How to get a good deal when buying a house today
If you’re in the market for a home and you’ve been watching the news lately, surely you are wondering, “Am I getting the best deal I can get on my new home?” A “deal” can mean many different things to many different people.
So, what does a deal really mean? Is it a great price? A great location? A lot of the latest features included? Low-to-no maintenance and upkeep? For many people, a deal is related to money; however, some don’t realize that they are getting caught up in the monetary angle while ignoring other valuable aspects of acquiring a home. You really need to define for yourself what a deal means to you.
Keep in mind that there is no “perfect” home unless you create and build it, and even then it is only nearly perfect, at best. So, you should prioritize what you need in a home and neighborhood and then consider the items that you want. Basically determine what is your threshold of making or breaking the deal … and what is your bottom line.
A couple of things to consider as part of the deal: When buying a new home versus a used one, the new home will come with a warranty, along with a builder ready to respond to any warranty issues. A used home comes with nothing and, depending on the age of the home, may soon be in need expensive repairs — like a new roof, replacement of the old heating and air system, upgraded electrical and/or plumbing — you name it. Why are warranties important? Simply stated, they will save you time and money.
Are the features of the home considered part of the deal? In a new home, absolutely. Discussing with your builder what you need can result in choosing the right house plan for you, or adding features to a home under construction or already completed. Even if a feature is added to a newly constructed inventory home after the fact, it is still less expensive than trying to upgrade a used home, because upgrading a used home will mean additional dollars after closing. You will also be responsible for hiring your own contractor(s). These out-of-pocket expenses are not always known ahead, and are almost never included in the price of the home.
Pros and Cons
When considering the advantages and disadvantages, it’s important that you compare apples to apples. For example, say you have narrowed your choices to one used home built in 1990, and one that is brand-new. The used home’s price tag is $200,000. You plan to refinish the floors and put down new carpeting. The roof needs to be replaced, and the heating and air system is close to being on its last leg. And the kitchen really needs to be updated. But, wow, $200,000 is such a great price!
Now let’s look at the new home scenario. The price of the new home is $220,000. You can choose the type of carpet and flooring you want. There’s a 30-year architectural shingled roof and a properly sized, energy-efficient heating and air system. Plus, it comes with all the up-to-date kitchen appliances. In fact, the entire home is designed to be energy-efficient and has all new equipment. And, there’s a builder and structural warranty included in the final price!
Yes, the used home is $20,000 cheaper, but have you priced a roof or new HVAC system lately? Asked for a quote on new floors, new carpeting or a kitchen makeover? With the additional expense of upgrading this home, you could easily end up paying $225,000 or more, especially if something unexpected (and expensive) crops up during the process — which it usually does. Not to mention that there is no homeowner’s warranty. So is the used home really the better deal?
In addition to the money comparison, consider the value of your time. With a new home, once the contract is signed, construction begins. With the used home, you cannot begin to work until after closing. At that point you will spend time interviewing remodelers and contractors and booking the work to be done. And if you’ve ever lived through a remodeling job, you know your schedule revolves around theirs. With a new home, however, in most cases your home is complete at closing, and all you have to do is move in. If a warranty issue arises, you simply call your builder, whereas in a used home you have to call the service contractor(s) you hired. And pay for it.
Deal of the (21st) Century
It’s true: They don’t build homes like they used to. Thank goodness! Today’s new homes feature light-filled, livable floor plans; durable, low-maintenance materials; and stronger, more energy-efficient construction. The building industry has responded to current needs with building materials, products and systems that eliminate recognized health hazards like asbestos and lead; new homes have extra bracing and meet stricter codes against high winds and even earthquakes; electrical systems are designed for the heavier electrical demand of today’s family (homes built in 1980 or before consume 50% more energy than a new home). There’s also less maintenance, with siding, windows and trim that never need painting and have a tighter fit. And the list goes on.
Location is very important: The more desirable the area, the higher the price. When you are considering the deal, don’t forget to factor in the prices of the homes in the area. Really do your homework — not only on your own potential home, but also on the neighborhood. Don’t expect to get such great deals on homes in these highly desirable areas because, contrary to some of the reporting of declining home prices, not all areas have experienced significant price declines like some others. If you find a cheap home in a good area you are likely dealing with a distressed property, with the key word being “distressed.” It’s your job to find out why it is distressed. And how much it will really cost you in the long run. Have that home thoroughly inspected — you might realize that in the long run it will cost you more than it’s worth to bring it up to speed.
If you are price-driven but location-conscious, moving to an up-and-coming neighborhood will save you money. Really look at the growth patterns of the area. Look at the neighborhood’s infrastructure. Is it well-designed and well-maintained? What features are in place? If the community is still under construction, what is promised and what is the timeline for build-out? Is the neighborhood in a desirable location? Does it seem safe, with the surrounding properties in good condition? While you might find a house for a great price, it’s important to remember that these considerations will affect the future appreciation of your home.
Buying a home takes time and thorough research, so be careful of those so-called deals, especially on older homes. Photographs can be part of your toolkit, but remember that a good photo can really enhance the appearance of a questionable property. That photo could also be 5, 10 or 20 years old, or even digitally enhanced. A lot of little things that need fixing up can be expensive and time-consuming, and you may find your definition of a deal is not the same as that of the seller who is offering the deal.
Do your homework. Search online, and definitely search in person. Determine if you’re willing to opt for a “better price” in exchange for your extra time, expense, frustration and no guarantee of a desired outcome.
Deal or No Deal — only you can decide.