Differences in buying a new construction vs a resell?

Question

I am a first time home buyer and have identified a property I'm interested in. It's a new construction in a fairly good part of town. What benefits would there be for purchasing a new construction? Would I be more likely to get the developer to pay for an inspection? Can new constructions come with a warranty? Are there any things I need to consider with a new construction? Since they've only sold a handful of properties would they be more likely to negotiate? Also I'm in the US, North Carolina specifically.

Like I said, I'm a first time home buyer so any advice is welcome, thanks!

Answer 1

Would I be more likely to get the developer to pay for an inspection?

Maybe, but I would still pay for an inspection on your own. It's a very cheap way to have a somewhat neutral third party identify any conditions that would cost you many times more to fix.

Can new constructions come with a warranty?

Yes - the builder could warranty the home for a period of time (one year is typical), but it's not required (it's generally added to protect the reputation of the builder), and only covers defects in workmanship, not normal wear-and-tear.

Since they've only sold a handful of properties would they be more likely to negotiate?

Not necessarily - it depends completely on their negotiating skills and the market conditions. I've known builders that refused to negotiate price because they knew exactly how much is cost them to build the home and what profit margin they expected.

Houses are not like cars in that new construction is not significantly more valuable than homes than have been lived in. Normal wear and tear on homes is generally pretty cheap to repair (paint, carpets, etc.) so there's not a huge difference between new and "used" homes. Location is the biggest factor, with quality of construction and features next.

Answer 2

The benefits of a new construction would be that everything is new, obviously, but also that many new construction projects allow you to pick out details. Perhaps you want bamboo flooring, or quartz counter tops instead of granite.

As far as negotiation of sale price, they might not budge on the overall price because it protects future sales in the neighborhood. For example, if they've only sold 5 of 20 properties, if they drop the sale price for your home, then all future home sales in the neighborhood could be affected because a home of similar build and size (yours) sold cheaper than the price they have listed.

What they might do is give you credit on certain upgrades that they normally charge for. So instead of paying the extra $1000 for fancy appliances, but getting $1000 off of the listing price, you'd pay full price for the home, but they would throw in free appliances.