Posted by Randy Kelley on December 31, 2008
San Antonio home buyers always balance the pros and cons of purchasing a new home as opposed to a resale home. Based on my experience as a San Antonio Realtor(R), here are some important things that a buyer should think about.
In the San Antonio area, the appeal of new homes is so great that, over the 8 years I’ve been in the real estate business, 80% of my buyers have bought a new home. It’s easy to see why.
Each year, San Antonio builders seem to have more and more enticing features built into their products. Their new homes & neighborhoods are fresh and unspoiled. The new houses don’t have the expected wear and tear found in resale homes, no matter their age.
The builders’ lending programs are very competitive and the builders offer additional incentives to encourage the buyer to use their affiliate lenders. But, here’s a word or caution. Because home buyer incentive programs are sometimes not what they seem, it’s a good idea to have a Realtor(R), or another knowledgeable person, listen carefully to the builder’s sales pitch & advise you if there are hidden pitfalls.
Often, buyer incentives offered by builders at the end-of-the-year are particularly appealing. For example, I recently had an active duty AF buyer who was given a home buyer incentive package by a nationally recognized production builder that simply couldn’t be turned down. The contract was written in the second week of December, the sale closed on the 27th of December and the family was settled in the house in time to celebrate the new year.
The exceptional speed in closing that sale was motivated by the builder’s strong need to sell an inventory home before the end of the year. Yes, builders are like retail merchandisers. They hate to have inventory on hand at the end of the year.
Here are some other considerations favoring buying a new home.
Texas law requires the builder to warrant a newly constructed home’s structure for 10years. The home’s new appliances are warranted by their manufacturers in accordance with their standard warranty programs. The home’s non-structural components & systems are usually warranted for a minimum of 1 year and sometimes up to 3 years.
Now, let’s consider the other side. Here are some things to think about if you’re considering buying a resale home.
If a resale home is less than 10 years old, what remains of the state mandated builder’s structural warranty will convey with the property. After 10 years, there’s no structural warranty left to convey.
Even when some of the structural warranty remains, I encourage the buyer to negotiate for a seller paid 1 year home protection plan to cover repair or replacement of some of the home’s more costly appliances and systems. Usually the seller will agree to buy the plan in order to sweeten the deal and help seal the sale.
Resale homes usually come with owner installed features that new homes don’t have - things like upgraded blinds, curtain rods, garage shelving, etc. If a buyer is short on the money needed to improve a new construction home, then a resale home might work out better.
In terms of settlement costs, for a new construction home, the buyer’s cost can usually be reduced by using the builder’s cash incentive, if one is offered. For example, by using the builder offered cash incentive, my AF buyer payed no settlement charges and got back $850 at the closing table. What a deal! See why they chose new over resale?
If you need help with a resale home’s settlement costs, your Realtor (R) should help you negotiate for the seller to contribute to your closing costs. Sometimes it works, sometimes not. And, keep in mind that, for some types of mortgage loans, the lender will limit the seller’s contribution to 3% of the sales price and for other types, the lender won’t let the seller contribute at all. Conversely, for VA home loans, the seller is required to pay some of the veteran’s settlement charges.
Because the lending rules are complicated, it’s highly advisable to develop a comfortable relationship with a qualified mortgage loan officer who’ll take the time to carefully explain the best loan alternative for your circumstances.
In summary, when balancing the pros and cons of buying a new vs. resale home, there are many factors to consider and many opinions to be heard and evaluated. You usually won’t have a feel of the way you’ll go until you’ve personally seen quite a few resale and new homes, listened to some sales pitches, and driven around new vs. established neighborhoods, preferably accompanied by a Realtor(R) who can advise you about local home values, neighborhoods, and builders.
If you want to know more about San Antonio realty opportunities, visit SanAntonioHomeQuest.com, a very user friendly site for finding information about real estate listings, things to do in San Antonio, local weather, military bases, etc.
If you have questions or need advice or assistance regarding buying or selling San Antonio real estate, don’t hesitate to call me at (800) 201-9145 or (210) 863-2661 or send me an E-mail at kelleybus@aol.com. I’m honored to help.
Randy Kelley, Realtor(R) at Keller Williams Legacy, San Antonio
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