Written by Mary Beth Tice
When buying a new home, you almost always have the option between purchasing new construction or a resale home (this includes short sales and foreclosures). If you have no preference for a new home or an older one, the question then becomes “Which is the better deal?” If you have two identical homes in the same neighborhood but one is new construction and one is few years old, which is the better buy?
First you have to look at repairs. A new construction has passed inspections and meets the current building codes. An older home (even one built 2 or 3 years prior) could possibly need repairs that cost thousands (or have had ones done that are not up to code) and the seller could refuse to pay for them.
Second, if you are purchasing a pre-sale new construction, you have the option to personalize items like floor coverings, cabinetry, countertops and appliances. In a resale, these items are in place and customization is not an option. The cost to replace them after closing can also add up quickly.
Third, the newer the home and appliances, the more energy efficient it will be. While this won’t save you money at the closing table, it will save you in the long run.
And speaking of the closing table, lastly, financing a new home is often easier than financing a resale or foreclosure. Even better, builders will sometimes offer incentives that reduce closing costs or gift cards to retailers if you use their preferred lenders and closing attorneys.
All these factors can sometimes make a seemingly great resale actually more expensive than a brand new home. Before submitting your first offer, make sure you have been pre-qualified for a mortgage and know exactly how much you are willing to spend on repairs, updates and closing costs.
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