Many Americans have a goal to put down roots and become responsible for their own little corner of the world – symbolized by owning their own home. Just a few generations ago, people would live in their homes for many, many years. They would pay off their mortgages and live in their castles into their retirement years.
Today’s home buyers are mobile; the average person moves 11 times during their lifetime. Regardless of the era, and whether buying a home for the first time, downsizing to a smaller space, or building a dream home, all home buyers have something in common – buying a home will be one of the largest and most important investments they will ever make. This investment has its risks but also has the potential of a high award.
The Risks of Purchasing an Existing Home
When it comes to previously owned homes, some home buyers naturally gravitate to the architectural style, charm, and spacious lots associated with these houses.
For other buyers, many perceive an older home as being more affordable than a new house. However, buying an existing home comes with numerous tradeoffs, like:
- Outdated floor plans
- Smaller rooms
- Less storage
- No central air conditioning
- Smaller garages
Some people get excited about the process of customizing and upgrading an older home to their personal preference. In some cases, brave souls will undertake an extensive remodeling process and timeline to make a previously owned home their own.
In addition, many of these homes are less energy efficient, are in older communities, and require the buyer to negotiate with sellers who may add a level of emotion to the negotiation process.
Why Buy a New Home?
If you decide to purchase a speculative home in a popular new subdivision, buy a personalized semi-custom home, or oversee the construction of a custom-built dream home, you will only have to deal with the builder.
The experience of buying a brand new home differs from just a few short years ago. Simply find a community, find a lot (your own or the builder’s lot), and choose a builder.
Many prospective buyers start the process at their computer or cellphone to search various locations, communities, builders, architectural styles, and amenities. New home buyers can also choose design elements that appeal to them and their lifestyles — open floor plans, large master bedroom suites, matching his and hers walk-in closets, and gourmet kitchens.
Purchasing a new home gives the buyer absolute control over the final product, especially as it relates to color palette and personal touches like countertops, appliances, and window treatments. More importantly, the builder does all the work to create the home in the buyer’s image.
Finally, new home builders utilize the latest construction techniques and energy-efficient products and materials, which potentially means lower utility bills.
New-Home Warranty Protections
Regardless of the state, new home buyers typically receive some type of warranty that provides limited protection against faulty workmanship and materials. These warranties fall under three categories: statutory, implied, or expressed.
A statutory warranty refers to protection granted to new home buyers in accordance with state statutes. Implied warranties denote safeguards afforded to new home buyers based on precedents as established by certain court cases. In most cases builders back their homes with an expressed warranty or contract with an independent firm to offer protection for specified claims that may happen.
Warranties cover major systems and components, like:
- Heating, ventilation, and air conditioning (HVAC)
- Electrical systems
While the duration of the protection depends on the component, in most cases warranties cover workmanship and materials the first year, including components like siding and stucco, doors and trim, drywall, and paint. Heating and air conditioning, electrical and plumbing systems can receive coverage for 2-10 years, and structural defects 10 years.
For additional peace of mind, many new homeowners elect to purchase extra warranty coverage from third-party providers that extend protection for specified items beyond the builder’s warranty.
The Department of Veterans’ Affairs (VA) and the Federal Housing Authority (FHA) require homebuilders to provide home buyers with third-party warranties for newly built homes insured by the agency.
Although warranties can alleviate a lot of the anxiety of purchasing a new home, buyers must be ready to consider other factors and tradeoffs when buying new construction. For example, adding in features and amenities viewed in the model home can send the final cost skyrocketing — new homes may cost 10 percent or more than existing structures.
Often the lots are smaller and absent from the quaint, tree-lined streets found in mature communities. Also, buyers must include protections in the contract and other contingency planning in case of delays.
Like any option, a new construction home has its pros and cons, but ultimately, it’s up to the buyer to decide if the risk is worth the award.
Hi! I’m Elijah, a Content Writer here at Homes.com. If I’m not reading a horror novel, you can find me amongst friends or at the gym.