Image source: Getty Images
When my husband and I came across an opportunity to buy new construction about 15 years ago, we jumped at it. We had recently sold our home and had limited time to find a new one. And we wanted to move quickly at a time when mortgage lenders were offering up pretty competitive interest rates.
Our experience wound up being far from ideal. The type of new construction we bought was a home being built from the ground up. Some new construction homes are simply new to the market — meaning, they’ve never been lived in, but they exist at the time you make your offer and put your mortgage in place.
A big issue we ran into with our home was delays, delays, and more delays — so much so that we had to secure temporary housing while our house was being finished. We also had to dip into our savings account to pay to store our belongings for multiple months.
But that’s not the only reason I like to caution people against new construction. Here are a couple more issues you might encounter if you decide you’re going to purchase a newly built home.
1. You might face hidden costs
There are certain features you’d expect out of a home that may not be included in your new construction contract. In our case, our build included closets in different parts of the home. But our contract didn’t specify that our builder was required to provide ample shelving in those closets.
To cut costs, our builder basically put a single shelf in each closet and called it a day. As a result, we had to hit the hardware store after we moved in, buy added shelving, and install it ourselves or otherwise pay for a contractor out of our own pocket.
This is just one example of many of the hidden expenses we faced. If you’re buying new construction, be careful and read your contract carefully. That way, you should know exactly what is and isn’t included in your purchase price.
Also, don’t hesitate to negotiate with your builder. If your contract simply says “closets,” require your builder to specify how much shelving they’ll provide. If they say a single shelf per closet, ask for two or three, since that’s, you know, normal.
2. You might end up with builder-grade materials
The term “builder-grade” might seem like a positive one. But anyone in the real estate industry will tell you that builder-grade is basically synonymous with crap. Not only can builder-grade materials sometimes look less attractive, but they may not have the same staying power as higher quality materials.
In our house, our builder-grade paint started to chip very early on. We had to repaint several rooms within a couple of years of moving in. Our builder-grade faucets also started to leak and rust sooner than they should’ve, leaving us to replace them on our own dime.
If you’re thinking of buying new construction, you’re in good company. An estimated 668,000 new construction homes were sold in 2023, according to the U.S. Census.
But before you do, take our experience to heart. While you may be excited about getting a brand-new home — one you can potentially even customize — you might also end up spending beyond your budget and having to make repairs early on when things don’t work the way they should. You’ll need to weigh the benefit of a newly built home against the drawbacks involved.
Where to invest $1,000 right now
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has nearly tripled the market.*
They just revealed what they believe are the 10 best stocks for investors to buy right now…
*Stock Advisor returns as of February 6, 2024
We’re firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers.
The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.The Motley Fool has a disclosure policy.
