Every successful endeavor starts with a game plan, and you need one before ever setting foot inside a developer’s model home.
Buying a house in a new-construction development affords you a wealth of options. You can have the basement finished, the countertops upgraded, maybe even put a pool in the backyard. Builders are more than happy to do all of this for you — meaning that the moment you walk into your new home, it could be exactly as you dreamed.
But that does not mean it makes financial or practical sense to do everything at once. It may be worthwhile to consider buying a more bare-bones home and upgrading after you get settled in.
“The problem is a lot of new homebuyers go into developments like they’re going into a new-car dealership, and that is a huge mistake,” said Baron Williams, a real estate agent with Taylor Properties.“The most important thing for someone to say is, ‘What do I really need? Can I live without it for five years? How much is it going to cost? Financially, where will I be in five years?’ ”
Not surprisingly, price is one of the most important factors when deciding what, if any, upgrades to have the builder complete. If you know, for example, you want a finished basement, be sure to get detailed estimates not only from the builder but also from outside contractors.
Specific builder incentives mean it may make financial sense to have the work done before you move in, but other projects can be less costly if done later by a third party, Williams said.
“The builders are trying to make as much profit as possible,” said Williams, who sells properties in Maryland, Washington and Virginia. “There’s nothing wrong with that, but what you have to do is investigate the deals that are out there.”
On the other hand, there is one major reason to have the work done at the time of purchase. “The biggest advantage is it’s financed in with your loan,” Williams said. “Before, it was easy to pull money out for a home equity loan. Now, you’re probably not going to get an appraisal that’s going to allow you to do that. A lot of people say, ‘I’ll do that in a few years,’ then never get the money to do it.”
It’s also important to understand that your specific tastes might not mesh with potential buyers when it’s time to sell.
“If they know they want a finished basement, they need to think about what they want down there,” Williams said. “A bar? An extra bedroom? I don’t like to speak generally about real estate, but generally speaking, the more expensive the upgrade, the less you’re going to be able to pull out of it. Probably not everyone loves the exact kind of expensive granite countertops that you do. Some people want a bar in their finished basement, others don’t.”
On the other hand, there are reasons why having the builder do the work makes sense, said Cynthia Herberg, director of marketing for Bethesda-based Winchester and Camberley Homes.
“We get asked this question a lot from clients,” she said. “First, because we do volume buying, we get prices on materials they’ll never be able to get retail. We’re buying huge amounts of drywall and wiring.”
But financial considerations are only one aspect of the decision. “For a basement, for example, you’ll be bringing in a lot of different contractors,” Herberg said. “HVAC, drywall, an electrician. You’ll have to schedule your life around contractors.”
There’s also something to be said for completing work before your favorite couch, blouse or big-screen TV actually is in the house.
“If you’re putting drywall in the basement after you move in, you’re going to have it in your attic,” Herberg said.
One last thing to consider is a warranty. When the builder completes a project, all the work is covered under one warranty. Do it piecemeal and you may wind up with a six-month warranty on the windows, three months on the wiring and a year on the roof.
