Real Estate

The Pros and Cons of Buying a New Construction Home

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Youve been hard at work, soundly managing and saving your money. You have a good credit score, and youve amassed enough cash for a down payment on your first home. Or, perhaps youre looking to sell your current flat and upgrade to some new digs.

Either way, you might find yourself considering a new construction home, with good reason. New construction homes are a sound plan for many buyers. But here are some of the pros and cons to consider before you make your final decision:

The Advantages

1. Newness (and warranties!):First and foremost, everything in a new home is new. Floors, ceilings, windows, roof, siding... the whole nine yards. One huge benefit of this that few people consider is warranties.

Any appliances included in your home will probably come with several years worth of warranties. The furnace, water heater, central air system, and any kitchen appliances that come with the home are likely to be covered for several years under manufacturers warranties. Chances are that your first few years of home ownership will incur very few costs for repairs.

2. Efficiency:Another added benefit of new homes is efficiency. New appliances are made to use less energy than their predecessors. This translates into lower energy costs.

In other words, youll probably spend less on electricity each month. Further, new construction homes are better insulated than older homes. This means smaller bills to heat and cool your home. Certain efficiency upgrades could even lower your tax bill so make sure to check with your tax adviser to see if you qualify.

3. Flexibility:If you purchase the home during the pre-construction phase, youre likely to receive a great deal of flexibility. Most times you can customize appliances, paint colors, flooring, and other home features.

4. Discounts and Amenities:Builders can often offer you discounts off the purchase price, or be able throw in added amenities. Frequently, a home-builder will present you with mortgage options.

But remember, a home-builder can never require you to use their preferred lender. You always get to choose your own. Theres no harm in hearing an offer from your builders preferred lender, but make sure you compare their rates to other lenders and always read the fine print.

The Disadvantages

1. Not Perfect:Unfortunately, you cant assume that a new construction home is in perfect condition. Even though the home is freshly constructed, you want to make sure to have the home inspected by a professional before the purchase. A qualified inspector will check to make sure that everything is installed properly and in good working order prior to the sale.

2. Location:The location of new construction homes can often be a bit of a drawback. Developers frequently build a series of homes on open land. In other words, new suburban developments are typically a bit removed from city centers.

Also, if the home is in an entirely new neighborhood, you wont be able to get much of a feel for your neighbors before the purchase. Established neighborhoods offer buyers more of a chance to gauge the character of a particular area before buying in.

3. Delays:Lastly, remember that Mother Nature can get in the way of home building. Theres always a chance your home build will be delayed due to weather, which could mean a push back on your move in day.

To conclude, treat a new construction home with the same healthy skepticism you would any other home. Get it inspected to make sure everything is in proper shape. Make sure you think youll be happy in the neighborhood.

And always shop around for the best loan available to you. Shopping around for mortgage interest rates now can mean a future lower interest rate and that translates into lower payments over the entire course of the loan.

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Rob Berger

Rob Berger

Rob Berger is the founder of Dough Roller and the Dough Roller Money Podcast. A former securities law attorney and Forbes deputy editor, Rob is the author of the book Retire Before Mom and Dad. He educates independent investors on his YouTube channel and at

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