New Home VS Existing Home | Pros And Cons of Buying a New Build Home

you've got a big decision in front of you don't you it's the third quarter now 2024 this year is flying by and you've been preparing for buying a new home and so now you're there and the question is are you going to buy an existing home or are you going to buy a new built home not an easy question it could go a lot of different ways here I'm going to try to create a video that doesn't show my biases even though I am biased on this I'll tell you right now I'm going to put those aside and we're going to go over pros and cons of buying a new build versus existing and then at the end of the day if you are in on going the new build route there's going to be at least three or four things you just got to know that I'm going to cover for you and at the end of this video hopefully you're going to thank me and say wow that was uh that's some Vital Information that really helps so as I like to say let's kick off this Rodeo right now hi folks I'm the mortgage Patriot Kevin Fagan on your side nestled here in the Hill Country above San Antonio Texas serving proud Texas and all you great folks all around the country so as I said another great one today because we're talking about an important topic if you want to buy a home what are you going to buy are you going to buy an existing home or you going to buy a new build that's a big question uh as we get into that if you would hit the like And subscribe below right there that helps me bring up my YouTube content it helps with the algorithms puts my videos in front hopefully to get to you and as you've seen I've given you lots of great ideas on financing matters on purchase strategy on house hacking strategies done a lot of videos all to your benefit and here's another one so let's get into that content right now just a quick commentary before I get into the pros and cons and that is we're experiencing a giant inventory shortage in homes for sale across the country that's just a fact we're down I want to say about a million homes below what our normal inventory levels would be right now so it's forcing a lot of people to explore new homes and new builds when they wouldn't have done that in the past and part of that reason is because a lot of homeowners as you know going back three years to about a year and a half ago we had experienced very low historical low rates and given that people don't want to sell so they're sitting in a home maybe a 3% interest rate and they're thinking to themselves well I kind of like to move but I don't want to buy a home a new home for six six and a half whatever the interest rate is so that's that's creating an inventory shortage Big Time a lot of places like Texas in your bigger cities new builds are almost the only game in town so let's get into those pros and cons because you're going to need to know what you're stepping into if you're going to go new builds there are absolutely advantages to buying new builds and so let's cover the main ones I think there's four main ones and the first one is price point what do I mean by that and that is with existing homes and existing neighborhoods mature neighborhoods sometimes you can't even you can't find anything in the price range you're qualified for so builders on the outskirts typically of communities outskirts of towns uh are building in new developments at price points you can afford just that simple so the price point is a big one number two is customization that's obviously a wonderful thing because as you go into and talk with Builders about their different models you get to choose different packages different design packages and customize certain aspects of your home right countertop what what's the material going to be made out of what what kind of flooring are you going to be wanting what color are the walls what color is your trim work that's all fun and exciting and that's just a major advantage of a of a new build the third big advantage or Pro would be once the house is built the building gives you a warranty for usually about 12 months sometimes longer on certain systems and so that gives you some comfort in knowing that you've got that covered now of course on an existing house you can buy a home warranty but again that you're coming out of pocket for that here the Builder is going to include their warranty in that final number so that's a big Advantage but having said that though of course a warrant is only as good as the Builder's execution of that in other words if something goes out an AC unit goes out or something and let's say it's an 11th month of your ownership of the home I've known some Builders to kind of slow walk that whole response time so that you're actually after 12 months they say oh I'm sorry we're we're out of the warranty period we can't really fix your home what you want to do is you want to kind of find out the reputation of your Builder one good idea is to go either on the line somehow find a neighborhood group maybe Facebook group in that Development Area ask about Builder warranty and what people's you know experience has been with that and maybe you get some ideas on how much they back the own warranty let's talk about the last big advantage or Pro of buying new bills and it's incentives incentives can be very very large it's going to depend on the market forces meaning if the Builder is moving inventory quite quickly without having to offer many incentives then you're not going to get many incentives but if their the inventory their own inventory started to back up a little bit those inventories start to really Blossom and just explode even so you're going to be potentially offered 10,000 15,000 20,000 more depend on the price points uh from a builder and youve got to know and we're going to talk about this right after this you've got to know how to look through all this and analyze it properly because everything's negotiable so let's get into things you must know if you're going to go the new build route so the first thing you really need to know and I've already mentioned it and I can't say this enough is that everything and I mean everything is negotiable the price is negotiable the upgrades are NE negotiable the design elements are negotiable the financial incentives are negotiable everything is negotiable but if you're just representing yourself in other words if you don't have a buyer representation in place already or at least an agent's name in place already when you go into a showroom you're going to get eaten alive because even though they're going to be wonderfully nice they know their numbers and they're not there to represent you they are representing the Builder and even though they're going to show you let's say our package is $300,000 a house and we're going to give you $10,000 worth of financial incentives and we're going to buy that rate down to 5.5 instead of 6.5 sounds like a great package well guess what what they're giving that to everybody bringing on an agent that knows what they're doing like myself who's in a unique position because I'm both a loan officer and an agent I know both sides of the deal I know I know the numbers and I know the games that the agents play on the listing side from the builders you need that someone like me in place so that we can help negotiate even a better deal for you and if they're giving you $10,000 we'll show you how we're going to save $220,000 so we're going to get better than the package that they're going to give everybody so do this for me if you would please if thinking about a new bill which is great tell me in the comment section what community as in what area of a city at state that you're looking in and if I can contact you because I want to be able to register myself it's called registering with that Builder that you might be going to visit on the weekend I'll register with them doesn't cost anything to do that and I can represent you then or a teammate of mine can represent you to help you on that negotiating table because again they're going to be wonderfully kind and all those things but they going to give you a standard deal and that doesn't mean that's going to help you everything is tilted to the Builder side I'm going to get into some of those things right now but trust me when I say their contract is not a good one and you've got to have somebody experienced looking at the numbers as well as the language of the contracts here's another big one you need to know and it's about the contract like I mentioned earlier the contract from the Builder is not at all a fair contract typically it's tilted completely towards the Builder's advantages most of the states do not require the builders to use a common form that the state uses on the whole Builders a lot of times get to use their own unique contract purchase agreement and in that language in there could say anything so a lot of times you're left as a potential buyer you're going to put up what's called an earnest money you've heard that term before a lot of times they'll call it the build or deposit you're going to put it up a deposit up front and an existing home earnest money is not typically at risk until after a certain option period is done but on the Builder side you might come up with $10,000 $15,000 to write a check just to hold a house that won't be ready for even 6 or seven months and the Builder deposits sometimes is larger than on an existing home and that1 or $15,000 is at risk day one unless certain small things happen meaning you could lose your earnest money if you back out and you don't have a time period an option period to back out of you're not protected and there's other Clauses typically in a builder's contract that work against you as well an experienced a in that area will understand what language to look for and how to help you that's a big one a couple more things you just really have to know with new builds is you need to be very very flexible when you move because you might come into their showroom they show you that model home a beautiful home and guess what that's that's not the home you're going to get those model homes that always have every single upgrade every single beautiful fixture that aren't in your standard package but anyway you get enthralled by the model home you give them a large deposit which is at risk like we just said and now they're say okay great we're going to finish this home in six or seven months we'll be ready you'll be ready to move in by March the 1st you gear up for that and you got a lease in place that you know and you're timing your lease just right but guess what as you're approaching January February and you're talking to the Builder rep now they say oh gosh turns out uh we've had some issues we're a little bit behind on schedule it's not g to be March it's going to be May and you're stuck now you have to either reup on your lease or you're going to get hit with higher month the month rental expense versus what you were paying these happen all the time so you got to be extremely flexible and ready to understand that there's going to be variations on when a house is going to be finished or not lastly there's what we call special assessments and what are those well you you're going to be paying property taxes of course along the way but you have sometimes in these new communities a special assessment which is a local tax on top of the normal County and other city and School District taxes to pay for a certain project like this community so it could add quite a bit of monthly expense to you monthly payment maybe 200 to 500 I've seen even higher than $500 per month it's not a small number and yes it goes away after a certain time but it doesn't go away anytime soon they're not going to tell you about that when they're talking about their wonderful $10,000 of incentives and 4.99% interest rate there's sometimes special assessments and once again someone like myself who's a loan officer as well and can look at numbers and can grind them out with anybody uh you're going to need somebody on your side like that to help negotiate this whole deal do not step into these things lightly there's all kinds of ways for a new build to get a big advantage over what you could have had had to use in Asia so as I mentioned earlier if you would in the comment section tell me what area you're trying to look in for a new builds if that's the case could be north of Dallas Texas south of Tampa Florida whatever your case may be those connect together I want to register with that Builder or one of my teammates will register with the builder now we're on your side as a strong negotiator we're going to reduce your liability we're going to improve your situation in terms of cost and or increase your incentives we're going to give you overall better deal I'm Kevin fan mortgage Patriot on your side make it a great one folks END OF TRANSCRIPT