Real estate has long been the go-to investment for those looking to build long-term wealth for generations. Let us help you navigate this asset class by signing up for our comprehensive real estate investing guide.
Buying new construction isn't for the faint of heart. Not only can there be hidden costs involved, but even in the best of times, new-construction homes can be subject to countless delays that leave you scrambling to find someplace to live while your life is effectively in limbo. Throw a global health crisis into the mix, and it's fair to assume that your new home may be delayed even more. Here are a few reasons whyCOVID-19 may push back your closing date on your new construction home.
1. Ill workers
COVID-19 has already sickened more than half a million Americans, and that's just the cases we know about. Construction workers tend to do their jobs in close quarters, and unfortunately, you can't discount the possibility of key members of your builder's crew getting sick. If that happens, your builder may struggle to find replacement workers, which means your home could be seriously delayed. Also, home construction is paused in some locations.
2. Missing materials and supplies
COVID-19 has disrupted supply chains across the country and globe. As such, you may run into delays if your builder attempts to secure supplies that are normally in stock, only to find that they're on backorder for weeks at a time. And while your builder may be able to switch gears and use alternate materials, if that results in added costs, that expense may be passed along to you.
3. Permit and inspection delays
Building a new home generally means obtaining many permits and going through numerous inspections along the way. For example, you'll need to have your home's rough plumbing and electrical components inspected and then checked again later on once they're completed. Under normal circumstances, townships can be backed up several weeks. Right now, it's possible that some towns aren't issuing new permits at all or aren't performing inspections, which means your builder may be in limbo until things get better. And even once things open up, an existing backlog could, unfortunately, mean that your home isn't looked at for a month or longer.
What you can do
Buying new construction generally means facing delays, and sometimes extensive ones at that. If you're thinking of signing a contract for a new-construction home, know what you're getting into. And if you've already signed that contract and are now a victim of poor timing, focus on ways to make the situation more manageable.
If you've sold your current home, reach out to your buyer and ask for more flexibility on a closing date, given the delays you may be facing. If you've locked in your mortgage, contact your lender and ask about extending the rate you were approved for. And if there are aspects of your home you're willing to compromise on, like choosing a different countertop stone if the one you initially picked is unavailable right now, make that clear so your builder doesn't waste time waiting for a new shipment.
Most importantly, be patient, and keep an open line of communication with your builder. That way, you'll be more informed about your home's progress -- or lack thereof.
Got $1,000? The 10 Top Investments We’d Make Right Now
Our team of analysts agrees. These 10 real estate plays are the best ways to invest in real estate right now. By signing up to be a member of Real Estate Winners, you’ll get access to our 10 best ideas and new investment ideas every month.
Find out how you can get started with Real Estate Winners by clicking here.