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New Construction vs. Resale Homes

There are benefits for both buying new construction and resale homes.  Let’s discuss some of the biggest differences between the two.  The majority of the argument boils down to two things: Time and Money.

With low resale inventory this year, new construction benefits are definitely worth a discussion.

How Long Does It Take to Buy a New Home?

This question depends on a few factors.  If you choose to have a home built from dirt to close, this will include design, permitting and construction.  In most cases this takes 8-9 months.  This is the case where you choose either your own property or an undeveloped lot in a new neighborhood.  This gives you the largest flexibility to choose most of the design elements from floor plan to finishes.

Most buyers are not in a position to make this time commitment, so builders choose to build “Spec” or “Inventory” homes.  In this case the location, floor plan, and design options are chosen so that they have a steady flow of homes available for sale.  Depending on the builder and stage of the process, some interior design options may be changed by the buyer.  This takes a large portion of the timeline out, so that buyers have options that meet their obligations.  A finished home can be closed just as quickly as a resale.

Doesn’t New Construction Cost More?

Home builders do their research before starting a new neighborhood.  They are definitely in the business to sell homes and ultimately to make money.  Frequently this makes new home prices very comparable to resales in the area.

There are additional factors to consider with pricing.  For example, a resale home may have a roof or HVAC that you will need to replace in a few short years.  This can be thousands of dollars of extra cost.  Additionally, most new homes are built with high energy efficiency standards from insulation to windows to smart features.  Low-E windows alone may cost you $300-800 each to replace in an older home.  These energy costs stack up month after month.  With a new home, you pay for it one time.

But New Builders Don’t Negotiate Prices…

In just about every case this is true.  Builders do make price adjustments on their homes, but they are based on the same factors used to price resale homes.  However, they do offer incentives that a home owner may not.  One of the largest is to Closing Costs.  On a resale home this has to be negotiated.  You have to ask the seller to give you a concession for closing costs, say 3%.  That seller can then negotiate that or flat out refuse.  Builders put this into their “Cost of Doing Business,” so they most likely provide this to buyers.  Other benefits are available, too.  For instance, Riverside Homes in Amelia National will pay off the CDD for a new home which is ~$17,000.  Some items like this would have to be a negotiation with a resale, but are commonplace in new sales.  You know your costs when you sign the contract.

Home Values in New Neighborhoods

Another item that is less of an issue in New Construction is the Appraisal.  Any home that you obtain a mortgage for requires that the appraised value meets the requirements for the loan.  In the event that the appraisal is lower, the seller would have to accept a lower price or the buyer would have to pay the difference.  In new construction, builders take this into account in their pricing and it is very uncommon for an appraisal to come in low.

I Want to Add Equity by Upgrading a Home

Another motivation for buyers to buy resale is to rehab or update a home.  This is a great way to gain equity in a home, however depending on tastes they run the risk of Out-Pricing the neighborhood.  That is to say, unless a good number of homes in the area are upgraded to the same or similar standards, they may not see that returned at sale.  Appraisers can only adjust a home value a certain amount without it being an outlier.  This has to be balanced with what finishes you want in your home and your intention to sell it later.  I am not against doing this, as I have done it with several of my own homes.  It is a longer-term concern, but one that I think warrants thought.

In a new neighborhood, every home is built with similar finishes and to the same standards.  If you choose to have quartz counters and wood look tile, you are not Out-Pricing the neighborhood since these are options provided.  Long term value of that choice will likely be more stable as a result.


Some buyers who have decided to build a new home decide the best course of action will be just go to the sales center alone.  New Builder Site Agents are amazing, so please don’t mis-read this section.  I love working with them personally, and they make everyone’s part in the process better.  In a large neighborhood, however, they may have a dozen or more homes under contract at any give time.  Your REALTOR will just have YOUR HOME to worry about.  I visit with them frequently during construction to make sure that we are on schedule and to make sure you are updated.  It will also give you another set of professional eyes on the contracts, the build, and the final walk-through and any repairs.  Site Agents love having their buyers represented for all of the same reasons.

Shop New Homes

If you are interested in information on new homes in the area, let’s get together and discuss your options.  You can also check out builder information below:

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