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Pros And Cons Of Buying New Homes
It’s not very hard to find drivers who cannot imagine themselves buying used cars.
There’s just something about using something that someone else had used before that can turn some people off.
The thought of sitting on a car seat that a stranger has sat in for years can leave a bad taste in your mouth. And the thought of having the engine abused by the previous owner is just something you cannot accept. Then there is the thought of possible hanky-panky that went on in the vehicle’s history…
If you are someone like that, then there’s every likelihood that you see the same way with a house as well.
This is understandable as newly-constructed homes has various advantages.
1) Built to today’s standards
Physical safety and health hazards have always been a topic that government agencies try to keep a handle on throughout the years.
Just because there is no legislation preventing a homeowner to sell a house to you does not mean that the house does not come with hazardous baggage.
For example, older houses can have insulation or basement problems that are unheard of in modern houses. That is yet to mention hazardous material that were used to build them decades ago when some materials (e.g. asbestos, lead paint) were yet to be labelled as a safety concern.
Buying a brand new home that is going to be built by a reputable developer can give you peace of mind that they are more likely to use quality building material for construction.
And they are going to meet current safety standards set by the authorities as well.
2) Get more value
The modern real estate economy is all about value.
Developers and builders understand that new-age consumers and households have an eye on the value of buying a new home. Or they might as well buy a resale completed house on the adjacent street.
This is why newly built homes often incorporate a whole line of latest technology and gimmicks to entice buyers to buy.
These can include things like:
- Energy-efficient set up
- Concierge service in condominiums
- Pet swimming pools
- Internet of things (IOT) ready
These features can add a considerable amount of value that households in older homes can dream about.
That is without mentioning the savings that new home owners will enjoy due to all appliances and fixtures being new… and under warranty!
3) Modern design
With the needs of household ever-changing, the requirements of a regular house has changed as well so as to fit in the demands of the modern household.
For example, what used to be luxury items in houses are now very much in demand by regular households.
- Walk-in wardrobes
- Built-in kitchen appliances
- Feature wall for TV consoles
No longer will you need to mess with a 15 feet extension cord just so you can connect the hair-dryer in front of the bathroom mirror. The power outlet is hidden conveniently in the cabinet beside the mirror.
Your refrigerator won’t look out of place anymore. It is nestled nicely in a slot surrounded by custom built cabinets that blend into each other.
And no longer will you need to bear with the unsightly piping that runs along the ceiling of the kitchen. They are all hidden within the walls.
Why wouldn’t anyone want to live in such a nice environment?
Yet with such persuasive reasons to buy a new house rather than a used one, there are various disadvantages of newly-built homes that make home buyers cringe with goosebumps.
1) You never get to see the finish product before purchase
Because the house has yet to be built by the builder, the only way you can get a sense of how the house would look like physically is in a sales gallery.
This is where the masters of interior design get to work crafting a heavenly experience for every person that walks into the showroom.
I kid you not. Here are some amazing things these professionals can accomplish with model homes.
- Make a 1,000 square feet apartment feel like 2,000 square feet
- Use an insane amount of lighting that makes the place look dreamy
- Furnish the place with exquisite items that don’t come with your purchase
So before you sign on the dotted line, do check with the salespeople what exactly are included in the deal.
2) Less room for price negotiation
Negotiation is one of the biggest leverage you can have as an real estate investor or property buyer.
So it can really be a huge challenge for you to bargain over price.
This is because developers need to maintain a certain price level (usually per square feet) so as to protect the prices of any unsold inventory and for inventory that has yet to be released to the public.
For example, if a developer is planning a three-phase sales launch to attack the market, then devaluing their units in phase one sets a negative precedence for phase two and three.
Moreover, it has been observed in various markets that when developer finally decide to compromise their profits, they’d prefer to pass on the saving to agents and sales representatives rather than to the end consumer themselves.
For example, if they are willing to cut $10 per square feet on the selling price, they’d prefer to pay the agent a higher consumer than to offer a discount to the end buyer.
3) It’s not really cheaper
You might find that an older home cost 20% more than a new one. And you get a lot of perks that come with the new home too. Making it a no-brainer.
But if you take a closer look, you would often realize that the new home is more expensive on a per square feet basis.
Shrewd developers might even built comparable home sizes with very competitive prices.
But on inspection of the floor plan layout, you might find that only 80% of the new house is livable space. The remaining 20% is make up of ledges outside the home or worse… a high ceiling.
Be careful with where you are spending your money.
Finally, remember that your investing strategy can also greatly affect whether a new property is a right fit for you.
For example, if you are going into rental property, a new home essentially means that you will be without a tenant for a few years due to the time it takes for the place to be built. Further more, there is not proven rental market for it since it’s new development.
So do consider your investment strategy before deciding to acquire a completed house or a new house.