Buying a brand new home, like buying a new car or a custom made suit is a thrill. It is, in essence, a blank page, a clean slate, a chance to be the first and to make it your own. But buying new is not without danger. Here are a few things to consider:
Last year, Waterloo area builders were asking homebuyers to wait 9, 12 and even 15 months for delivery of their new homes. In the resale world where 60 days is normal, 90 days is a little long and 120 days is often too much to ask, 9 months seems like an eternity and it might seem like an eternity to the buyer once they have put down their deposit.
I have a client who bought in 2016. His home was delayed (I’m not sure why) but now he is scheduled to move in January 2018. That is quite a span.
Even after you take delivery of your new home, many new home buyers have to wait six months or longer before the landscaping is in and the driveway is poured. That’s more waiting.
In the resale world, the market sets the price. What that means is that once a home is sold, the value is what it sold for. Some sellers start too high. Some don’t sell at all.
It could be argued that in the new home market, the builder and developer does not really set the price. But I say he does. First of all he has the inventory. Gone are the days of small home builders putting up one or three houses a year. Now, 80% of the homes are built by the three biggest builders.
And builders don’t drop their prices. If the property isn’t in high demand, builders may decide to cover closing costs or upgrade the property instead of dropping the price.
Resale real estate contracts are seven to nine pages long. New home construction contracts are close to 50 pages long.
In resale homes, what you see is what you get. It’s real. You can see it and touch it and look out the windows. With new home construction, the devil is in the details. You are buying off plan.
Like most real estate agents, I might only help one or two clients buy a brand new home every year. I personally prefer resale homes, but I have to admit that my first home I bought off plan and that worked out just fine. All in all, I suppose I’m just saying the two things are very different, like apples and oranges.