Advantages of Buying a New Construction Home

new construction home buying advantages

Late last year, my wife and I purchased a new construction home. If you know about my nightmare foreclosure then you might think I would have been a bit hesitant to join the ranks of homeowners again. After all, that fiasco was horrifying enough to deter anyone from buying another property for a lifetime.

However, time heals all wounds and, mentally, I was ready. Plus, with the newest addition to our family, we were fast running out of space in our rented, upstairs apartment. After paying off most our debt and being nearly debt free a few years back we were able to accumulate enough for a down payment.

As a result, last summer we started house hunting. Initially we focused our search on resale homes – homes that were built in the past and currently owned by the folks ready to sell.

Eventually we expanded our search to include the possibility of buying a new construction home. At first I had excluded the notion of buying a new construction home. In my mind, I likened purchasing such a house to buying a brand new car. In other words, buying a new construction home would be an inherently bad decision with the detriments generally outweighing the benefits.

In the end, we did indeed purchase a brand new construction home because it made the most sense for us. While there are definitely some disadvantages to new construction homes, there are also some advantages that you might not realize. Let’s take a look at both sides of the spectrum when it comes to buying a new construction home. We will start with the advantages.

Note – for the purposes of this article, “new construction” home means those from a builder, such as Lennar or Beazer, that develop a community of similar homes. This article excludes homes where someone purchases their own single plot of land and designs their own home by finding their own independent contractor.

Advantages of Buying a New Construction Home

  • Warranty – One of the largest benefits of buying a new construction home is that it should come with a warranty from the builder. Our warranty included 1 year for pretty much everything. Other parts of the house, such as the framing and foundation, have a 10 year warranty. This can be advantageous for several reasons. First, if something breaks, there’s a decent chance the warranty will cover it especially within the first few years after purchase. This can keep your maintenance costs rather low. Conversely, if something breaks right after you buy a resale home, the bill is all yours!

And, yes, you can purchase an out-of-pocket home warranty for a resale home. It probably won’t cover as much and you’ll have to pay the premiums each month.

Trick! – you may want to consider skipping a home inspection during the actual purchase. While getting a home inspection is critical when buying a resale home (although, as was my case during my nightmare foreclosure, home inspections can be worthless if the inspector is incompetent), it might not be necessary upfront when buying a new construction home. This will save you money during the close. Now, here’s the trick: wait until right before your initial 1 year warranty expires and then get a home inspection. If something has gone wrong in that first year, then hopefully the inspector will catch it. You can then submit a warranty claim. If you’d done the home inspection solely upfront, then you might not catch stuff that goes wrong afterward (if there is anything that is).

  • Choice of Floor Plans/Upgrades – When you buy a resale home you get the home as is. Sure, you might be able to negotiate with the seller to put in some new carpet or lay a fresh coat of paint down. That’s pretty much the extent of your customization options. However, with a new construction home, you likely will have the option of choosing the floor plan that best fits your needs and budget. Beyond that, you should also have the opportunity to choose what upgrades you’d like, if any. For example, picking the cabinets, counter tops, flooring type, interior paint, etc. are all possibilities that you can have done “out of the box.”
  • Newer Technology – I love my solar panels! Our new construction house also has cutting edge insulation. The outcome? We have been averaging $15/month electricity bills in the consistent 90 to 100+ degree heat of the summer.

Purchasing a new construction home means you are getting newer technology and up-to-date building standards as a part of your house. Sure, you could renovate or have new technology added piece by piece to a resale home, but that can be a costly hassle.

Trick! – Ok, so this is not necessarily a trick per se, but it is a nice “did you know.” Current tax law allows for a credit to be taken on your income taxes for 30% of the cost of a solar system. Remember, a credit is a dollar for dollar reduction of your tax liability (which is better than a deduction). The neat thing is you still get to take this credit when buying a new house even though the solar system comes included in the purchase price of the house! In other words, you are financing the cost of the solar system through your mortgage yet you can take the full credit on your taxes during the year of the purchase. This can give you a nice little “break” income tax wise while wrapping the actual payment of the solar system into your long term mortgage.

  • Nicer Neighborhood – New construction home neighborhoods are generally going to be well-maintained with desired amenities nearby. Of course, you never know what type of immediate neighbors you might end up with. On the whole, though, there can be a certain appeal to live in a neighborhood that still has the “shine” on it. All of this is subjective, of course, and there’s nothing to say more mature neighborhoods won’t have a similar type of appeal. The “niceness” of new construction homes and their neighborhoods can definitely be an advantage over resale neighborhoods.
  • Financing – Most likely the builder will have its own financing option available for you to use. You should be able to use your own lender of choice and if you have already found a great mortgage deal then awesome. I was initially skeptical of using the builder’s mortgage company (which was an affiliated subsidiary company) because I assumed it would be too pricey rate and fee wise. Turns out they were actually fairly competitive.

The real benefit to using the builder’s financing comes during the closing process which can be long and drawn out (depending on when in the construction process you sign the purchase agreement). Outside lenders might not be familiar with the builder’s closing requirements, timing, or general process. That means you will likely have to play the middleman – undoubtedly a stressful and frustrating experience. The builder’s loan officer and the processor will be intimately knowledgeable about the whole process and that makes for a smoother overall ride all the way through closing.

  • Lower Cost of Initial Maintenance – On average, with a new construction home, there is going to be less maintenance and replacement costs incurred. If you buy a 15 year-old resale home that has an original roof with a life of 20 years, you are going to have to pay for it the be replaced in roughly 5 years. When you buy a new construction home the roof life is going to have 20 years remaining (or longer since the material may be of higher quality). Also, keep in mind the warranty if something does go wrong early on in your ownership of a new construction home.
  • Closing – From my experience, the whole process leading up to and including the closing process was quite smooth. The builder provided a list of all important dates and items due based on the pre-determined construction schedule of the house. And, as mentioned above, the builder’s lender worked hand-in-hand to square away the financing side of things. That’s not to say you won’t have to ask questions and follow-up on various items. I am also not guaranteeing a hassle free experience since each builder operates differently. The main difference from a resale home is you work directly with the builder’s representatives instead of contacting your realtor who then contacts the seller’s realtor who then contacts the seller. It can make a difference.
  • Resale Values – We will take a closer look at resale values in part 2 which will discuss the drawbacks of a new construction home. The truth is, buying a new construction home will not guarantee you will be able to sell down the line for a higher price than an originally purchased resale home. There are too many variables to factor into what the home value will be. However, there is possible credence to the theory that, because new construction homes will generally have more recent technologies, less deterioration, etc. in 5, 10, or 15 years then they may maintain their values better compared to the older resale homes that were available when you originally purchased.

What do you think? Would you consider buying a new construction home? How much do the advantages listed above influence you?

**Be sure to check out Part 2 Disadvantages of Buying a New Construction Home**

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48 Responses to Advantages of Buying a New Construction Home

  1. Michelle August 17, 2015 at 9:24 am #

    We’re undecided with what we should do with our next home. It’s a hard decision!
    Michelle recently posted…The 6 Steps To Take To Invest Your First Dollar – Yes, It’s Really This Easy!My Profile

    • Mr. Utopia August 17, 2015 at 7:46 pm #

      It’s a difficult decision because it is such a huge decision! Are you at all considering a new construction home?

  2. ND chic August 18, 2015 at 6:10 am #

    I totally agree with you! Our first house was new construction and we made bank on it when we sold. We also had way lower energy costs because it was new. Also, I think you get a better deal when youare one of the first ones in a neighborhood. The last few homes that are built are sold for more money because the people don’t have to put up with construction in their neighborhood.

    • Mr. Utopia August 18, 2015 at 7:44 pm #

      Interesting observation about possibly getting a better deal when being one of the first buyers. I don’t have any data to know if that’s true but there is some logic behind it. Another reason for that could be because the builders want some folks in the homes to make it look more neighborly to future prospective buyers – so the first movers get better pricing. In the end, the overall housing market is the main influencer of new construction home prices though.

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  3. Syed August 18, 2015 at 2:56 pm #

    We bought a new construction home 3 years ago and I agree with all the benefits you listed. The whole process from start to finish was pretty easy, since you aren’t dealing with a seller who may or may not be trying to inflate the price. It was fun trying to maximize our custom selections within the budget we chose. We love our home, and if possible I would like to get another new construction home when we end up moving in a few years.
    Syed recently posted…Are Physician Loans a Good Idea?My Profile

    • Mr. Utopia August 18, 2015 at 7:38 pm #

      I had always inherently been against the idea of buying a new construction home. For some reason I just thought I’d be getting ripped off. The whole process was surprisingly pleasant though (for the most part). I don’t have any buyer’s remorse, not like I did with my foreclosure nightmare.

  4. DC @ Young Adult Money August 18, 2015 at 3:23 pm #

    Honestly I think the benefits of a new construction home are kind of obvious, though I did not know about the warranty terms. We bought a 70s house fixer-upper and we definitely realize the benefits of NOT going the fixer-upper/renovation route. With that being said, I think you can still pick everything you want if you are willing to pay/live through a renovation. We plan on basically replacing everything by the time we are done with our home.
    DC @ Young Adult Money recently posted…10 Steps for Financial Success In Your 20sMy Profile

    • Mr. Utopia August 18, 2015 at 7:30 pm #

      What is obvious to same may not be obvious to others especially when it comes to buying a house. While some of these benefits may be fairly self-explanatory, sometimes it is easy to forget about certain aspects. You’re right about being able to buy a resale home and then update piece by piece until it’s mostly “new.” Lots of folks probably don’t want to bother with multiple renovations, hence one of the advantages of a new construction home.

  5. Jackson Florestal September 2, 2015 at 3:43 am #

    With brand new appliances, plumbing, heating, and air, you should be repair free for at least a few years. Utilizing new construction materials, just-built homes are usually more energy efficient; that means potentially lower utility bills.

  6. bryan flake September 11, 2015 at 11:21 am #

    In all that has to be considered with buying a home, I never knew that they came with warranty’s. I can see that this is a great idea if the home is built along with dozens of others by a construction company. In that same vein, it is really fascinating to see a neighborhood of homes that all stick to the same two or three design plans.

  7. Correy Smith September 14, 2015 at 1:53 pm #

    Mr. Utopia, the trick that you mentioned about doing a home inspection right before the 1 year home warranty sure sounds like a wise idea to do. Well, do all homes offer that 1 year warranty and would the home insurance also cover the cost for a home inspection? I ask that because later today my wife is coming along with me to buy a new home.

    • Mr. Utopia September 14, 2015 at 4:44 pm #

      No, homeowner’s insurance will not cover the cost of the home inspection.

  8. Veronika October 26, 2015 at 11:28 am #

    We got a new construction home for the fresh slate on maintenance and repair. The apartment we rented before this was a maintenance nightmare. Now our primary concerns are our son flushing things down the toilets.

  9. Andre Beluchi November 3, 2015 at 6:34 pm #

    In a newly constructed home, if you were to find signs of unfinished work and the company that built it won’t finish it, would you consult with a real estate attorney about this? I ask this because of the situation that my brother is at with his home. The home that he bought had an unfinished basement and crawlspace that the workers left out as well as the tools that they left.

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  10. June Robinson December 17, 2015 at 11:55 am #

    I really appreciate this information on the advantages of buying a new construction home. My husband and I have been trying to decide what we will do as our family gets bigger, and I think this could be a great thing for us. I like that this explains that one of the advantages is that there could be a warranty from the builder. I think it would be really important to find a new home builder that was trustworthy to have the best results. Thanks for the information!

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  12. Laurie January 29, 2016 at 2:58 pm #

    I always recommend that people do their research before making any big decision such as purchasing a home. Thank you for sharing.

  13. kevinallenus March 4, 2016 at 1:16 am #

    Very informative post.
    I totally agree with your post. The tips are really beneficial for everyone. Keep sharing all the valuable information with us.

  14. Hazel Owens March 10, 2016 at 10:29 am #

    As much as I love the look of old-fashioned houses, buying a modern house has so many more benefits! You won’t have to worry about needing repairs as soon, and you’ll know that your new home follows all the current building standards. Plus, as you said, you can have more technology already built in to your home, instead of having to add in newer technology later. Thanks for the article!

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    The best thing I can think is hire some professionals who deals with this. And your lucky we are those professionals. So check us out If you need some help!

  16. Dianaa Hilton April 1, 2016 at 2:21 am #

    Hey, great share….

    Me and my husband are planning to purchase a new construction home from quite a long time but we were little apprehensive about our decision. After reading this post I am quite sure that our decision is right.

    Thanks for sharing all these advantages.
    Cheers!!

  17. Westly Smith April 8, 2016 at 12:56 pm #

    I agree with you that home inspections are worthless if the inspector is incompetent. However, I’ve had some good home inspectors who give me great advice. They can usually see things that I can’t see. So, that’s always useful to make sure your home is in good shape.

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  18. Charles Kemp April 19, 2016 at 2:57 pm #

    Don’t you want to get an inspection of the place before you decide to purchase a home that isn’t quite finished yet? I think it would be a smart idea just to make sure that you are covered for anything that could happen. I haven’t ever bought a home before, but I think it would help to have a pre-purchase inspection before you were to buy.

  19. Vickey Barron April 21, 2016 at 10:35 pm #

    Buying a new home is not always a good deal, it totally depends on the quality of construction material if it is superior then it can be a good decision but if it is not, then the case is different.

    A bit old house can be a better choice than a new one if its stiffness and durability is quite high. A good analysis or inspection can help you to choose right home for your family.
    Vickey Barron recently posted…D’MARGE, March 24, 2016My Profile

  20. Vickey Barron April 21, 2016 at 10:54 pm #

    Purchasing a new home is not always a decent deal, it totally depends on the quality of construction material if it is superior then it can be a good decision but if it is not, then the case is different.

    A bit old house can be a better choice than a new one if its stiffness and durability is quite high. A good analysis or inspection can help you to choose right home for your family.
    Vickey Barron recently posted…D’MARGE, March 24, 2016My Profile

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          Be careful to keep your color choices aligned with the home’s architecture. In other words, don’t add cottage garden-type flowers to a bed in front of a starkly modern home. Certain plants are grown because of their interesting and colorful foliage, such as hosta and coleus, and are better suited to more modern homes. If you have questions about what to plant, consult with the experts at your local nursery.

  21. Herman April 27, 2016 at 2:06 am #

    Hii..
    I agree with the idea of buying a new construction home.But a thorough research is essential before making the final deal.
    Even I bought a new construction home last year and that was one of the best deal I have ever made. And I loved those “TRICKS” , that you’ve mentioned.
    Cheers buddy..!!!
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  22. Vern C.Tan May 6, 2016 at 10:26 pm #

    Loved the ideas you have mentioned in this article .
    Really one of the great and interesting read .

    New homes may offer you the opportunity to customize the home to match your personality.

    Cheers Buddy , thanks for share !

  23. Eamon Hurley May 30, 2016 at 12:11 am #

    Hey, nice share…..

    Thanks for sharing these tons of advantages of buying a new construction home. We are also planning to buy a home very soon but we want a home that also comprise a beautiful deck. Hope we will get our new dream home soon.
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  24. tilers supplies Brisbane Northside July 11, 2016 at 7:04 am #

    Be careful to keep your color choices aligned with the home’s architecture. In other words, don’t add cottage garden-type flowers to a bed in front of a starkly modern home. Certain plants are grown because of their interesting and colorful foliage, such as hosta and coleus, and are better suited to more modern homes. If you have questions about what to plant, consult with the experts at your local nursery.

  25. Tim Handley July 25, 2016 at 4:18 am #

    Awesome post.

    Thanks for sharing such a wonderful post with us. Loved the ideas you have mentioned in this article. One of the best ways to save is being flexible in your design. Hope to see more stuff from your side.

    Keep sharing…!!!!

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  28. Anthony December 3, 2016 at 2:32 am #

    Great

  29. Tomas Killington February 13, 2017 at 6:50 am #

    My wife and I are moving out of our apartment soon because our lease is expiring in a few months. We really want to buy a home to call our own, but we don’t really know what to look for. I didn’t realize that a new home can save buyers money by having low maintenance costs because everything is up to date and brand new. Also, a lot of things in the home are still under warranty. That seems like a great benefit that my wife and I would enjoy.

  30. Frank Delaware February 17, 2017 at 6:30 am #

    My wife has been looking at a few new home being built in our area, and we were curious about the advantages we would get by moving into one of them. It makes sense that buying a new home means you are getting the latest technology. Since we have been using the same things for years, it might be nice to have a home that is a little more efficient.

  31. Anthony Shalala March 1, 2017 at 10:18 pm #

    I am completely agree with you, buying a new home is a clever thing. With the new house we can design in our way.

  32. Ridley Fitzgerald March 28, 2017 at 2:15 pm #

    New construction homes seem like a great idea. My wife and I are looking for a new home, and maybe this is the best option for us. It’s pretty great that you can plan everything from the floor plans to the appliances.

  33. Timothy Curley May 10, 2017 at 12:11 am #

    Hello,

    Nice post!!!

    When building a home, I think that the most important part is communicating with your builder. This way, both of you can be on the same page so you won’t mess anything up. Another thing you should do, is to get it all in writing. This way you can be sure that if something was done not to your standards or liking, it can be changed without problems.

    The various advantages you mentioned are however a great help!

    I was also planning to buy a new house from quite a long time but nothing was getting finalized. I am sure your article is going to help me out as well.

  34. Kylie Dotts July 3, 2017 at 12:42 pm #

    I like how you said that most builders will have his own financing options available for you. This would be really important if you’re using a new home builder because it would give you the opportunity to plan out for yourself how you’re going to pay for the new house. Taking the time to plan out what will happen could do a lot to help you save money.

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