What’s Best New Construction or Existing Homes?

 Both new construction and existing homes have their advantages and disadvantages. In the current market, buyers have a select inventory to choose from these days. If you are in the market for a new home, here are some things to consider when choosing either an existing home or new construction.

There are many benefits to a new construction home. A new construction home will allow for modern and customizable floor plans. Builders stay in tune with what current homebuyers want, so a new construction home more than likely will follow this trend. In today’s market, new construction homes tend to have an open floor plan with larger bedrooms and bathrooms that allow in tons of natural light. If a home is still under construction, or if a builder is selling it, then you will be able to personalize some of the finishes. There will be a cost involved when you are upgrading from builder grade but adding your own touches might be worth it to you. Another benefit is living in a new home community where most new construction homes are located. Master-planned communities offer tons of amenities such as pools, community spaces and parks.

A new home will also be energy-efficient. Many builders are building smart homes as well as adding more insulation and energy-efficient windows. Smart technology options allow you to control home systems even when you are away from home. New homes are now being painted with low and zero-VOC paints and building materials which is better for a homeowner’s health. Builder warranties are also offered which protect components of a new home for a certain number of years. New homes also require less maintenance since everything will be brand new.

There are some negative aspects of purchasing a new construction home. A new construction home is usually more expensive than a resale. The median sales price of an existing home in April 2022 was $391,200 but the median price of a new construction home was $450,600. Land needs to be available in order for a builder to build new construction. This means that you will more than likely have a longer commute because it will be located farther away from urban areas.

A new community means new landscaping which will take time to grow and mature. A home that has been constructed on a cleared lot, can feel exposed and look stark. If you found your dream home and it is under construction, this will bring a risk of waiting and of delays. It could take several months or longer for a home to be completed in order for you to move in.

This brings us to a move-in ready home. Most resales are move-in ready unless you are renovating. An existing home is also in an established neighborhood that has mature trees and landscaping. As mentioned earlier, a resale is less expensive than a new construction. The material and labor shortages and inflation have caused new construction homes to skyrocket in price.

There will be fewer decisions to make and more location choices when it comes to purchasing an existing home. If you want to live closer to the action, then you will more than likely have to purchase a resale. Most new construction homes are built outside urban areas. When you move into a move-in ready resale, you do not have to make a bunch of decisions such as choosing building materials and exterior and interior finishes. A resale especially if it is an older home will have history and tons of architectural detail. Many of the architectural details found in older homes would be extremely expensive to replace today.

The downside to purchasing an existing home is that it will probably have an outdated floor plan. You might also have to add the expense of updated outdated finishes and if you want a smart home, you might have to rewire the house. Older homes are usually not very insulated and have older HVAC systems that are not energy efficient. There will also be more maintenance on an existing home as well as unexpected repairs.

If you are in the market for a new home, contact a real estate agent who can help you decide which is best for you. A local agent can help you from start to finish with the home buying process.

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Is Selling Your Home Still a Smart Idea in the Current Market?

 A seller’s market means it is a great time for sellers but then once you sell you turn into a buyer. Buyers are having a hard time buying in the current market. If you are a seller and worry about becoming a buyer you shouldn’t. According to NerdWallet’s 2022 Home Buyer Report, 89% of current homeowners say that finding a new house and paying too much in the current market is prohibiting them from listing on the spot.

Current homeowners do still have an edge if they do decide to sell right now. If they make the most on the selling side, then they will have more money for purchasing a home. Remember inventory is low and there will more than likely be multiple offers on one home. According to the report close to 26 million Americans are planning on buying a home this year. Typically only 5 to 6 million homes are sold a year!

Today homes are not only being listed at much higher prices but also selling at or above the higher asking price. The report reveals that buyers paid 100% of the list price in 2021. The typical listing price went from an average of $270,000 in 2019 to $344,000 in 2021 according to the National Association of Realtors.

As a seller, you are also giving up less than before. In 2021 a typical seller did not offer any incentives for a buyer. You should list if you are willing to move to an area that is more affordable, will go back to renting for a time being, or you have what it takes to be a competitive buyer.

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Steps to Take When Buying A House

 The best way to start your house search is to work with a local sales agent who can help you navigate the home buying process. Here is a list of the steps you and your realtor should take when going through the homebuying process.

1. Make sure you’re ready

You not only need to be financially read, but also emotionally ready when it comes to purchasing a home.  It is said that buying a house is one of the most stressful things to do when it comes to life events.  With that being said, you are going to be at your home for a good amount of time so there are questions to ask yourself.  What are your goals for the next few years?  Are you going to be purchasing a home with a partner, if so, are you all in agreement on how much you want to spend?  Is there a chance that you might need to relocate for work?  Are you thinking about starting a family?  These are big life questions that can help you determine if this is the right time to purchase a home.

2. Get your finances in order

Again this is one of the biggest financial decisions you will make in your lifetime.   Before you take the plunge, make sure you are 100% financially stable.   A great resource is a home affordability calculator.  With this tool, you can help determine your budget by listing your income, debts, location and down payment amount.  You can compare how much your mortgage would be versus how much income you bring in.  This will help you keep your housing hunting to a home you can realistically afford.   Along with this, check your credit score too.  A high credit score will allow you to get a lower interest rate.

3. Make a plan for the down payment

After you figure out what you can afford, then you want to determine your down payment. The norm is to put down 20% but nowadays many potential home buyers are opting to put down less.  The downfall to this is you will have to pay private mortgage insurance (PMI) when you put less than 20% down.   Note that certain loans require a minimum downpayment.  There are many programs out there that can assist with a downpayment.

4. Create a wish list

List some things you would love to have in your new home (a wish list). Things to think about when creating a list are, detached or attached unit, ideal location and move-in ready or fixer-upper.  If you have a big family and pets, your best choice would be a single-family home with a yard.  You will want to choose a neighborhood that best fits your lifestyle.  If you love the outdoors, you should look for a neighborhood with tons of greenspace and walking trails.  If you are good with your hands, then a fixer-upper could be right for you.

5. Find the right mortgage

There are several different types of mortgages.  A conventional loan offers a low minimum down payment but is strict with qualifications.  An FHA loan is backed by the Federal Housing Administration and is usually easier to qualify for but you will more than likely have to have mortgage insurance.  A VA loan is backed by the Department of Veterans Affairs and is only for active or former service members. A jumbo loan is used when the home that is being purchased is more than standard lending limits.  A renovation loan will allow you to combine the costs of your home improvements with the home loan.  Depending on your situation and your credit score there is a loan that is right for you.

6. Find the right Realtor

Once you have your mortgage pre-approval and you know what you are looking for, it is time to find an agent who can help you with your search.  You will want to interview several agents to find one that fits you.  Professionals in the industry say that it is a good idea to at least interview three different agents.   Word of mouth is a way to find an agent.

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