Buying a New Home vs. Resale: What You Need to Know

Buying a home is one of the most exciting but challenging steps in life, especially when you're choosing between a new construction home vs. a resale home. Both have advantages and trade-offs, depending on your budget, lifestyle, and priorities. 

In 2023 alone, over 1.4 million new construction homes were built in the U.S., offering modern designs and energy-efficient features. But does that make a new construction home a better choice over a resale property?

Whether you're a first-time homebuyer or considering your next big move, it's important to weigh your options carefully. This guide will explore what sets new construction homes apart from resale homes so you can make the best decision for your future.

Buying a New Home vs. Resale: What's the Difference?

When deciding between buying a new home and a resale property, key differences include cost, customization, and features.

New Construction Homes: Everything is brand new, from appliances to design, and you often can customize layouts, finishes, and fixtures. New construction homes tend to meet modern energy standards that cut down on utility costs and come with builder warranties, providing peace of mind for many homebuyers. However, new construction homes can be more expensive upfront, and you may need to budget for things like landscaping or window treatments, which often aren’t included.

Resale Homes: These are previously owned homes typically located in established neighborhoods, potentially offering more charm or character. On the downside, they may need repairs or upgrades—such as a new roof, updated kitchen, or better insulation—and usually lack the energy-efficient features in newer homes.

Let’s look at some pros and cons of new construction homes and resale homes to help you understand their differences.

Pros and Cons of Buying a New Home

Pros and Cons of Buying a Resale Home

What to Know About Buying a Resale Home 

If you are planning to buy a resale home, you’re purchasing a property that has already been lived in, which has advantages and challenges.

Resale properties are popular in cities typically because they are located in desirable neighbourhoods. However, even if they have beautiful wooden floors and crown molding, resale homes may eventually require facelifts or renovations.

A few more advantages of buying a resale home include: 

• Resale homes are often in or close to popular areas or urban centers where it’s more difficult to find land or opportunities to build a new construction home. 
• Resale homes offer the convenience of being move-in ready. However, be prepared for potential renovation costs, unexpected repairs, and less energy-efficient designs. 

Is Buying a Resale Home Right for You?

If you’re buying a new home, deciding on resale depends on several factors. Resale homes can appeal to buyers looking to move into well-established areas with community amenities. 

However, it’s important to consider:

• Budget and Lifestyle: Resale homes may offer established neighborhoods, but might require upgrades or repairs. In contrast, new construction homes have modern amenities, energy-efficient systems, and lower maintenance needs but at a higher price. Consider the one that meets your requirements for commuting to work, school rankings, green spaces, and amenities.
• Time on Market: Inquire about the length of time the home was listed. If a home has been up for sale for longer than usual, inquire as to why. 
• What Comes with the Resale Home: Typically, appliances come with a home, but confirm that this is the case. Also, negotiate anything else you want to come with the purchase, like curtains, a barbecue, wall mounts, etc.
• Condition of Major Systems: Inquire about the age, health, and condition of the roof, plumbing, HVAC, and other vital systems. Replacements for these items are usually expensive, so it is good to know if they will require repair or replacement anytime soon. Always review an inspector’s report or pay for an independent inspection. 
• Disclosures: The seller ought to disclose known issues. Essential details such as foundation problems are critical; if concealed, they could be a warning.
• DIY Renovations: If the home has been renovated, ask whether specialists carried out the renovation and whether it met building codes. Poorly executed DIY projects can create nightmares in the long run.
• Review All Pertinent Documents: Reviewing documents like Title Reports, No Dues Certificates, Building Approvals, Sale Deeds, and No Objection Certificates will help ensure a smooth purchase and protect you from unwanted surprises.

What to Know About Buying a New Home Construction?

What if you’re buying a home and eyeing a new construction project? It’s exciting to think about everything being new—no repairs, modern designs, and the chance to customize some features. However, there are a few essential things to ensure you get the best deal and a smooth experience.

Here are seven essential tips for buying a new construction home:

• Always Negotiate

Choosing not to negotiate could cost you tens of thousands of dollars. On average, buyers who negotiate properly can save around 6% on home costs, which could equate to $18,000 on a $300,000 home. 

According to reports, 63% of homebuyers claim to have negotiated for lower property costs. That is why you need to ask the right questions when buying a new construction home. 

Here are some questions to ask when buying a new construction home:

• Are there any builder incentives or discounts available?
• Can I customize the features or upgrades, and how will that affect the price?
• What warranties are included?
• What is the timeline for completion and move-in?
  
  

Shop Around for a Mortgage Lender

Start your home-buying process by shopping around for lenders. Even a slight difference in interest rates could save you thousands over time. 

Asking at least five lenders for their rates is a smart strategy that could save you money over the life of your loan. This is one of the essential tips for first-time homebuyers.

• Always Use a Real Estate Agent

Builders usually cover a Realtor’s commission, so having one won’t cost you extra. A real estate agent will negotiate, help you navigate the process, and ensure you get the best deal possible, including potential upgrades and more favorable contract terms.

Research Your Builder

Check online reviews, talk to current homeowners, and see if your realtor has any insights. Knowing the builder’s reputation for quality, mitigating construction delays, and customer service can save you from headaches.

Negotiate for Upgrades, Not Just Price

Builders are often reluctant to lower the price but are open to offering upgrades, like better countertops or flooring. These upgrades can add significant value to your home without lowering the price and affecting the market for other new construction homes in their development.

Put Everything in Writing

Get all agreements in writing, especially around upgrades and timelines, to avoid misunderstandings and frustration.

Get a Home Inspection

Even though it’s a new home, mistakes can happen. A home inspection will help catch any issues before you move in, giving you peace of mind and saving you from having to pay for future repairs.

Is Buying a New Construction Home Right for You?

Buying a new construction home might be ideal if you value modern design, low maintenance, and customization. Buyers who are more interested in customization than upgrades and don’t require a “move-in ready” experience often gravitate toward new construction homes. 

Here’s why buying a new construction home could be the right choice for you:

• Energy Efficiency: New construction homes often save homeowners money on utilities thanks to updated building materials and energy-efficient appliances.
• Long-Term Value: Many new homes appreciate at a strong rate, mainly if they are located in a growing community with plenty of amenities.
• Customization: One of the most significant advantages of buying a new construction home is the ability to personalize it to your taste. From flooring to countertops, you can often choose the finishes and upgrades that suit your style and needs.
• Modern Features: New homes are typically equipped with the latest technology, from smart thermostats to energy-efficient appliances, which can lower your utility costs
  
  
  

Buying a New Construction Home Lets You Access Incentives

One key factor when deciding between buying a new home vs. a resale home is the incentives builders often offer. Builders want to sell quickly, so they frequently throw in perks. You might get closing cost assistance or free upgrades such as higher-end appliances or premium flooring. 

In some cases, builders might cover 2-3% of your closing costs, a significant boost when you’re already managing other expenses.

To get the most out of these deals, it’s essential to time your purchase. Builders tend to offer better incentives toward the end of the month or the year when trying to meet sales goals. And if a builder has a few homes left in a community, they might be more flexible.

Although builders often hold firm on the base price, there’s room for negotiation on upgrades and extras. You can secure a better deal on those add-ons by working with a real estate agent specializing in new construction homes.

Customization for New Homes vs.  Resale 

With a resale home, what you see is pretty much what you get unless you want to undertake renovations. But buying a new construction home often lets you choose from different layouts, finishes, and features. New home builds offer a wide range of options that allow you to tailor the home to your needs and tastes.

Customizing a home can increase the price, so it's important to weigh which upgrades are worth the cost. For instance, while upgrading kitchen countertops might be a priority, you could skip the premium flooring to stay within budget. 

Why You Should Work with an Agent to Buy a New Construction Home

When buying a new construction home, you might wonder if you need a real estate agent. After all, you're dealing directly with a builder, right? But here's the thing: having an agent on your side can save you money, time, and stress. Here’s how:

• Negotiation Power

A real estate agent will bargain and communicate on your behalf. If a builder is insistent on the base price, there can be leeway on other aspects, such as upgrades, closing costs, or incentives. An agent could help their client save nearly 5%.

• Contract Review

Builders' contracts are usually lengthy. A real estate agent will assist you in reviewing and understanding every clause and term while ensuring that everything promised, including upgrades and completion deadlines, is captured in writing.

• Expertise in New Construction Homes

A real estate agent can help you collect builders’ details, including their reputation and the quality of work. Also, an agent knows real-time local real estate market trends and pricing. This enhances your understanding of the house's worth, whether the proposed price and conditions are reasonable, and its value.

Furthermore, a real estate agent working with a builder may have access to even more incentives. 

Buying a New Home vs. a Resale Home: Which is Harder?

Buying a new home vs. resale home offers different challenges. With new construction, you may face longer wait times, as homes aren’t always finished when you buy. Additionally, there’s often less online information about new builds than resale homes, and it can be harder to visualize a house when only looking at a floor plan and renditions.

In contrast, buying a resale home usually offers quicker transactions, a history of home inspections, and negotiation opportunities. However, resale homes can come with unexpected repair costs and less opportunity for customization.

Deciding Between New Home vs. Resale

Ultimately, choosing between buying a new home vs. a resale home depends on your preferences and lifestyle. 

New construction may be the way to go if you want the latest technology, energy-efficient features, and the ability to customize your home. But a resale home might be better suited if you’re looking for character, established neighborhoods, and a potentially lower price point.

Consider your lifestyle, budget, and long-term goals to decide which option will bring you the most value and comfort in the years ahead.

If you’re ready to explore new homes near you, start your search at New Construction Homes to get early access to upcoming project inventory, off-market listings not yet on MLS, detailed floor plans and layouts, current builder incentive programs, and connect with a new home specialist today.  

FAQs

• What are the primary considerations when purchasing a resale home?

Scrutinize every system and feature, such as plumbing and electrical, while identifying any needed repair work or renovations. Look through the home and the homeowner’s disclosures to avoid surprises. Additionally, consider the property's overall condition and age, as older homes may require more maintenance or updates.

• Can I make changes to a brand-new house before moving in?

Yes, most new houses are built with change options for selecting finishes, fittings, and more. This can be an added benefit if you enjoy customization.

• Are new homes more energy-efficient than resale homes?

Generally, yes. A new house can provide up to 30% savings on utility bills because it is built with energy-efficient designs and materials.

• What is the usual timeframe before a buyer can occupy a new house?

Depending on what builder is doing the construction and what level of changes you have decided to make, new construction homes can take several months, or even years, to complete. On the contrary, resale homes are typically available for immediate use.

• What are some of the problems you will likely encounter when buying a new construction house?

Problems can range from risks related to construction delays to high expenses for customized changes.