Is It Better To Buy New Construction or Existing Home?
Are you looking to own a home? The Cannon Builders Dream Team brings you another What’s Up Wednesday and they tackle the topic of is it better to buy new construction or an existing home? The market’s completely different than what we have seen in a very long time. Houses are the one thing that will continually have value because everybody needs a home.
People are paying more than what a home is worth right now, just because there’s limited inventory.
WHEN COMPARING NEW CONSTRUCTION OR EXISTING HOME
For example, five years ago when the interest rates were still low, but high. They were at a 5-6% rate. People were putting their houses on the market. We wouldn’t start the new construction home until their houses were sold and closed. That’s what their loans would say that they’d be predicated on the sale and closing of their property.
People would put them on immediately, and we’d build into the schedule 60 to 120 days to allow them time to sell their houses. Now they’re coming in writing a contract with us and before their loan commitment letter even comes in or their pre-approval, they’ve sold their home, and they’re moving out and renting somewhere. The market has changed substantially.
We know that building new construction is not for everybody but if it’s possible to build, you should, because you’re getting the equity during the build.
When you buy new construction, whether it is with us or not, you are walking into a new community, first in, best investment.
YOU ARE PROTECTED AND IT’S YOUR MONEY
There are so many things that are variable in this market, for example, prices go up for Lumber and concrete, and other items, and when those items go up, the base price of the house goes up.
Every builder is backlogged right now. You’re not going to be in for 90 to 120 days. you are going to walk into your house with equity, and that is unheard of with an existing home. You will walk into your new home with equity, and as we build new phases and incrementally increase the prices, more and more buyers have the best value.
If you are thinking new construction or existing home, your best investment is new construction right now, and typically we’re 50/50. We want to walk you through the steps. When you’re going out with a realtor, and you’re looking at used properties, you’re in competition with somebody else. You’re not on an even playing field.
Whenever you walk into new construction, you know what your base price is and what your options are. You run the show as far as your budget is concerned, you can make that number as high or as low as you like.
You know exactly what you’re getting, and you know it the day that you write the contract. Unless you got any options, do you know at the day of closing, unless, of course, we have to use the Merchandising Act, which we haven’t had to use yet. You’re protected, and you’re not overpaying for something, which is huge.
BUYING AN EXISTING HOME
If you need to buy an existing property, that need is there. Just be ready to prepare. Prepare your budget, because if your budget’s 250, make sure you’ve got enough money to go over that budget by minimally 10%.
We have real estate agents bringing in clients and many similar comments are:
“I’m tired of my buyers being let down by the market, and I know what they’re getting with new construction. I know what you have to offer. I know these houses are coming with a warranty, and I know that my clients are going to walk in and have preserved value versus being outbid on the house, needing to buy an extended warranty, having to come out of pocket with more money for repairs and things of that nature,” because let’s face it. You’ve got a budget for a reason.
We can’t stress enough to be ready for the backlog.
I mean, with the backlogs today, we’re in December. Shelly and I have closings every single week through December, and it is literally back to back to back to back. So there’s consistently something under construction, and it takes the wind out of our sail when we have to tell you, “Hey, you waited a little too long. Now you’re looking at January. Now you’re looking at February,”
If you guys are looking at new construction, the first thing you’re going to want to ask the builder is, “What is your warranty, and what is your backlog?” Those are the two key principles of purchasing a new home in today’s market, because you want to know your timeframe is, especially with rates. Rates could still rise.
LET US HELP YOU
At Cannon Builders, we can easily help you plan your dream home in Lincoln County. Contact us today to speak to Shelly or Holli of the Cannon Builders Dream Team for expert guidance.