selling homes. His background includes success in consulting, management, administration, sales, marketing, merchandising, research, and sales training for both new home salespeople and Realtors. Contact Bob at www.newhomessalesauthor.com, email him at bob@newhomessalesauthor.com, or call him at 972-795-5926.