Silicon Valley is rapidly growing so you've likely noticed all the construction happening in your neighborhood. Drilling, dust, dirt...new complexes are popping up everywhere, some for purchase and others for rent. But what's the deal with purchasing a new construction home? Is it better to purchase a new home directly from the builder or a property resale directly from a seller?
There are many pros and cons to consider when making the decision, but here are a few to think about:
In-House: Many aspects of the transaction are handled in house. You're working directly with the builder and they usually have preferred lenders and vendors in house so the purchase process is generally pretty streamlined.
Easy Purchase: Unlike the offer process on a resale, purchasing a new construction home is a purchase based on inventory. Competition and bidding wars are not required.
Brand New: No one has lived there before! There are generally no imperfections, repairs, or an unknown property history to deal with. However, it is still always advisable to have a property inspection done.
Customizable: Oh the beauty of being able to select materials and upgrades yourself! With a new construction, you can decide what you like... just keep in mind, most premium upgrades come at a premium price.
Early Purchase Discounts: New construction complexes sell units in phases -- many often begin selling units even before the model homes are built. Purchasing a unit in the early phases (sometimes only looking at blueprint plans or model units) will get you the lowest price in the complex. As the unit continues to be built and prices for new phases go up, so do the comps for your unit!
Low HOA/Utility Bills: New construction communities offer low monthly HOA's since the unit requires minimal maintenance. Energy efficient features also help keep utility bills down.
In-House: While the streamlined process is a pro, it's also a con because in-house realtors that represent buyers also represent the builder. Would a buyer truly feel protected or that their best interest is being looked out for? It is essential to take your own realtor with you on the first day you visit a new construction so they can register with you. Having your own realtor will allow them to review your contracts, negotiate upgrades, and get you the best overall deal while looking out for your best interest. I repeat, do not go without your own realtor on the FIRST day!
Location: Sometimes new constructions are built in areas that seem a bit far out. However, these areas are usually in the process of beginning some retail developments, and if they aren't, retail developments usually follow the complexes! After a few years, more often than not, the area has gone through changes and is more desirable than the initial ground breaking.
Cost: New construction complexes can sometimes cost more than other homes in the area. The premium can be well worth the upgrades or new condition, but each buyer perceives the value of these features differently :)
Timeline: Purchasing a new construction home may still mean you have to wait a few months while the home is...well, constructed! Buyers need to be prepared for a move-in date that may be months out.
There are many other important factors you should discuss with your Realtor, especially details like selection a unit location for the best resale value. New construction can be an excellent option for a home purchase if it fits into your budget, goals and lifestyle.