It’s hard out there for a home buyer.
With inventories of existing homes for sale chronically low in most housing markets, buyers are at a disadvantage. With existing homes, buyers’ choices are fewer, and competition is stiff for affordably priced quality properties.
When it comes to negotiating, that means sellers usually have the upper hand. Buyers often encounter multi-bid competitions, low appraisals, lengthy negotiations, difficult sellers and unexpected surprises that can delay or lose a deal.
Home construction, meanwhile, is booming. Builders are offering a wider choice of price ranges and styles. Though new homes cost more, the difference might be worth it. New homes offer many advantages, including energy-saving construction and systems and modern design to fit today’s lifestyles.
New homes also are easier to buy than existing homes. A primary reason is that you are dealing with a builder whose goal is to sell a house and close a transaction expeditiously. The process is simplified when there is only one party to deal with, as opposed to a seller and their agent.
Here are some other reasons that buying a new home is easier.
1. You do not have to manage the transaction
Builders are equipped to manage the transaction and usually have their own lenders and title companies that they prefer to work with and who know the builders and the properties in the development. Builders want their buyers to have a smooth and pleasant closing, so most have programs that make it easy for buyers to move from contract to closing, including getting approved for a mortgage.
2. Credits reduce closing costs.
Closing costs on a new house typically range from 2 to 4 percent of the sales price. A house that sells for $250,000, for example, could incur settlement fees from $5,000 to $10,000. Many builders offer significant incentives in the form of credits to help pay closing costs to buyers who use the builder’s preferred lender, even builders who are not affiliated with their preferred lenders. Closing cost credits can be substantial—as much as 2 or 3 percent of the purchase price.
3. Title fees are usually lower.
Because the builder does so many transactions with the same title company, home buyers who use their builder’s preferred title company encounter fewer perceived title issues with new construction. As a result title and escrow fees for new homes are usually much lower than for existing homes.
4. Problems are fixed before closing.
Getting an independent inspection of a new home is a good idea. Should your home inspector identify any problems, builders will fix them before you buy the home at closing. You will not have to deal with the dust and noise from repairs after you move it or the inconvenience of having to stay home from work while workers are in your house.
5. Warranties protect you.
If your inspection missed a costly problem or if a problem develops later with an appliance or system installed by the builder, most builders provide a free home warranty to pay for the costs of repair or replacement.
6. No move-in drama.
Your move-in will not be delayed by a seller who wants to rent back. You also probably will not need to pay for a fresh coat of paint or decorating costs before you move in a new home. You have already selected appliances and finishes that fit your style.