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Buying a New Build Versus Resale

Buying a New Build Versus Resale

avatarthumbnail.jpgNormally the decision between buying a new build or a resale home is an apples versus oranges kind of scenario. On the surface it may seem that the home being offered by the builder is the same as the resale home for sale, but there are some significant differences between the two.

The most dramatic often can be the price. Builders adjust their base price and often offer considerable incentives to entice buyers into signing a contract. But it’s not in the sales office that a new home often becomes an expensive adventure – it’s in the design center, where prices for upgrades are far from competitive.

KB Homes, for instance, focuses on what it calls affordability. Which means the base price gets you four walls and the basics; everything else you might want – from upgraded floors and counters to details such as finished walls in the garage and locks on the bedroom doors – is going to cost extra.

That’s the most extreme example. Some builders offer more, some offer less. Lennar is unique in that whatever you see in the model is whatever you get; the downside of such a scenario is if you want to move a doorway six inches to the right, it’s not going to happen. What you see is what you’re going to get.

And that doesn’t take into account the other basics that every homeowner needs – things like window coverings, which aren’t included, and ceiling fans (which can be included but aren’t worth the cost at the design center.)

Today I was touring golf course homes at Trilogy in Vistancia. Base price for a particular model on a golf course lot, from what I’m told, is $350,000. There are a couple versions of the same model available as resale homes for less than $400,000.

So the question becomes … how much can a buyer make the builder give away to make the new build worth the same?

Both homes at granite counters, one had travertine floors and the other diagonal tile,  both had plantation shutters on some windows (interestingly enough, neither had shutters on the three large living room windows overlooking the course), one had paint that would need to be redone (Trading Spaces, anyone?) and the other was more or less set in that department.

Oh, and there’s this … given the current market for non-bank owned homes, there’s a more than decent chance these homes can be had for less than list price, which is not something you can say about the new builds.

What’s the better deal? It’s going to vary from one buyer to the next. But in general terms, I know where I would be looking first.

[tags]Phoenix real estate[/tags]

1 Comment

  • Jim Zirbes says:

    As you may have also seen, there are more and more price “recasts” as builders are increasingly being able to get the land to build on at bargain prices out of foreclosure.

    Since the land typically accounts for around 20% of the price of the home, this, coupled with the best labor pool at lower cost plus the fact that most material costs are holding steady (or have declined), prices on new builds are much more competitive than they were 6-9 months ago.

    Also see: http://jimrejournal.blogspot.com/2009/02/top-10-reasons-to-buy-brand-new-home.html