New Construction VS Resale in Raleigh NC

When you are thinking about buying a home in the near future one of the first questions you need to ask yourself is should I buy new construction or resell? We are going to give you all the facts so you can make a good decision. 

 One thing you need to know that has recently shifted in the market, we’ve seen an increased number of new construction homes actually coming on the market that have not been gobbled up in the construction phase. This means with new construction you have a chance to buy one of these new construction homes and move in within thirty to sixty days. This has been not something that was common in the past. Usually people were waiting six months, eight months, sometimes up to fourteen months to be able to move into their new home. This was a major negative of new construction. With the shift happening we're seeing more inventory and more of a chance for you to move in your home. This is going to play into the factors of what we are talking about.

 Let's start with the positives of new construction. The main positive of new construction is its new. You get new design features, you get a home that no one else has lived in and you’re not inheriting someone else's problems. You’re starting with a very clean slate. Along those lines of new, you're also getting new heating and air system, a new roof, new windows. The great thing about brand new windows today is they have a film on them that blocks a lot of that UV light. It also keeps your home a lot cooler than normal, plus the sun is not going to be fading your furniture over time. It is definitely a plus. You're getting all the new stuff, you're getting a home warranty from the builder for a year on all of that new stuff, plus you're getting a 10-year structural warranty on foundation so you're going to have peace of mind when it comes to new construction.

The other new positive thing you're going to get is a new modern floor plan. If you're really into open concept floor plans that is generally what you're seeing around the Raleigh area right now. This is something you can expect. The other part flip of that is speaking of floor plans, you're going to be able to get to pick your floor plan. If you are someone who wants a loft above on the second floor and a couple of other bedrooms you can pick that floor plan out from select builders. If you want everything on a single floor you can pick that out from select builders. You get to control the floor plan that you want to buy based on your needs and you're not having to sort of settle for the inventory that’s available out there on the resale market.

The next positive of new construction, you get to pick out your design touches, all the selections. There are some builders due to material costs, due to scarcity of products that are unfortunately still doing their own selecting and you are buying a house with a package already pre-selected and pre-designed from their design center. This can still happen today but know that if that does happen, the people that are making these selections are not just random folks off the street, they are designers who know what parts to put together to make a really nice cohesive house for you. Rest assured, you're not going to get something that's unsightly. Number two, this is happening less and less. You’re starting to see more of an opportunity for people to go to the design centers and make their own selections. If you are passionate about a marble backsplash with a black countertop, granite countertop, that's something you can select in many cases. 

The next positive of new construction is not only are you getting brand new appliances, a brand new heating and air system, you're also getting all those modern touches like ethernet ports and access to be able to put your TV above your fireplace without having to drill through walls. The builder has done that for you and put a tube from the ground, where all of your equipment can be, that goes all the way up to above the the fireplace so you can mount your TV easily above your fireplace. Things that has already been pre-planned into the house by the builder. This is something you're not going to find in a resale home, especially one that was built any older than say 2005 or so. 

Another positive of new construction, generally a lot of the builders have their own in-house lending department which means if your credit is a little shaky and you're not sure if you're going to qualify for a resale home, it’s more likely that you will be able to qualify under the terms of the builder's lender for a new construction home.

As for the negatives of new construction, unfortunately most of the building that's going on right now is not in the big cities. The city centers of Raleigh, Cary, Durham, you’re generally going to have to buy a home that’s further out. Youngsville, if you're buying in Raleigh or Garner, Clayton, Fuquay-Varina is still seeing construction, some in Apex on the outer limits of Apex is seeing construction. You’re not unfortunately going to be able to buy something in the city unless you're buying really really high-end stuff where the builder was able to find a piece of land and put a development in. Most likely, in the cities you're seeing tear downs where a builder is going and buying a dilapidated home, tearing it down and putting a larger brand new home on that lot. This is a big generalization but know that in general if you're buying new construction you're going to have to buy further out which means more drive time to get into work especially if you work in those city centers. 

Another negative of new construction, you’re generally going to be on a smaller lot.The older homes that are in more established neighborhoods that were built on larger lots. Today we’re seeing more and more homes especially in the cities that have city water, city sewer, on a tenth of an acre, 0.15 of an acre, 0.2 of an acre. You're not getting these gigantic half acre, three-quarter acre or acre lots. If you're in an area that has septic tank then yes you’re going to have a larger lot but that is generally not happening especially not in the city center. Expect buying new construction means buying homes that are really close to each other. 

Another negative of new construction in many instances you're going to be in a cookie cutter neighborhood. This means the builder has five or six plans that they build and they build them over and over and over again. As you're driving into the neighborhood to your house, you're probably going to be able to say oh there's my floor plan and there's my floor plan.

Another negative of new construction is that you have to wait on average, six, eight, sometimes even fourteen months for your home to be completed. You may buy a home one year and not get to move into it until the next year. This is something you have to really pay attention to. There’s been some inventory increases so this is not happening as much now as it was in the past but we don’t know how long this inventory surplus is going to last. You may end up going back to having to have plan B as to where you're going to live while your house plan A is being constructed, just be prepared for that. 

Another negative of new construction is that although it is not as competitive as the resale market, you may still have to bid against other buyers to be able to secure your dream home. This is happening more in the higher end market than it is on the say zero to $650,000 to $750,000 range. We are talking about in the $1,000,000 plus range where this is still happening. There is still so little inventory in that million plus range that buyers that are coming here for jobs or a change of life are having to really compete against each other to secure these few homes in that million dollar plus range. That is just something you need to know that could potentially happen in the resale market, you could potentially be competing against other buyers. 

Another negative of new construction is the cost of materials and the cost of labor keeps going up and up and up. With this inflationary period we're in, we have seen the demand for materials get so out of control last year just know that prices for new construction could continue and probably are going to continue to ratchet up. Whereas with resale you really don't have that ratcheting up of prices so aggressively. You have a better idea of what you’re going to pay. You may have to pay a little over but it's not like this mystery prices that's going to happen and jump out at you at the last minute with resale like it does with new construction . 

Another negative of new construction unfortunately is shoddy craftsmanship and shoddy workmanship that you see with some of the builders. There are some national builders out there that's on our preferred builder list. This means we prefer you not to deal with them. They do some shoddy work, cut corners to make extra bucks and it's a huge negative for the buyer because they move into what they think is a great home only to find out six months later they have to already replace their whatever in the house that should be fine to go. This is a major inconvenience, major hassle and unfortunately these builders still keep chugging along building houses and the buyers are the ones who have to suffer. Just know one of the negatives of new construction could be shoddy builders. Again, we’re not talking about all builders. The vast majority of builders in the area are great, we’re talking about a few unmentionables that again are on our preferred builder list. 

Another negative of new construction in most instances you're going to have to supply your own refrigerator, you’re going to have to put up your own fence if you want a fence. You’re going to have to install your own pool if you want to have a pool. Most of the builders do not do these three things so know that those are things that you're gonna have to account for and prepare for if you are putting up a fence, refrigerating your food which I imagine you probably are or wanting a pool. Conversely on the resale side, you can target homes that have fences and or pools or whatever it is you need and zero in on those specific homes. If you don't want to come up with the cost, the hassle or the expense and the trouble of installing a pool or a fence. 

Another negative of new construction is the young landscaping. Builders do not put in ten year old trees on their lots when they're done building your house. They are going to put in hearty tree but it's going to take three, four years for it to grow up to any appreciable size that can provide you privacy. Please know that buying new construction means buying young landscaping. It will take a few years to mature and look good. With resell, it has more mature landscaping in most instances. You’ll be moving into your own private backyard oasis which is not the case on the new construction side. 

Another negative of new construction is you're going to have to get used to living in a construction zone. Unless you are one of the last few homes being built in the neighborhood. Please know that you're going to be waking up to the sounds of hammers and saws and drills and trucks backing up and all of that noise pollution. You may end up with nails in your tires. These are things that you should expect when living in a new community that's just being built and is something you just have to be prepared for. If this is something you're not comfortable with and dodging trucks is not something that you really want to do at the end of the day coming home from say picking up your kids from school then maybe new construction is not right for you. 

Another negative of new construction you most likely are not going to be able to negotiate with a builder very much. The builder sets the price that they want to meet for that particular home, in that particular neighborhood and they are not going to be very interested in coming off of that price. This is mainly because they don't want to hurt the values of people that just bought in the neighborhood. If they sell you a home for $500, 000 and they just sold to residents down the street for $550,000 that means the value of that $550,000 home just dropped by $50,000. They are not going to be inclined to do that. What you are going to be able to get from builders, is things like that refrigerator we talked about earlier, closing costs. The benefits they can give you maybe some upgrades. This will in effect give you that discount without it being truly a discount on paper. That way everybody's comparables are equal, everybody's happy and the builder is not on somebody's naughty list for losing them $50,000 worth of equity. 

What about resale? What are the positives of buying a resale home? The number one positive we can think of is it doesn’t generally cost as much as a new construction home. A 2,000 square foot resale home is probably not going to cost as much as a 2,000 square foot new construction home.There are obviously exceptions to that rule if you're buying a 2000 square foot house in downtown Raleigh. It is probably going to cost about as much as that 2000 square foot house up in North Raleigh or in Youngsville or whatnot if not more just based on location. In general at apples to apples the cost of new construction is going to be more than the cost of resale. This is one of the positives of buying a resale home. As we said earlier, the positive of resale you’re going to be closer to town if you don't want to drive 45 minutes to get to Trader Joe’s. This pretty much impossible if you buy new construction because again new construction is not going to be very close to Trader Joe’s. You're going to have to go the resale route and that makes that a positive for resale homes.

Another positive of resale, you're able to buy your home in your preferred city and in your preferred neighborhood. If you absolutely must be around say Wakefield Country Club in North Raleigh, there’s few new construction homes in that area. You’re going to have to buy a resale home. If you're committed to buying in North Raleigh, in Wakefield, you’re going to be looking at resale. 

Another positive of resale as we've said earlier much larger lot sizes. If you are wanting a traditional closed-off floor plan and you don't really like those open concept floor plans  then you probably do want to go the resale route. Again, very few builders are building those traditional and closed off room floor plans. Builders are going with these giant spans in the kitchen, breakfast room, dining room, living room. If you want that closed off look, you’re probably going to go the resale route. If that is your style and taste then that’s definitely a positive for resale homes. If you want to put your personal stamp on your next home then resale homes are definitely the way to go. It is certainly much cheaper to gut out an older resale home, take out walls if you want an open concept home, take out the kitchen cabinets that are 50 years old. That is much cheaper to do on a resale home than it would be to do on a brand new construction home where you’ve just paid for brand new. To then be ripping out new cabinets to put in different new cabinets. One of the positives of resale is if you want to put your personal stamp on it and you want a fixer-upper it is probably cheaper to buy a resale than new construction. 

Another positive of resale is back to that mature landscaping again. If you're looking for bigger trees, mature landscaping, the privacy you’re going to get from that resale route is definitely the way to go. You’re just not going to get the mature vegetation in new construction that you're going to get in the resale market. Another positive of resale is you can move in 30 or so days. Typically with resale homes the buyer is able to go under contract and move into that home 30 days later, maybe slightly over that if the seller needs to figure out where they’re going to live. In general you can move in fairly quickly with resale homes. Whereas in new construction you have to wait for the builder to finish your house. This means you’re probably going to be stuck either living with family or friends, living in an Airbnb or delaying your plans when you sold your past house a little bit to make things sync up.

Another positive of resale is that pool and fence we talked about earlier, you can zero in on finding homes with your agent that only have pools, that only have fences. This way you don't have to hassle with going to the HOA to get approvals done. You don’t have to hassle with the construction zone in your backyard. This is just a massive positive of resale homes. If you're absolutely committed to a pool and fence, you probably want to look at resale first and new construction second.

 The final positive of resale homes is you are able to negotiate off of that price and off of repairs in most instances. If the home is in hot demand and they've had multiple offers you probably are not going to be able to get anything off of the price. You may even have to pay more. You may or may not be able to get repairs done depending on how good your agent is in helping you and having that rapport with the listing agent. Know that in general, as compared to new construction when it comes to resale you're going to be able to do some negotiating. You’re going to be able to get yourself a pretty decent deal and get your repairs done so you're able to move into the home without having any major issues that you have to deal with. Whereas again on the new construction side you're probably not going to get much off of the price of the house. Hopefully you're going to be able to negotiate some things like the refrigerator but that's not always a guarantee.

As far as negatives of resale homes one of the big ones is that in many instances you're going to be walking into a fixer-upper situation. If the home you're buying is in a great area but has lots of closed-off rooms and you want open floor plans, you will have to tear out walls. If the appliances in the kitchen are burnt umber or there are green countertops, you’re probably going to have to replace them. 

Another negative of resale homes is inspections and repairs. When it comes to new construction we recommend you get a home inspection done on the home but the builder usually takes that list and just fixes everything before you move in and it’s a seamless process. With resale homes, we recommend you get a home inspection. This is where the challenge starts, where your agent is going to have to negotiate with the listing agent to try to get repairs done. Some may be done and some may be refused by the seller, just know that it is potential that you may not be getting everything done. You may be stepping into some issues that you may have to correct right off the bat. 

Another negative of resale homes is there may be some maintenance that needs to be done and repairs that need to be done down the road. Your roof may be in great shape today, your heating and air system may be in great shape today but in five years you may be having to cough up $6,500 for that air conditioner system or $15,000 dollars for the roof, just be prepared that. With new construction you have usually fifteen, twenty, thirty years to deal with that. With resale that time period may be dramatically condensed and you may have some big issues that you need to deal with four or five years down the road. 

Another negative of resale is we've talked about it a little bit already, it may have a dated floor plan. With new construction that was built between year zero and 2010 you're probably going to have a bit of a dated floor plan, with closed off rooms, to a tuscan look and and you may like the tuscan look but you get the point. It may need to have the countertops replaced. You may need to replace out cabinets that can't be painted. You may have to rip out walls, just know that you may be needing to do this work to get into the home of your dreams, in the area of your dreams. You may have to make some major modifications of the home you buy.

If you need further help in deciding if you need to buy a new construction resale our real estate team would love to assist you. You can call us at 919-964-0474, email us at [email protected] or click here to fill out our contact request form. 

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