The decision to buy a new home or an older home can be daunting and complex because people often buy based on their current needs with an eye for their future. That can include staying in a home for a long time or selling a home after a few years and hoping to get top-dollar when they resell. Here are some things to understand to help make that decision a little bit easier.
My builder says I’ll have equity in this home the minute I buy it. What does he mean? What he means is that he’s selling you this home below the market value of the home and the moment that you purchase it for the price he’s selling it for, you could turn around and sell it for more. In reality, the builder is stretching things a bit to “help” you make a buying decision. Often a builder will take the price of the home, which is priced within what the market will bear for homes of this size in this neighborhood, and then add the full price of the upgrades to this price, creating an inflated value for the home that is often above the market price. If you really want to know if a home has any instant equity, ask for the official appraisal for the home and com pare it to the asking price. If the appraised value is higher, there is probably some equity in the home.
Should I put upgrades in to my home that will make it m or e expensive than all my neighbors’ homes? Putting upgrades in a home that will make the purchase price much higher than the comps in the neighborhood or place your purchase price beyond what a bank is willing to lend can create challenges at the beginning and at the end of the time, you’ll be in the home. Fist, if the upgrades drive the price of the home above what the bank will lend on the home, (as your upgrades won’t generally raise the appraisal value that much) you’ll have to find a way to cover the difference between the what the bank will loan on the home and what you’ll have to pay for it. You’ll need to have this amount ready at closing. Second, have a home that you value much higher than the neighbors m ay make it difficult to sell your home for a price that covers all the upgrades when it’s time to move, and the new buyer m ay be in the appraisal value/ loan value dilemma that you were in when you bought the home.
When is the best time to buy a home? There are so m any factors that determine the answer to this question, so we’ll step aside from the personal reasons that are only known to you and focus on the time of year. About 50% of homes are bought in the summer, so this is when buyers are getting the best price on their homes as demand for them is at its highest. If you want the best price on your home, wait until winter. Toward the end of the year, there are fewer shoppers out there, and many are thinking of other things such as the holidays.
Should I buy a home when the economy is weak? A weak economy will affect home builders like it would any other large industry. Dem and for new homes will decline, and sales will suffer. If you can afford a home and have a steady job, buying a home when the economy is weak will probably allow you to get a great deal on a new home. Before you do this, you may want to consider what it will take to sell the home you’re in. You’ll face the same challenges selling your home that builders are facing selling theirs.
What are the best things to put into my new home to make sure I can resell it later? Things like energy efficient systems, windows, insulation and materials will make it easier to sell your home with the time comes. Laundry rooms, exterior lighting, ceiling fans, a patio, hardwood floors, storage space, and granite.
We wanted to buy a spec home, but we wanted to change the kitchen countertops and cabinets. Why was the price for these changes so high? The reason that it is so expensive to pay for upgrades in a finished spec home is that the builder has already paid for the item s and they won’t be able to remove things like faucets, light fixtures, countertops or cabinets once they are rem oved from the spec home. The builder will charge you for the cost they had to pay to initially install these item s, the cost for the item s themselves and the cost to remove or demolish these items. On top of that, you’ll also have to pay for the new materials, fixtures, cabinets or countertops. Remodeling a finished spec home can be very expensive.
New homes offer many advantages to home buyers. Gather as much information as possible to help you make the choice that best suits your needs – current and future!