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.
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.
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.
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!