Pros and Cons of New vs Resale
You’re in the market to buy a home. Should you buy a resale or a new home?
5 Things to Consider to help you in the Home Buying Process
# 1 Price and COST
When you go look at a resale home, the price listed is the actual price for the home. All the finishes that are currently there, and the real property, which is considered anything that is attached – such as window coverings, ceiling fans, water softeners, oven, range, custom closets, garage cabinets, backyard landscaping, if there is a pool/pool equipment, epoxy garage floors- all the things that an owner puts in after they take possession.
In today’s market you can certainly negotiate money off the list price and or ask for some closing cost assistance. You know exactly what the price is, the finishes, and what is included for that money.
Now when you look at new homes the price you see listed is ONLY the BASE PRICE. The BASE PRICE will vary depending on which exterior elevation you choose. In addition to the BASE PRICE – you will have a LOT PREMIUM associated with the dirt. This can range from $5K to hundreds of thousands of dollars depending on if the homesite- if it has a “view” or if it is a large sized lot.
In addition to the Base price and the lot premium, you have to factor in options and this is where it becomes challenging to determine how much exactly the final price of the home will be.
There are two types of options:
Structural options which are determined at time of contract signing – these are things such as a fireplace, an oversized shower instead of a tub, a bedroom in lieu of a den or vice versa, sliding glass door configurations, etc. You will know the price of those at the time you sign the contract.
Secondly you have design center options, which is the fun part, where you get to go the the design center and pick everything you want: cabinets, floors, paint, backsplash plumbing fixtures, shower tile, extra lighting or electrical, door hardware, etc. You really have no idea what everything in your wish list will cost until you have that appointment which is AFTER you have already signed a contract.
A good rule of thumb is to figure about 15-30 % of the base price of the home in option money OR have a predetermined budget in mind for what you can spend at the design center and choose everything you want, and then eliminate what you can go without if the total goes over your budget.
The one exception to this is if you find a standing inventory home, which is completed – then you will know the true cost of the home.
One other important thing to be aware of is in a new build they are going to require more money outlay up front. Each homebuilder is different in their downpayment requirements but typically you place a downpayment to go to contract, and then they will collect a portion of the lot premium and structural options which remember are selected at time of contract. Then once you have your design center apportionment about a month later – they will require a percentage of those selections. The percentage of the option money you give is NON-REFUNDABLE.
Also on a new home, you will be responsible for getting a fridge, washer/dryer- unless you purchased them through the builder, window coverings, custom built out closets, and backyard landscaping, water softeners – which in a resale, those homeowners have already put in these items. You’re going to also have this money expenditure when buying a new home.
#2 Closing Costs & Incentives
Lastly when it comes to the topic of money you need to know that closing costs on a new home will be more than that of a resale. New homebuilders pass on what are typically SELLER COSTS in a resale, on to you as the buyer. This includes The Nevada State Real Property Transfer Tax which is $5.10/$1000 – sellers, 99.9% of the time pays this fee on a resale – so on a $500K Home this is $2550.
Owners Policy of Title Insurance – Sellers also pays this 99.9 percent of the time on a resale – which using $500K as a reference guide is $2128 – so this adds up pretty quickly.
This is in addition to any loan costs charged by your lender, and also escrow fees.
On a new home -prepare to pay more in closing costs.
Buying from A Seller Vs. Buying From A Business
Homebuilders are in the business to sell homes. They recognized the shift in the market quickly, and immediately adjusted. You can get some great incentives on a new home right now in which they will buy your interest rates down, or pay for a portion of your closing costs, reduce lot premiums, give you $$ towards the design center. There are some VERy attractive deals on new homes and who doesn’t love a new home?
Resale homes you are dealing with an individual seller and there are still some sellers stuck in 2021/early 2022 pricing/mindset. Sellers tend to be more emotionally attached to their homes because of the love they put in, the memories made, and it’s their home, so sometimes negotiating can be a bit more sensitive – they’re emotionally invested.
Coordinating a Move and moving is tough as it is. Do you need a home more immediately within 30-45 days or do you have the time to wait for a new build on and potential delays? The supply and labor chain is still affected from Covid and 2-6 month delays on a new build are a reality, add on that the time to build a home is about 6-12 months these days. When you buy a resale, we typically have a 30-45 day closing, and you can coordinate moving truck, utilities, internet for closing day.
If you are wanting a pool – it is Las Vegas after all, then this is something you definitely need to pay attention to. Any new pool builds can only be a maximum of 600 sf due to a newly passed regulation for water conservation efforts. If you are wanting a larger size more resort style pool – then you will need to find a resale home that one is already built in – and there are plenty of pool homes to pick from!
#5 HOME INSPECTION
Do you need a home inspection on a new home? Most buyers always home inspections on a resale as part of their due diligence – even in the craziness of the market, we weren’t seeing too many inspection waivers here in the Las Vegas & Henderson real estate markets. On a new home a lot of times buyers feel its new – what could go wrong and at the new home orientation conducted with the builder’s customer service rep, they identify any blue tape items cosmetic items we and also show you how the systems work – shut off valve, sprinkler system, etc. However, You need a home inspector to conduct a thorough inspection to make sure everything is in tact from the roof to the attic.