We see it all the time in our business: would be home owners that are looking for their next place are getting further and further into a state of frustration due to the lack of satisfactory resale inventory. This causes buyers to consider purchasing a new build home in order to get ‘more’ of what they want in a home without having to do the work to a resale home to have it look the way they want it to.
Having done this myself, I happen to think it’s a great option, however, since I purchased, new builds have gotten so much more expensive. On top of the high price points for the actual home, one must consider all of the ‘extra’ costs associated with going the new build route. I know all too well that just because you aren’t buying a project house, doesn’t mean that there aren’t a lot of extras that you will be paying for out of pocket.
Soft costs, as they are often referred to, are the costs other than that needed to build the home. Below are some costs to consider and budget for if you are buying a home through a builder:
The ‘upgrades’ included in a new home vary, depending on the builder and the neighbourhood. In Waterloo’s Carriage Crossing, for example, there are neighbourhood covenants that dictate what each builder in the neighbourhood can do. In this area, homes are not permitted to have aluminum siding, as it’s a high end area, and they want to ensure that there is a high end feel. In other neighbourhoods, an exterior of all aluminum siding with no brick whatsoever may be the standard, unless you pay to have that upgraded. Make sure you read the fine print as to what’s included in the base price, and figure out what it would cost to get all or most of the upgrades that would make it worthwhile for you to move.
What Am I Missing?
When you walk through a builders model home, more often than not, they’ve done every upgrade under the sun, and have the home fully decorated. Once you strip all of that back, you start to realize the escalating costs to add in all of those components. In terms of immediate need, window coverings are something that most buyers forget to budget for. The most immediate need being bedrooms and bathrooms, the cost of window coverings definitely adds up when talking about doing an entire house. Another expense is the driveway. Some builders include this, some don’t. Asphalt is definitely the cheapest (around $1,500 for a double wide driveway) with stone and concrete being more expensive. A fence is something that is almost never included, save for some townhouse complexes. Depending on how much you can do yourself, it could range from $1,000-$5,000. Another consideration is appliances. Some builders will offer appliances in their package, but they are usually very basic. If you don’t want theirs, would they give you a credit, and allow you to purchase your own? Another cost to consider is landscaping. Does the builder do any landscaping at all? Outfitting a yard can be very costly, so make sure you know exactly what the builder will do. As per the above regarding appliances, ask the builder if there is a credit you can take for doing your own landscaping. The small things add up too, such as towel rods, toilet paper holders, mirrors (usually included but unattractive) and paint. Most builders will paint the whole house 1 colour – usually they give you an option of selecting 1 of 2, and will charge you for additional colours. It’s also typically not top quality paint, where you can see every ding and scratch (this one I know first hand – it’s better to paint yourself or hire your own painters after you take possession).
Future of the Neighbourhood
When you’re buying into a new area, you don’t have historical context for what the neighbourhood has typically looked like in terms of crime, education, and culture of the area. These things evolve over time, and it’s important to note that you are taking a risk in that regard. It’s also important to look at the surroundings of the area, and consider how that may affect the area over time in the above respects.
When you walk into a model home without an agent, you forego your right to representation. Most of the time, if you don’t go through the model for the first time with your agent, the builder will not allow the agent to participate in the transaction. Just remember, that the agent sitting in the model home works for the builder ,and is hired and paid to protect their best interests – not yours. Make sure you have someone on your side who has been through this before and knows how to navigate the complexities of building new.
Thinking about buying new? We’d be happy to chat with you and go through all of the pros and cons to find out if it’s right for you and your family!