Will You Opt For A New Home Or A Resale Property?
One you have decided to buy a home, the big question is whether you will go for a newly built house or purchase a resale home. This indeed is a very crucial decision involving thousands of dollars and, hence, you should not come to a hasty conclusion. Neither should you think emotionally, but be balanced and coherent as this will help you to make the right choice.
In fact, lots of people who are buying a house for the first time inevitably decide on acquiring a newly constructed home. This is primarily owing to the fact that these first-timers usually do not have any familiarity whatsoever with home ownership and are unable to work out how to change the wallpaper or move walls. In addition, these people go for things that are new and gleaming - for instance, home appliances.
What is actually regrettable is that when you decide to purchase a newly constructed house, you will inevitably be required to pay the price set up by the vendor. This includes paying for the price of the lot, the construction costs as well as some amount of profit for the builder when the deal is closed. Since the house is new, it will generally take some period of time - perhaps five years or even more, for the market conditions to surge forward and raise the value of that particular place higher than what you will be paying for it originally.
On the other hand, when you go for a resale home, things will be entirely different under the usual market conditions. In this case, you will definitely find a more favorable bargain and this means more number of houses on sale, more value for your money as well as a more developed locality. In addition, when you are looking for a resale home, you will find it along with a proven reputation, as the house is expected to have had numerous, may be several dozens, of past owners as well as an extensive history of appraisal. In this case, it is much easier to approximate the worth of the residential real estate after some years. In addition, when you buy a resale home, you automatically acquire certain additional benefits, as these properties are usually situated in an established locality - a known neighborhood with all the infrastructural facilities, mature plantings, a feeling of community among the inhabitants and above all, a verified real estate appraisal. Before you set out to buy a home always remember the fundamental rule - there is nothing more imperative about a house than where it is. In other words, the location of the house is of utmost importance.
However, buying a newly constructed home has its own benefits and presents the buyer a trouble-free inhabitation. As all things in the house - the heating system, electrical gadgets and wiring and the plumbing system - are brand new, the buyer does not have to worry about these things for a long time. In addition, when you buy a new home, it will always be accompanied with a warranty and this makes living much easier. For instance, in Ontario, the New Home Warranty Program offers the buyer an extensive guarantee for a specific period of time stating that if anything in the house malfunctions or becomes defunct will be put right within the stipulated period. New homes also offer the buyer other advantages, such as straight walls, bigger garages and backyards, less energy consumption and even exclusive luxuries like Jacuzzis or sauna baths. There are some shortcomings too because when you buy a newly built house it is sure to be located somewhere downtown making transportation a major problem. In addition, the area, particularly the streets will be bereft of mature trees lining them. However, you will not miss these if the new house has been built on a vacant plot within an urban area. But in such a situation, generally you will be required to part with mega bucks to own a residential real estate in the area.
Honestly speaking, when you go for a newly built home, the cost will generally be much higher owing to the escalation in the price of land, building materials as well as labor charges. As a result, the scope for bargaining is restricted, as the builder would definitely not hand you the keys at a loss. You need to realize that he or she is in the business to earn profits and not lose money. In addition, if you are buying a house from plans, you may also encounter problems with the closing date. In a hectic market condition, business may retreat very fast and delays caused by labors may cause disorder and confusion. In other words, this would mean possibly prolonged impediments in shifting home or taking occupation of your new house. Besides, the agreements for purchasing a newly constructed homed are generally unusually long and also quite knotty. You may also encounter a number of major restrictions regarding what you are entitled to do with your new home. For instance, the agreement may incorporate constraints that may prohibit you from painting the borders pink or parking your boat in the driveway. Even the cost of the house may go up during the construction period owing to escalation in prices of building materials or hiked labor costs. What is worse it that you may even have to live without a lawn in front of your house for six months or even a year as a result of too hectic markets and/ or poor supplies.
Benefits of buying a resale home
Buying a resale home has a number of advantages and some of them are briefly discussed below.
- When you buy a resale home, the property will always be situated in a familiar neighborhood with all infrastructural facilities. Before you buy the residential real estate you may make inquiries regarding your close neighbors or the traffic arrangement in the area. If any of these or other aspects is inconvenient to you, you are free to abandon the place and search your new house elsewhere.
- Additional facilities
- When you are buying a resale home, you have the facility to include a lot of things like the drapes, broadloom, appliances, pool equipment, gardening tools, light fixtures or anything you can imagine, in your purchase list along with the house. On the contrary, when you go for a newly built house, you will be surprised to learn how much money you will be required to spend to furnish the house. Purchasing even small items of necessity, such as garden hoses or curtains, will make a hole in your pocket.
- Closing date
- When you buy a resale home, the closing date is almost fixed and you know exactly when to pack your stuff, call the movers, send out address change cards to people you know as well as take some time off from your schedule for moving home. The biggest advantage of knowing your closing date in advance is that you are able to prepare yourself with the cash and the mortgage much before you need them for the deal.
- When you buy a resale home, you automatically get a paved driveway, landscaping worth several thousand dollars, an existing garden and patio, a swimming pool and maybe even a garden shed. However, if you desire to have these with the newly built home that you have bought, it will not only be an expensive affair, but you will be required to pay for each of them as an add-on.
All said and done, buying a resale home the same as acquiring an old home and there may be chances that the furnace, the air conditioner or the roof may require a replacement. In such a situation, buying a resale home may actually cost you much more that what you would be spending to purchase a newly constructed house. Therefore, it is hardly surprising that the majority of the people, especially those who are not experienced in home ownership, decide on buying new built houses.
Guidelines for new home buyers
Well, if you truly wish to acquire a new home, the few points discussed below should always be borne in mind. Buying a newly built home would definitely require you to work harder than acquiring a resale home and, hence, you need to be equipped to go through what may appear to be a long procedure that may entail several impediments while the builder obtains municipal authorizations, handles the trades and implores for a continual supply of materials and labor that is problem-free. And, what is most important while looking for a resale home, you need to hire the services of a real estate agent as well as a legal expert to help you while dealing with the purchase.
- Explore and investigate
- Doing a thorough research is essential while trying to buy a new home, particularly in the vast metropolitan localities where you have the option to choose from several hundred new home development projects. In order to explore the market, you need to go through the advertisements in the newspapers, visit the different sales exhibition areas and model homes, gather plenty of sales materials and also undertake plenty of driving or communication. The fact remains that most of the newly built homes are usually located outside the city center and in distant suburbs and so you also need to personally visit each of these locations to understand whether they are convenient for you vis-à-vis transportation and your way of life. For instance, if you are a very social person, living in the distant suburbs, where most people only move from their car to the garage to the family room and where the streets become desolate even during the daytime, it would certainly not be an ideal location for you to inhabit. So, it is important to find out the actual situation of a locality before you buy a house there.
- Explore again
- If you are not content with your research on a particular locality where you desire to purchase your new home, you need to work more and explore more. For instance, a visit to the area will give you no idea regarding the future development of the place. In such cases, it is advisable to visit the local municipal offices and go through the official plan regarding that particular area and this will provide you with an idea of the future development activities in the region. For instance, if you find that a huge box retail development is being considered just within the view of the kitchen window of the house you intend to buy, it is certain that you would not like the idea. To be frank, Canadian Tire and Home Depot are definitely good locations, but definitely not if they are in your backyard. While finding more about the locality where you desire to acquire your new home, try to meet people and have an opinion regarding the probable property taxes in the area.
- Having found a location that suits all your desires and requirements, the next thing you need to do is to investigate about the builder of the residential real estate property that you intend to buy. A good standing and a proven past record of the builder are of crucial importance and, at the same time, the firm ought to be a member of a professional group, such as the local home builder's association or society. Do not hesitate to ask the representative of the builder at the sales exhibition for references as well as the site of the projects undertaken by the company in the area previously. It is also important to meet a few people inhabiting the area to know about their experiences with the builder and how they have handled different situations arising from time to time.
- Select the unit carefully
- While buying a newly built home, you have to take several aspects into account before you can actually close the deal. And one such important factor is to find out the number of unit still left to be sold in the development you are planning to buy your new home. At the same time, you need to assess your affordability to acquire the new house in the development you are eyeing. For instance, you ought to known that a unit that has a narrow valley or woodland in the backyard will cost you more compared to an unit that has another home in the backyard. Similarly, a house situated on a cul-de-sac or dead end of a street is considered to be a better property to own and would come at a premium, while one on a busy street would cost much less, as people generally want to avoid all hustle and bustle near their homes. Again, most people dislike having their home situated on a corner lot and, hence, one would cost you less. On the other hand, homes that enable you to view plenty of scenarios - city skylines, fields and water, will always remain more expensive and valuable properties. It is important to note that when you make a decision considering all the aspects of a unit and its surroundings, it is sure to have a great effect on the future salability and value of your new home when it becomes a resale home in the eyes of the following buyer of the property.
- Engage an agent
- Generally, majority of the new home buyers try to get their property on their own, as they think that they would be able to save hundreds of dollars that were to be paid as commissions if they hired the services of a real estate agent. However, this conception is utterly wrong as you always need an agent to help you out in buying your first home. This is primarily owing to the fact that an agent is the best person to represent you throughout the house buying process and will look after your interests better than you could yourself. This aspect will help new home buyers to save a lot of money, annoyance and valuable time.
You are not a professional negotiator, but an agent is. Hence, your agent will go into the market looking for your desired home in a casual manner and with precision. On the other hand, if you were to go looking for your home all by yourself, you are likely to be in a condition of emotional confusion, often make unintelligent assessments and be more entangle with trifles issues like the color of the bathroom tiles, where these issues actually does not matter at all while taking a decision to buy a new home. You should always keep in mind that the person in the sales exhibition is paid by the builder and is also possibly commissioned and, hence, his or her duty would include looking after the interests of their employer and not yours. Since they would not be taking care of your cause, it is essential that you too get someone who will look after your interests and in a very professional manner.
Is there any possibility of any opposition from the builder or his/ her representative?
Honestly speaking, yes, there is such a possibility, but the fact remains that such resistance from the builder or his/ her representative will not continue for long. This is because whenever any prospective buyer visits a builder or his/ her representative along with his or her agent, it is a clear indication of the seriousness of the buyer in purchasing a new home. And, in such a situation, the builder will not refuse to pay your agent's commission once the deal is closed. Remember, though the buyer engages the services of an agent, conventionally, it is the seller who pays the agent's commissions once the deal is closed. In other words, the service of the agent is completely free for the buyer!
Your real estate agent will not only assist you in bargaining for the best possible price, as all prices, irrespective of newly constructed houses or resale homes, are open to negotiation. In addition, your agent will also work to secure a closing date favorable to you and ensure that the contract is not entirely biased in favor of the builder - which is the case mostly. Many builders have financing arrangements with major lenders, such as banks and this may enable you to obtain a favored rate, and in this case, your agent will ask for the rate that will be acceptable to you together with an agreement to reduce the closing expenditures. In addition, your agent may also bargain with the resale home vendor or the builder for undertaking certain home improvements, such as asking for better quality bricks, a thicker broadloom, a free fireplace or even a paved driveway, which otherwise would have cost you several thousand dollars if you undertook the renovations yourself. Isn't it always better that while someone else keeps asking these tough questions and does the running around, you keep yourself preoccupied with the color of the bathroom tiles?
- Mull over a model
- It has been often noticed that the best deals are those where the buyer purchases an existing home that the builder had originally built as a prototype. In fact, when the market conditions are hot and teeming with buyers, buildings constructed as models become redundant to produce sales, but when they were initially constructed, that have the potential to masquerade as great value to a potential buyer. On many occasions, you will find that in order to make the model construction attractive to potential buyers, the builder may include a number of improvements as well as high-grade home furnishings in it. You can make an offer to buy this model construction, as this would come along with a number of things virtually free of cost. Alternately, you may also choose to wait for sometime till most of the units in that particular units are sold and make an offer to buy one of the last few units that are yet to be sold. At this juncture, the builder would possibly be anxious and in a hurry to conclude things at the earliest and move on to a new project. It is possible that when you make an offer to the builder in such a situation, you may even get a discount on the home. On the other hand, people who purchase their homes early, especially in large condominium developments, can also do very well because the builders encourage sales with some incentives with a view to provide an impetus.
- Hire a lawyer
- The contracts for buying a new home are always very intricate as they are drafted by the legal representative of the builder who includes all terms and conditions that are necessarily in favor of the builder. Since you are inexperienced in handling such complex matters, it is always essential to have your own lawyer so that you may be sure that you get maximum security and protection while signing the contract. Therefore, you should also hire a lawyer who is experienced in real estate matters and is familiar with the closing delays and also knows how to tackle such situations and cut down the impediments. While it is always preferable to hire a lawyer even before you start shopping for your new home so that your legal representative can counsel you on all matter pertaining to the house buying procedure as well as prepare your purchase offer. However, if you have not done this and hire a lawyer at a later stage, you should show him or her offer of purchase made by you as well as the contract draft before you sign it. In addition, make sure that you lawyer makes necessary suggestions and incorporates clauses in your favor, such as the right to inspect the construction site often and also a final physical inspection of the unit you are purchasing before the closing date. It is important to mention here that you should never move into a house that is not 100 per cent complete, or else you will be inviting a multitude of gigantic potential problems for yourself. Above all, the deal or contract needs to clearly specify the protections you have as per the provisions in the latest home warranty programs.