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FeaturedReal Estate

Seven Mistakes Buyers Make When Purchasing New Build Homes

by John and Natascha Karadsheh September 4, 2023September 7, 2023
written by John and Natascha Karadsheh September 4, 2023September 7, 2023
Natascha and
John Karadsheh

With resale inventory only half of what it was before the pandemic, many buyers are turning to new builds. In fact, new build sales now represent 20 percent of all home sales nationally as compared to previous levels which were around 10 percent. The best thing about new construction is that everything is new, but this does not mean that the process is without its challenges.

According to a national survey by Clever Real Estate in 2022, 66 percent of buyers of new construction homes said they felt some sort of regret about the process and 26 percent said they wished they had purchased an existing home instead. More significantly, 92 percent of respondents found that buying a new build was much more expensive than they anticipated.

pensive than they anticipated. If you are considering a new build, here are Seven Mistakes to Avoid before you start your search that will help you have a great experience when buying new.

1. ENTERING THE MODEL UNREPRESENTED

Builders post about this right on the sales office door. Once you walk into the sales office you cannot be represented by a Realtor. We know the lure of the model home décor is strong, but if you are seriously considering buying a new build, know that you do not save any money by not having representation. We have had a ton of experience representing buyers on new builds over the years and we would love to help you navigate the process. 

2. CHOOSING THE WRONG LOT

This is huge. The model always presents the prettiest lot with the loveliest exposure. But while the floorplan might feel light and bright on one lot, it may feel dark and oppressive on another. Even if lots are limited, choose the lot with the fewest defects. Evaluate the lot premiums, walk the lots, and really assess what your view will be on all sides at all times of day. The lot will impact your long-term value.

3. NOT BEING AWARE OF ALL THE COSTS

Unless you are buying a fully completed spec, new build pricing begins with a base price, and then you go to the design center. Most buyers spend between 10 to 20 percent of the base price on upgrades, which is how a $750,000 base price quickly becomes $875,000. On top of that, you need to consider the cost of backyard landscaping, a pool, window coverings, appliances, lighting, fans, garage cabinets, and security systems. It is so important to know your numbers.

4. NOT UNDERSTANDING THE IMPACT OF THE UPGRADES YOU CHOOSE

In the resale market, we see the challenges that result from upgrade decisions all the time. A two-car garage on a 4,000-squarefoot home that was the result of a bonus room upgrade made a beautiful home functionally obsolete. The lack of a garage service door, low-grade cabinets, and flooring, expensive custom finishes that are outside the norm — the list goes on and on. Understanding the resale market is very important as you make your upgrade decisions.

5. NOT FULLY EVALUATING THE MODEL FOR FUNCTION

Model home bedrooms and garages are always styled to look bigger than they actually are. Before you sign on the dotted line, properly evaluate the flow of the spaces. Does it work for the way you live? Also, evaluate the storage in the kitchen and bathroom cabinets, pantry, hall closet, and garage. Usable space and good storage are the keys to a happy life in your new home.

6. NOT UNDERSTANDING ALL THE FEES AND FUTURE TAXES

Most new build communities charge thousands of dollars in upfront capital improvement fees and reserve fees to help fund the new community homeowners association. Understand how those fees will impact your closing costs and also recognize that your property taxes will increase after your first year. The jump in property tax from raw land to improved property can add hundreds of dollars per month to your mortgage. 

7. ASSUMING YOUR HOME IS NEW AND THEREFORE PERFECT

We have been to many home inspections of new and almost new homes and we can tell you that just because your home is new does not mean it is without flaws. Understanding warranties, builder obligations, knowing what to ask for, and when to do so is part of why having great representation is paramount.

Despite potential challenges, buying a new build can be an amazing experience. You can get a new home, with the finishes you want, and it can be a fun experience. We have worked with great builders, awesome sales agents, and fantastic designers to help our clients get their dream homes and we are here to help educate and support you through the process if new is right for you.

John and Natascha Karadsheh are co-owners of KOR Properties, a boutique real estate brokerage serving the Valley of the Sun. 

John is the Designated Broker of KOR Properties and has been a Multi-Million Dollar producing agent for over 20 years. He is an Accredited Buyers Representative (ABR) and Certified Residential Specialist (CRS), and serves on the Arizona Regional MLS (ARMLS) Rules & Policies Committee, ARMLS Appeals Committee, and the West and Southeast Realtors of the Valley Professional Standards Committee

Natascha is a Multi-Million Dollar Producer and Accredited Buyers Representative (ABR). She is the Founder of Mesa Food Truck Fridays, a Member and Past-Chair of the City of Mesa Economic Development Advisory Board, and on the Board of Directors of the Greater Phoenix Economic Council.

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