Looking to buy a house? Both new homes resale homes offer advantages homebuyers must carefully consider.
As broker and salesperson at Realty Executives of Nevada in Las Vegas, Laura Worthington sees it happen all the time.
Take the corporate gentleman from Phoenix, for example. The man’s company agreed to help him with his job transfer to Las Vegas and his move into a new home — under one condition. Company policy required that the time frame for closing on a home could not exceed one year. The man moved to Las Vegas, hired a homebuilder and waited. And waited. And waited. Months passed. Finally, it became painfully apparent the company deadline for assistance would pass before the home was finished. Thankfully, with Worthington’s help, the builder agreed to let the man out of the contract.
Purchasing a resale, or already existing, home would have solved the executive’s problems. But does that mean resale homes are superior to new homes? Not necessarily, say real estate industry watchers. The pros and cons of each — new home versus resale — depend more upon the financial needs and personal preferences of buyers.
Still, buyers in Nevada are beginning to recognize the value of resales more than ever. Worthington estimates the pendulum is swinging in the opposite direction of the last three years, when seven out of 10 buyers in Las Vegas purchased new homes. Today, half of all homebuyers purchase resales. Worthington attributes this trend partly to the more aggressivel3r priced new homes, partly to the long wait often associated with building a new home and partly to less than positive experiences with builders.
“A lot of our move-up buyers who bought new homes last time are saying, ‘Okay, that was a really miserable experience. Next time I’m getting one that’s already finished,” Worthington explained.
The long wait that can accompany a new home purchase turns off many buyers. According to Worthington, many Las Vegas builders are sold out six months to a year in advance. Most builders specify a one- to two-year wait in their contracts, a timeline that can mean temporary housing for many homeowners.
“On the flip side, a builder may have the home done early,” said Worthington. “But with the resale you can pinpoint exactly when you’re going to move in. With a new home you just can’t”
In Northern Nevada, the long waiting time isn’t as severe as in Southern Nevada, according to Gary Canepa, president and broker at RE/MAX Realty Professionals in Reno. But ft definitely happens. lie’s seen frustrated homebuyers purchase a resale after the builder failed to meet the promised completion date.
There are potential hassles involved with building a new home. But each option – resale or new — has its advantages and disadvantages. Many new homebuyers look upon the home as worth waiting for — no matter how long ft takes until completion. After all, their new abode is exactly that –new. They’ve chosen their own curtains, paint, floor coverings. It’s a place they can truly call their own. They look upon resales as feeding off somebody else’s leftovers. Others prefer the faster turn-around time of purchasing a resale along with the mature landscaping and neighborhood. But beyond the obvious considerations, numerous factors come into play when deciding between a new or a used home. Although resales typically cost the same per square loot as new homes located in an equivalent neighborhood, the resale is the more economical value. Worthington pointed out that a landscaping job valued at $4,000 may only add $700 to the cost of a new home. In a used home, however, such an “upgrade” — the term used by the home-builder to refer to added-value items not included in the base price of the house — is often built into the original price.
Warranties are another important consideration. Resale purchasers often are concerned about potential unreported damage or wear and tear on used appliances. The structural and pest inspections recommended by real estate agents often eliminate many of those concerns. Warranties pick up where inspections leave off, but one disadvantage of resale warranties, said Worthington, is that they’re more limited in scope than a builder’s warranty. Resale warranties, she said, are typically limited to mechanical problems such as electrical or plumbing rep airs.
“In a resale you have to rely on Spections even more heavily because once the title is transferred, the new owner is responsible,” said Worthington. “It’s a little bit of a buyer beware.”
Even new homes aren’t immune to problems. Like Worthington, Gary Canepa recommends inspections for both new and existing homes. He learned this the hard way. Thirty days after Canepa purchased an uninspected new home in the Pacific Northwest, he heard water splashing. A peek under the house revealed the plumber had forgotten to hook up the sewer with the shower line. “All our shower water for a month went under the house,” Canepa recalled. “If I’d had a physical inspection done that probably would have been caught prior to me moving into the house.”
Another factor involved when choosing between new and resale homes is personal freedom. Many new home communities operate under conditions, covenants and restrictions (CC&Rs), rules that can govern everything from street parking to the color of houses. Often, exterior remodeling decisions in these communities are subject to an architectural review committee. After learning about her clients’ lifestyle, Desiree Leal, co-owner of Century 21 Consolidated in Las Vegas, might steer them away from such communities. When homebuyers indicate they spend nine months a year traveling in their recreational vehicle (RV), Leal realizes these neighborhoods would frown on such a behemoth parked outside a home. A resale could instead become the perfect option.
“It’s a double-edged sword,” Leal said. “Some people really like the fact that CC&Es are implemented in a community because that guarantees there won’t be a lot of RVs parked in the street. It guarantees a certain aesthetic quality to the neighborhood. The flip side is you are restricted in the use of your property.”
According to Leal, the information age has brought with it another set of concerns for homebuyers. Older homes often lack the technological upgrades necessary for some computer or h-tech equipment. On the other hand, newer homes often are pre-wired from top to bottom.
For others, location might become the deciding factor. For instance, most new homes in Las Vegas are sprawled out in suburban areas while a greater concentration of old homes exist closer to downtown.
“It could be a pro or a con, depending on the viewpoint of the buyer,” Leal said. “Someone who’s looking for a more centrally-located home is probably going to consider a resale sooner. Some people will forego a new home for that central location for convenience purposes. But the other side of that is some people like to be out of the city. They may have lots of children, and they want them to be away from the center of town.”
For parents, the location of a home is often the most important consideration. According to Leal, many new homes are near newer schools, a scenario that some parents prefer.
In new home developments, location also is key. Initially, homes located in phase one of a development are priced lower. Then, when the final phase is under completion and homes are in demand, the value of the houses in phase one can climb considerably from the original price. Consequently, buying one of the first homes in the development can become a profitable investment.
“Usually the person who buys in the first phase is going to pay less than in the later phases,” Leal said. “Often limes you have very quick appreciation. That home may have appreciated by 10 percent. So it’s in the buyer’s best advantage to purchase early in the development, especially if it’s a really successful homebuilder. They can, and will, keep upping the prices because the demand is there.”
The flip side, said Leal, is the hustle and bustle of construction taking place around homeowners residing in the early phases. The thought of tractors rumbling past their homes every morning has prevented many of Leal’s clients from buying within a new home development.
If a community springs up out of the desert, far away from the city’s main infrastructure — as often occurs in Las Vegas — builders often impose upon homeowners a special improvement district (SID) tax to cover the expense of hooking up utilities and providing special services. According to Leal, this tax can reach as high as $20,000. Resale houses, however, are unaffected by this type of tax.
Both resales and new homes present their own set of decorating challenges. New owners of resales must look beyond the previous owners’ taste and impart their own unique fingerprint on the decor. In new homes, however, starting from scratch isn’t always an advantage, according to Gary Canepa.
“Models are somewhat deceiving in some respect because they’re all ginger-breaded up,” Canepa said. “You’ve got to look beyond that and say, ‘Okay, I’m going to put my own personal touch into this new home once it’s finished. Pick the colors I want. Pick the wallpaper I want.’ In my experience, I’ve often witnessed home buyers who are unable to visualize what it’s going to be like when they end up owning the home.”
No matter which option a buyer chooses, in the end, it’s all about having a vision and working with your final choice to make the house into a home.
