by Monte Mohr
Educating yourself on these lesser known expenses will help you make smart decisions when preparing your budget and you can hopefully avoid any nasty surprises.
Countless homebuyers in today’s
market are under the impression that building a new home is somehow more
advantageous than buying an existing home. One of the biggest preconceptions
about new construction homes is that once you move in, there will be minimal
costs to maintain the home.
After all, a new home should be
built to meet all of the latest safety codes and standards, it’s constructed of
new materials, plus the brand new HVAC system and household appliances should
all be energy efficient. And if that’s not enough to entice a buyer, a new home
can offer an updated floor plan with modern day amenities, all nicely packaged
into a clean, never-before-used environment.
This all sounds fantastic,
right? Well it is fantastic, but it doesn’t really paint the full picture for a
home buyer. In order to get an accurate picture of what it’s like to buy a
brand new home, we need to take a look at the numerous hidden costs that can be
incurred. Educating yourself on these lesser known expenses will help you make smart
decisions when preparing your budget and you can hopefully avoid any nasty
surprises.
Latent Defects
Despite popular belief, new
houses are not perfect. Many times a newly built house will have hidden
defects, also known as latent defects, which will not surface immediately.
Things like a crack in the foundation, a leaky roof, faulty electrical wiring,
or floors that warp. Don’t rely on city/county inspectors to identify these
problems during the construction process. It is wise to hire an independent home
inspector to conduct a thorough inspection of the property. It’s better to
incur the cost upfront and avoid pricey repair costs down the road.
Necessary Items That Are Not
There
It is highly unlikely that a
new home will deliver everything you need. Chances are you will be responsible
for the cost of adding some, or all, of certain necessities like landscaping, a
fence, major appliances and fixtures, window coverings, ceiling fans, or even
paint on the walls. Watch out for “a-la-carte” type items that are not part of
your purchase agreement. Walk through the house and inquire about what items
are included with your purchase. And be sure to take this information into
consideration when you make an offer.
Upgrades Galore
If you toured a model home, you
can bet that it had all the bells and whistles. The builder wants you to see
everything you could have, so that you’ll want to buy more than what is offered
at the base price. Prepare your budget and stick to it. Understand that when
you choose to upgrade with the builder, you will pay an upcharge compared to
doing it yourself. Consider the resale value as well. Go with upgrades that are
attractive to a wide range of buyers and don’t select options that will
over-value or under-value your home for the area.
Operating Costs
Consider the cost of actually
living in the home. In other words, what will your utility bills cost and will
you pay hook-up fees for a new home? How much will you pay in HOA fees? What
are the estimated property taxes in the area? What type of homeowner’s
insurance premiums will be required? Will you need to buy lawn care equipment
to maintain your yard? Remember that it’s not enough to be able to afford the
purchase price of the house; you also need to be able to afford to live there
comfortably!