The Expert Podcast

Can't find a resale house to buy? Inventory is low. Well, what about a new house? What about new construction? Well, not so fast. We've talked about this before—new construction may be the only place to find inventory in the real estate market. However, there may be some downsides and reasons to avoid it. One of which is the construction quality. For homes today, the quality isn't what it was before. Some homes are considered to be "throwaway" homes, with a lifespan of maybe 40-50 years, rather than being a forever home you can pass down through generations.

Another example is the layout of the floor plan or the layout of the lot. You may find that once the house becomes a used home, the layout might not be as appealing as it was when it was new. Once you're no longer looking at fresh paint, new floors, and new countertops, the layout might not be as desirable as you might have thought.

Another factor to consider is higher property taxes. When you buy a resale home, it may have been locked in at a lower tax rate because it's a used home. Even at the same value, a new home may have higher taxes.

Another big factor with a new home is you have less room for negotiation. If you buy a home from a reseller, someone who owns the home, they may be willing to negotiate tens of thousands of dollars. However, when you buy a new home, it's more like a list price, and they don't really negotiate that much.

Finally, when you buy a resale home, it already has carpet, appliances, drapes, and other finishes. A new home, however, may require you to spend $5,000 or $10,000 buying drapes, blinds, and other basics that someone else already provided in a resale home.

Keep these things in mind when comparing new and resale homes. You may need to go with a new home if there aren't any used ones available, or if you want more customization. But make sure you're aware of the differences so you can make an honest and informed decision.