My Husband and I Bought New Construction. Here Are the Main Reasons We'd Never Do It Again
KEY POINTS
- New construction can seem like a good idea, especially when you get to customize your home build.
- When we built our home, we faced extensive delays and expensive upgrades.
- Our property taxes are also higher than what's typical in our town simply because our home is newer.
When my husband and I sold our starter home in a day, we knew we'd need to move quickly to find a new place to live. And we ultimately settled on a new construction home in our same neighborhood.
We knew that by purchasing a home being built from the ground up, we'd end up with a higher mortgage payment than with an existing home. But the home we signed up to buy fell within our home-buying budget (and below our maximum price), so that wasn't really an issue.
We also liked the idea of being able to customize different features of our home. For example, we opted for a kitchen setup with a double oven, and we chose an oversized tub for our master bathroom. These were features we may not have gotten in an existing home in our town.
But while buying new construction had some benefits, my husband and I agreed we'd never do it again. Here's why.
1. The delays were ridiculous
My husband and I were initially told that our home would be move-in ready by early June. We wound up moving in October.
During that time, we had to secure temporary housing that cost about $2,000 a month and pay to keep our furniture and most of our belongings in storage, which was another several hundred dollars on top of that. And trust me when I say that it's not easy to find a month-to-month rental when there's a dog in the mix.
If you're someone who can cope with being in limbo, then you may be okay to buy new construction. But if you can't imagine having to bounce around in temporary housing or cover the cost, then building a home may not be optimal for you.
Thankfully, when we went through the process, we didn't yet have children. Had this happened when our kids were in school, we would've needed to enroll them in a new district for a few months and then switch them mid-semester. Talk about a nightmare.
2. We were overcharged for upgrades because our builder knew we had no other option
The whole appeal of buying new construction was to get to customize our home's features. And that meant making different upgrades. We were able to roll those upgrades into our mortgage loan, which meant we didn't need to empty our savings. But our upgrades wound up costing more than expected because our builder took advantage of the situation.
When you have an existing home and you're looking to make upgrades, you can talk to different contractors and get quotes to see whose prices are the most competitive. When you're working with a builder on a new construction home, you have to go with your builder. And that gives them the chance to charge whatever they want.
Now, if you buy a new construction home that's well below your budget like we did, you may be able to cope with those costs. But like us, you might get frustrated by being overcharged.
3. We got stuck with really high property taxes
When you buy new construction, it can be tricky to assess its value because there may not be many comparable homes in the area. But that could end up hurting you.
My state, New Jersey, has the highest property taxes in the nation. And my town's tax rate is higher than that of a lot of surrounding towns. So we didn't expect our property tax bill to be minimal. But we were shocked by the taxes we got hit with, and we couldn't really argue them down because there were no similar homes to use as a point of comparison.
If you're going to buy new construction, know that your property taxes might be high. Also, know that the initial property tax bill you're presented with might change once your home is completed. The estimate we got for our property taxes when we signed our home purchase agreement was $2,000 less than our actual tax bill.
Lesson learned
For some people, the process of buying new construction might be totally smooth and pleasant from start to finish. But that unfortunately wasn't the case for us, and it's turned us off from a repeat experience.
Of course, your experience will ultimately hinge on the builder you work with. Ours wasn't wonderful. But we should've done a better job of vetting our builder, so that's on us.
If you decide to move forward with a new build, dig into your builder's history and finances, and talk to people who have used that builder to see how things went. That could prevent you from having a less-than-favorable experience like we did.
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