Did you know purchasing new construction can look a bit different than buying an older home? In this article, Dan Hamilton, Hamilton & Co. Real Estate Founder, debunks 7 common myths about new construction, explaining how a new construction transaction works and why it might be a good choice for your family. Thank you to Hamilton & Co for sponsoring this article!
House hunting can be an overwhelming process, and an especially difficult one when home prices are high and inventory is low like it has been the last couple of years. In light of today’s market standards, many of our clients at Hamilton & Company – especially our first time home buyer clients – are turning to new construction as an alternative to previously owned homes.
Myth #1: New construction is more expensive than previously-owned homes.
While there is typically less room to negotiate on the price of a new construction home up-front, they are definitely NOT more expensive across the board. Let’s look beyond the price tag for a moment…
New construction homes mean NEW. New roof, new plumbing, new flooring, new heating and air conditioning…new everything!
When you purchase a new construction home, you don’t have to worry about the HVAC breaking a year in or having to replace the roof. Renovations and cosmetic upgrades don’t have to be factored into the purchase price of the home because everything is new and, if you are building your home from scratch, everything is hand-selected by you!
In the rare case something does break or need to be replaced, new construction homes have home warranties that cover the cost of most repairs. These warranties will vary depending on the community you are purchasing in, so if you are home shopping, be sure to ask your real estate agent about the home warranty options before going under contract.
Finally, new homes are outfitted with some of the best energy efficient technology on the market, including energy-star appliances, insulating techniques, airtight, multi pane windows and more. Built up to the latest construction standards, new construction homes will heat and cool more efficiently, saving you money each month on energy bills.
While it’s impossible to say definitively that one type of home is more or less expensive than another, it is a safe bet to assume new construction homes involve less up-front cost for repairs, are more energy efficient, and can be a more affordable option across the board.
Myth #2: New Construction is more difficult to finance than pre-existing homes.
Contrary to popular belief, new construction can actually be easier to finance than pre-existing homes.
Like any home purchase, a new construction purchase will involve you meeting with a lender and obtaining a loan (unless you plan to pay cash, of course). You can bring your own lender into the new construction deal, but many communities already partner with lenders that you can work with. These lenders are familiar with the builders, the home construction, and the company as a whole, making the financing process move more smoothly.
Plus, there are typically incentives involved when you work with a community’s lender rather than an outside lending source. This can make it easier for you to secure financing and get a better deal on your mortgage.
Here in Greenville, we’ve seen a huge increase in new construction incentives as the market has leveled out, with some communities offering up to $40K in incentives!
So, while the financing process may look a little different with new construction homes than with pre-existing ones, it is not always more difficult. It can often be simpler!
Myth #3: New construction takes FOREVER to finish!
It’s true…new construction timelines often fluctuate depending on available labor, supplies, and other factors, many of which are outside the control of the builder. On our team, we’ve personally seen many of our clients deal with delayed move-in due to their homes not being ready.
However, we’d still say these delays are the exception to the rule rather than the norm. According to the 2021 U.S. Census Bureau’s Survey of Construction, home construction takes about 7 months on average, and this lines up with what we see here in Greenville.
But you don’t have to wait that long if you don’t want to. The nice thing about new construction is that you can often jump into the process at whichever point suits you as the buyer.
Many home builders start building a home long before they have a buyer. Construction on speculative homes, or spec homes, may already be underway or nearly completed by the time you start your transaction.
While many buyers purchase nothing more than a piece of land and build their dream home from the ground up, you can really purchase a home at any stage of development. If you are looking to move in the next month or two, for example, you could purchase a home that is nearly complete, add your personal design touch, and be ready to move in on your timeline.
Whether you’re purchasing a plot of land or a nearly completed home, planning in advance is key.
- Know how long your builder expects the construction process to take.
- Determine if the timeline aligns with your needs.
- Ask about material inventory and other factors that may shift the completion date of your home.
Your real estate agent can also be a huge help here. When we represent clients in a new build transaction, we negotiate on their behalf every step of the way. We can help get your questions answered and get you moved in on time!
MYTH #4: New construction is made of poorer quality than pre-owned homes.
With today’s building codes and construction standards, building construction principles are about the same regardless of the new build. Whether you’re purchasing a pre-fab townhome or building a custom home, a minimal standard of quality is required. Not only is there a minimum standard for new builds, but that standard has become more demanding, not less, over time. New homes are:
- more energy efficient.
- more earthquake and wind resistant.
- less expensive to repair than older counterparts.
While old homes often have charming details that are associated with luxury, they are also full of code violations that just wouldn’t be allowed in home construction today.
If you’ve purchased an older home, you know this to be true! Home inspection reports on older homes often come back riddled with warnings. As real estate agents, we have to walk our clients through these reports, helping them understand what is worth noting and what is merely due to age.
No such issues with new construction! With new builds, everything inside and out meets and often succeeds modern standards and codes. Any issues you may find in a report would be addressed quickly by the builder prior to move-in.
The quality of your home’s finishes may depend on your budget, and more expensive custom homes will surely have more luxury details than spec homes. However, when it comes to home construction, standards are high for new construction regardless of budget.
MYTH #5: You can’t perform a home inspection on new construction.
Speaking of home inspections, there is a huge misconception out there that you cannot perform a home inspection on new construction.
Quite the opposite! Performing a home inspection is a critical part of the home buying process for new builds. In fact, multiple home inspections will be performed throughout the building process in addition to a final inspection you as the buyer may order.
Local municipalities thoroughly inspect new construction as they are the ones who will provide a certificate of authenticity. This certification is required before you can move into your new home.
Your builder will also perform a final inspection prior to signing off. In addition to these inspections, you can hire a third party to ensure the home was built according to the local building code. You don’t have to wait until the end of the building process either! You can hire an inspection at any point in the building process. Your real estate agent can help you hire an inspector and will review your report with you.
So not only are you allowed to order a home inspection on a new build, but new construction is often subjected to multiple inspections, far more than pre-owned homes.
MYTH #6: You don’t need a real estate agent to purchase new construction.
Builders typically do not require you to have a real estate agent when entering a new construction deal, but that doesn’t mean you shouldn’t have one, ESPECIALLY if you are a first time homebuyer.
As with any real estate transaction, you want a knowledgeable professional on your side and negotiating on your behalf. Your realtor will make sure you get the best possible price, contract terms, add-ons, warranties, target completion dates, and more. With new builds, your realtor isn’t just there for the actual transaction, they are with you through the entire building process.
Most new construction communities have a real estate agent on duty to assist you with anything you need. While these agents are knowledgeable and more than capable of helping you, their ultimate loyalty lies with the building company that hires them. Bringing your own agent to the real estate transaction ensures you have representation looking out for only your interests.
Builders are typically more than happy to work with your real estate agent as long as you include them early in the process.
When it comes to commission, the cost is often part of the builder’s budget, so you don’t have to worry about that either!
Entering any real estate transaction without professional representation is a bad idea, but it is especially damaging with new construction. Since the transaction period for new construction is so much longer than with pre-existing homes, it is vitally important that you are represented the whole way through.
MYTH #7: New homes lose value faster than established homes.
Buying a house is NOT the same as buying a car!
A car loses value as soon as it’s driven off the lot, but the same can’t be said for real estate. Real estate is an example of an appreciating asset, or an asset that increases in value over time.
Both established homes and new construction are appreciating assets and increase in value after their purchase. In fact, new construction often increases in value more quickly than established homes due to one important factor:
Home values in a new community increase as more homes are added to that community. As the neighborhood develops (and businesses open up around the neighborhood), home prices increase quickly in value. If you have shopped for a new home before, you’ll notice the final home in the community is often much more expensive than the first. This is to account for the dramatic increase in value!
Real estate does not lose value except in very rare economic situations; it appreciates over time. And new construction often appreciates more dramatically in the short run than established homes.
Bottom Line
Hopefully this article has helped you debunk a few misconceptions about new construction in Greenville, SC.
If your family is considering a move in the next couple of years, a new build may be a great option! New construction is energy efficient, affordable, and customizable to your family’s needs.
The best way to decide what type of house fits your needs best is to talk with a trusted real estate agent. At Hamilton & Company, we sit down with each of our clients to discuss their wants and needs in a home, their design style, location preferences, budget and more. All of these factors will help us understand what homes to tour with you.
Contact Hamilton & Co
Are you interested in learning more about new construction homes in Greenville? Contact Hamilton & Company! We have relationships with dozens of builders and communities across the Upstate and would be happy to help you navigate the purchase of a new build.
Learn more about Kidding Around Greenville partner, Dan Hamilton!
