Any downside in buying a brand new house ?

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pasadena
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Any downside in buying a brand new house ?

Postby pasadena » Mon Mar 20, 2017 8:59 am

Hello!

I'm asking this for a friend, but the question should be relevant for me in a couple of years. Our company is moving to a new state, and my friend is looking into buying a SFH there next year.

In the new area, you basically have to choose between 100-year-old homes, or new constructions. His question is, is there anything he should be aware of when buying a brand new house from the builder ? Both from a financial, and non-financial perspectives ?

I know this is a fairly broad question, but he doesn't have any experience in the US housing market, and has never owned a home (green card holder, long time renter), so he doesn't even know what to ask, and neither do I :?

For example, I know that when buying an older home, you have to be extra careful on the inspections, and ready for higher maintenance costs. But a new one ? What's the catch ?

Any insight / experience would be welcome.

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cheese_breath
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Re: Any downside in buying a brand new house ?

Postby cheese_breath » Mon Mar 20, 2017 9:07 am

New houses can have problems too either from poor quality materials, poor workmanship or building site issues. Require a home warranty from the builder, make frequent visits to the site as the house is being constructed, and do a through inspection before accepting the completed house.
The surest way to know the future is when it becomes the past.

barnaclebob
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Re: Any downside in buying a brand new house ?

Postby barnaclebob » Mon Mar 20, 2017 9:12 am

One problem I see people have with new houses is that the builder will install something poorly but that's covered by the warranty. The true fix to the problem may very expensive so the builder will just do temporary fixes until the warranty runs out, the homeowner gives up, or lawyers up.

New houses can be built cheaper so things start coming apart and showing wear sooner (just like cheaper cars) but they are also built to the latest code which can have its advantage. You also don't have to worry about previous owners making poor quality upgrades or repairs.

Andyrunner
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Re: Any downside in buying a brand new house ?

Postby Andyrunner » Mon Mar 20, 2017 9:16 am

Things I noticed when debating this 4 years ago.

1)Builders usually just have a 1 year (legally required) warranty on the home. So if anything goes wrong after 1 year, your on the on the hook.

2) Premium in buying something new rather than used

3) Unless stated in the building process, builders will cut corners. Examples: minimum number of required outlets in rooms, no gutters unless requested, smallest garage doors possible, cheapest items possible. Entry level fridge, range/stove, etc.

3) Washer and Dryer not included in purchase of home, so need to add that into the cost

4) New curtains, closet shelves and other items that are not included in the cost of the house

5) No landscaping done, so if you want your house to look nice on the outside, you'll need to hire that out after the builders are done and gone.

6) No deck, unless priced in, and that is a good $20k price increase

On the positive, a new home will probably be the safest and most energy efficient home out there since everything is up to the latest code. I'd suggest maybe talking to a realtor there and they might have a better idea on what needs to be looked at from the buyer perspective.

orca91
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Re: Any downside in buying a brand new house ?

Postby orca91 » Mon Mar 20, 2017 9:20 am

Still be sure to have an inspection done... or, even a couple along the way.

Builders can be quite different between them. Some are more timely, more upfront, have more stable contractors... others not so much. Definitely ask and get in writing what is included and what's not... blinds, screens, appliances, etc.

Financially, it's pretty straight forward. When you want a house, you go under contract with them, and it's yours.... pending financing final approval. No bidding war with other buyers. Along with that, don't bother to try and low ball them. They will simply say no thanks and move on to the next buyer. There will likely be some options the buyer can pick and they will cost extra above the asking price. Most builders have a preferred lender and will try to have you go through that lender. You don't have to though. Then just wait and hope they finish the build on time.

Miakis
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Re: Any downside in buying a brand new house ?

Postby Miakis » Mon Mar 20, 2017 9:25 am

We bought a house that was 1 year old. The builder lived in it for a year, which conveniently means he didn't have to offer a warranty. It took about 3 years to work the kinks out. In that first 5 years we had to fix the roof multiple times, fix the gutters, replace the sump pump, repair every toilet, and do a variety of other minor repairs. Almost every repair was due to poor installation of low quality materials.

The following five years involved replacing fixtures or making other improvements because the builder had used cheap, dated materials.

In all, no repair that we had to do in those first 3 years was a major repair - but it often felt like something was constantly needing attention - and then we'd hear from the repair person every time "Well the problem here is that it wasn't installed correctly..." or "Well, these's builder basic fixtures aren't meant to last..."

On the bright side with a newer house - if you decide you want to do a renovation, you know there aren't really any big surprises behind the walls. If you want to install heated floors or a new ceiling fan, or a new light, you know your electrical system is up to it. You know nothing weird is happening with your plumbing. So there's a comfort in knowing that the big stuff is all up to the most modern building code.

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cheese_breath
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Re: Any downside in buying a brand new house ?

Postby cheese_breath » Mon Mar 20, 2017 9:34 am

Miakis wrote:On the bright side with a newer house - if you decide you want to do a renovation, you know there aren't really any big surprises behind the walls. If you want to install heated floors or a new ceiling fan, or a new light, you know your electrical system is up to it. You know nothing weird is happening with your plumbing. So there's a comfort in knowing that the big stuff is all up to the most modern building code.

And that reminds me, be sure the builder gives you a copy of all the blueprints. It will make planning for the the remodeling easier.
The surest way to know the future is when it becomes the past.

kaudrey
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Re: Any downside in buying a brand new house ?

Postby kaudrey » Mon Mar 20, 2017 9:50 am

When I bought the townhouse I still live in now, it was just a frame. That was 17 years ago.

I researched the builder's reputation for quality standards, as they were a large player in our area.

The good thing for me was I was able to select the items I wanted - # of outlets, Jacuzzi tub or not, which cabinets/lighting etc. So I didn't have to settle for the cheapest things they offered if I didn't want.

I haven't had any real major problems with the house in 17 years, except one, and it only recently caused an issue. The house has settled, so the walls aren't quite at right angles anymore, especially upstairs. This has caused strain on the plumbing, and a pipe recently cracked leading to the shower. The shower doors also have issues closing squarely due to the settling, but it doesn't cause any damage.

I've replaced the water heater and the original cheap dishwasher and washer/dryers, but after 17 years, that doesn't seems to be too bad to me.

TareNeko
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Re: Any downside in buying a brand new house ?

Postby TareNeko » Mon Mar 20, 2017 9:55 am

If a new home is built on a new neighborhood, there maybe special assessments (for example, water/sewer lines).

New homes, if built in a community, will have HOA.

RoadHouseFan
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Re: Any downside in buying a brand new house ?

Postby RoadHouseFan » Mon Mar 20, 2017 10:07 am

Can't beat the brand new smell!

mirror
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Re: Any downside in buying a brand new house ?

Postby mirror » Mon Mar 20, 2017 10:09 am

pasadena wrote:For example, I know that when buying an older home, you have to be extra careful on the inspections, and ready for higher maintenance costs. But a new one ? What's the catch ?

Any insight / experience would be welcome.


Get references on the specific builder you want to use.

Everything is built "to code;" don't expect much better. Unless upgraded all appliances will be the lowest quality/cheapest that the builder can find.

Here are issues that we ran into in the first few years:
-The dishwasher wasn't connected when we moved in. We called the builder to come look at it, and they said the water was never turned on to that appliance. They turned the water on and left. We went grocery shopping and came home to a flooded kitchen. 1" standing water. They didn't hook up the water hose to the dishwasher...
-The A/C was leaking Freon. Parts were under warranty but labor was still ~$400.
-The grading met all city requirements (i.e. code), but had standing water for several days even after light rain. We had to put in a drain ~$500.
-The tubing from the bathroom fans was just hung over rafters in the attic. Moisture started building up in the attic and there was ice/water there. (Again at the time it was built "to code" but the code didn't specify that they needed to vent outside of the attic.)
-This one is my personal favorite, during an energy audit (which we got because in the winter it felt like there was a strong draft in our house) we found that there was a 1/2" gap in the framing of the bay window. You could see outside from the basement.
-The dishwasher only lasted a few years.
-The range is on its way out.
-The furnace needed some work last year. (remember what I said about appliances?)
-The carpet only lasted a few years.

Other costs (monetary and otherwise) to consider:
Any upgrade over the "base" model of the home
All new window treatments
Painting
Landscaping
Fence (if desired)
Nails in tires if the neighborhood is still under construction
Construction noise 5 days a week starting at 7 a.m. (again if the neighborhood is being built) and the dirt that goes along with it

I would urge you to require a pre-drywall inspection, do research on the builder, and acknowledge that just because it's new doesn't mean it is perfect. You will still have things to fix even if it is brand new. If you notice even the slightest issue in the first year call the builder to address it immediately because on day 366 they won't pick up the phone.

That said, I have plenty of friends that have thrown (tens of?) thousands of dollars at their 100 year old homes. I remember one friend pointing to their wall and saying "Don't you like our new $1,500 plumbing?"
There are two types of people: those that can extrapolate from incomplete data.

adamthesmythe
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Re: Any downside in buying a brand new house ?

Postby adamthesmythe » Mon Mar 20, 2017 10:11 am

> has never owned a home (green card holder, long time renter)

Unless holding an advanced degree in experimental science (and maybe not even then) he should NOT buy an old house (Two-time old house owner here). He will not be able to do much himself and will not have the knowledge to deal efficiently with workmen.

Main liabiliies for the new house: (1) upsell on extras (because the basic, builder-grade stuff will be pretty basic) and (2) it may take a while for the resale price to approach the purchase price.

orca91
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Re: Any downside in buying a brand new house ?

Postby orca91 » Mon Mar 20, 2017 10:20 am

Miakis wrote:We bought a house that was 1 year old. The builder lived in it for a year, which conveniently means he didn't have to offer a warranty. It took about 3 years to work the kinks out. In that first 5 years we had to fix the roof multiple times, fix the gutters, replace the sump pump, repair every toilet, and do a variety of other minor repairs. Almost every repair was due to poor installation of low quality materials.


You didn't buy a "new" house. What did you expect warranty wise?

Did you have an inspection done? Doesn't sound like it. A good inspection should have caught some of these things.

orca91
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Re: Any downside in buying a brand new house ?

Postby orca91 » Mon Mar 20, 2017 10:23 am

mirror wrote:Here are issues that we ran into in the first few years:
-The dishwasher wasn't connected when we moved in. We called the builder to come look at it, and they said the water was never turned on to that appliance. They turned the water on and left. We went grocery shopping and came home to a flooded kitchen. 1" standing water. They didn't hook up the water hose to the dishwasher...
-The A/C was leaking Freon. Parts were under warranty but labor was still ~$400.
-The grading met all city requirements (i.e. code), but had standing water for several days even after light rain. We had to put in a drain ~$500.
-The tubing from the bathroom fans was just hung over rafters in the attic. Moisture started building up in the attic and there was ice/water there. (Again at the time it was built "to code" but the code didn't specify that they needed to vent outside of the attic.)
-This one is my personal favorite, during an energy audit (which we got because in the winter it felt like there was a strong draft in our house) we found that there was a 1/2" gap in the framing of the bay window. You could see outside from the basement.


Another, did you have an inspection done? Doesn't sound like it. You didn't know the dishwasher wasn't functioning?? An easy catch the inspection should have caught. Along with the other issues you mentioned.

tim1999
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Re: Any downside in buying a brand new house ?

Postby tim1999 » Mon Mar 20, 2017 10:30 am

Where I live, almost all of the large, mass-subdivideable wooded tracts of land have already been built out. All that's left are the wide open cornfields. So, if you buy one of these new cornfield houses (which are almost always on small 1/4 to 1/3 acre lots) you have zero privacy and can see all of your neighbors' houses, and they can see you. It would take at least 15 years for any kind of landscaping to mature. That is a deal breaker for me. It also means you need to spend a small fortune on window coverings, particularly if it's one of those houses with a "wall of windows" in the family/living room.

Frisco Kid
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Re: Any downside in buying a brand new house ?

Postby Frisco Kid » Mon Mar 20, 2017 10:30 am

One thing to remember is that building codes are "minimum" standards. Many times it is beneficial to build to a higher level but not cost effective, for example upgrading to a higher capacity electrical panel, additional electrical outlets, better insulation,etc.

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Watty
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Re: Any downside in buying a brand new house ?

Postby Watty » Mon Mar 20, 2017 10:33 am

Having problems with water drainage will sometimes not show up for a few years when there is an unusually wet year.

The new homes will likely have minimal landscaping and it will take at least ten years for the trees to grow to a decent size.

The subdivision may not be completed as expected. During the housing bust many subdivisions were left only partially completed. In addition to living around a bunch of vacant lots your HOA fees may be much higher than expected if a lot of the lots are empty. You may be in an upscale subdivision but if it runs into trouble the rest of houses that are built may be lower quality homes.

It was not during the housing bust but I know someone who bought in a subdivision what should have had a pool and tennis courts but those never were built because the builder went out of business before the subdivision was finished.

If there is undeveloped land nearby it may be rezoned and developed in undesirable ways. The traffic may get worse as more development is done.

If you need to sell for some reason before the subdivision is finished then that can be tricky since you will be competing against the builder.

In a fast growing area the schools may have a hard time keeping up.

On the plus side the first owners of new subdivisions tend to bond a lot more than people in existing subdivisions since the people will tend to be in the same phase of life and looking for new friends at the same time. Sociologists have written about this and the cycles that subdivisions go through. When I was growing up we lived in two new subdivisions and my parents made friends in both subdivisions that they kept for the rest of their lives.

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Kosmo
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Re: Any downside in buying a brand new house ?

Postby Kosmo » Mon Mar 20, 2017 10:33 am

Property taxes. I know it's all local, but around here property taxes are significantly higher for new build houses. Assessments are done by the county periodically (last one was almost 20 years ago), except for new builds which are assessed on transfer from the builder. Lot size, house size, etc. all the same, a new build could owe double the taxes of an existing house.

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dm200
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Re: Any downside in buying a brand new house ?

Postby dm200 » Mon Mar 20, 2017 10:40 am

pasadena wrote:Hello!
I'm asking this for a friend, but the question should be relevant for me in a couple of years. Our company is moving to a new state, and my friend is looking into buying a SFH there next year.
In the new area, you basically have to choose between 100-year-old homes, or new constructions. His question is, is there anything he should be aware of when buying a brand new house from the builder ? Both from a financial, and non-financial perspectives ?
I know this is a fairly broad question, but he doesn't have any experience in the US housing market, and has never owned a home (green card holder, long time renter), so he doesn't even know what to ask, and neither do I :?
For example, I know that when buying an older home, you have to be extra careful on the inspections, and ready for higher maintenance costs. But a new one ? What's the catch ?
Any insight / experience would be welcome.


Certainly no "expert" and you have received some excellent information.

In just about any kind of construction or major renovation, there is a wide variety of "quality" and cost of all aspects of what you get and pay for - wjether it is sinks, windows, applicances, door knobs and locks, flooring, carpeting, counter tops, shrubbery, etc. If you are buying from a builder - and the house is not yet built, do not assume that such details (involving many, many things and costs) are the same in your house as in a model or catalog. This not my "talent", but someone with such a "talent" should review (in detail) all such matters. I work (part time) in a new building constructed for a parent organization - and lots of such "details" were not fully monitored. One (of many, many) such details in this building is that none of the restroom sinks are built with vanity/countertops - just the sinks, with the plumbing open. I am quite sure that the builder did it this way to lower costs and this was in the detailed plans or requirements. I had nothing to do with such construction details. As best I recall, in this area, almost every similar building has restroom sinks enclosed - and not open. I might have "assumed" that it would be "normal" to have countertops/vanities around all the sinks - but that would not have been true. Even in the construction of a modest new home, I suspect there may be a hundred (or more) such details to watch for.

Rupert
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Re: Any downside in buying a brand new house ?

Postby Rupert » Mon Mar 20, 2017 10:43 am

It's clear from these comments that your friend should rent in the new location, that buying a house will ruin his life. :D But seriously, since he's never owned a home before and is not from this country, I would rent for a while in the new location and talk to some people who have bought new-build homes there about their experiences with different builders. That's really the only way to know what you're getting.

orca91
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Re: Any downside in buying a brand new house ?

Postby orca91 » Mon Mar 20, 2017 10:44 am

tim1999 wrote: So, if you buy one of these new cornfield houses (which are almost always on small 1/4 to 1/3 acre lots) you have zero privacy and can see all of your neighbors' houses, and they can see you.


You call that a small lot??

That's about unheard of for new build lot sizes where I live. The average around here is probably about 5000 sq. ft. lot size. Talk about close together!!

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dm200
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Re: Any downside in buying a brand new house ?

Postby dm200 » Mon Mar 20, 2017 10:45 am

Kosmo wrote:Property taxes. I know it's all local, but around here property taxes are significantly higher for new build houses. Assessments are done by the county periodically (last one was almost 20 years ago), except for new builds which are assessed on transfer from the builder. Lot size, house size, etc. all the same, a new build could owe double the taxes of an existing house.


This all depends on the jurisdiction. Some reassess to approximate "market value" on a regular basis.

I believe that homeowners insurance rates may be slightly lower for new construction.

In some areas of stagnant population and/or local economy, there may be limited demand for homes and homes (whether old or new) may not be expected to appreciate very much. I might look for the variance (for similar size and type) between older and new(er) homes. In such areas, there might be a significant financial premium on a new home.

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Flobes
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Re: Any downside in buying a brand new house ?

Postby Flobes » Mon Mar 20, 2017 10:45 am

Landscaping.

I bought my home new nearly 20 years ago. Front yard was sodded. But back and side yards were merely graded, simply to give a neat appearance. It took plenty of effort and money to dig rocks and debris, create workable soil, and add plant material, mulch etc in a manner required and approved by HOA.

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Watty
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Re: Any downside in buying a brand new house ?

Postby Watty » Mon Mar 20, 2017 10:46 am

cheese_breath wrote:New houses can have problems too either from poor quality materials, poor workmanship or building site issues. Require a home warranty from the builder, make frequent visits to the site as the house is being constructed, and do a through inspection before accepting the completed house.


For big ticket items a new home warranty is not all that useful. The problem is that the builder will create a new LLC corporation for each project and maybe even each house they build. If there is some big problem a few years later then the LLC is just an inactive empty shell with no assets so being able to sue the builder is difficult since the LLC has no assets to pay any judgement.

orca91 wrote:Still be sure to have an inspection done... or, even a couple along the way.


+1 on having multiple random inspections, and have it put into the contract that you have the right to do this.

Just having the builder know that the home will be inspected at random times will likely result in better construction quality.

Have all the details of the construction specified in the contract so that you inspector can also check to make sure that they did not cut any corners.

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dm200
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Re: Any downside in buying a brand new house ?

Postby dm200 » Mon Mar 20, 2017 10:47 am

orca91 wrote:
tim1999 wrote: So, if you buy one of these new cornfield houses (which are almost always on small 1/4 to 1/3 acre lots) you have zero privacy and can see all of your neighbors' houses, and they can see you.

You call that a small lot??
That's about unheard of for new build lot sizes where I live. The average around here is probably about 5000 sq. ft. lot size. Talk about close together!!


Our home (built in 1939) that we purchased abut 40 years ago is on about 6,000 sq ft lot, with 62.5' frontage. Builders are tearing down older homes and building large homes on such (and smaller) lots to within 8-12 ft of the property lines.

orca91
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Re: Any downside in buying a brand new house ?

Postby orca91 » Mon Mar 20, 2017 10:49 am

That is definitely part of it also... small lots with bigger sq. ft. houses built on those lots make things pretty cramped.

Not much yard to care for though. Silver lining for some?

mirror
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Re: Any downside in buying a brand new house ?

Postby mirror » Mon Mar 20, 2017 1:13 pm

orca91 wrote:
mirror wrote:Another, did you have an inspection done? Doesn't sound like it. You didn't know the dishwasher wasn't functioning?? An easy catch the inspection should have caught. Along with the other issues you mentioned.


Yes, but just like any other profession not all inspectors are good at what they do. I was simply pointing out issues that one can run into based on my own experience.
There are two types of people: those that can extrapolate from incomplete data.

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cheese_breath
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Re: Any downside in buying a brand new house ?

Postby cheese_breath » Mon Mar 20, 2017 1:43 pm

In our case the plumber didn't tighten the drain under the upstairs tub. We discovered that when the kitchen ceiling under the tub began cracking. And the exterior carpenters didn't fill in about 1 1/2' gap under the upstairs windows. Discovered that during a rainstorm when water started pouring down the living room inside wall.
The surest way to know the future is when it becomes the past.

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hand
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Re: Any downside in buying a brand new house ?

Postby hand » Mon Mar 20, 2017 1:44 pm

Frisco Kid wrote:One thing to remember is that building codes are "minimum" standards. Many times it is beneficial to build to a higher level but not cost effective, for example upgrading to a higher capacity electrical panel, additional electrical outlets, better insulation,etc.


Worth noting is that the building code's "minimum" standards are primarily safety focused, and are not focused on optimizing long term value or usability.

There is an inherent conflict between the goals of spec & tract builders (as well as flippers) and long term owners.
What may not be cost effective for the builder may be money well spent for the long term owner. Unfortunately production builders efficiencies come from standardized processes which are geared towards the lowest common denominator buyer. Most buyers prefer a lower purchase prices rather than an electrical panel with expansion capabilities, so that is what everyone gets.

Builders / flippers typically prioritize features and marketing flash over quality for a given price point - their focus is to make the sale in the short term and move on.
Rational, knowledgeable long term homeowners would likely place higher priority on quality (fixtures that last) and maintainability (extra space in the electrical panel, etc.)

Key downsides of a new house are 1) price premium over used, 2) potentially having to pay to upgrade quality on nearly new items within years of buying, 3) key systems may not be fully tested and problems / flaws apparent.

For short term owners, these may not be major downsides, but for those looking to live in a "new" house for 30 years, these are issues that require careful management. First step is to have a quality inspection of the "new" house before purchase.

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cockersx3
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Re: Any downside in buying a brand new house ?

Postby cockersx3 » Mon Mar 20, 2017 2:28 pm

Agree with all the posts so far. I think the main risk / downside with building is the cost premium from the fact that it's new. Unless you're in an area with rapidly appreciating home property values, there's a good chance that you will need to sell lower than you bought it for - new buyers near your home are likely to bias towards new construction if nearby, and will only "settle" for pre-owned for a discount.

Another downside is potential risks to your closing / move-in schedule. My sense is that the risks of a schedule delay from new construction is higher than the risks with purchasing existing, since there are so many more moving parts involved in addition to just the usual mortgage delays. If one of your builder's subs has a delay, or an inspection doesn't happen on schedule, etc, your move-in day will be delayed. Happened to us, almost spent Christmas in temporary housing due to delays in construction and permitting.

Also, if you do have to hold escrow for any open items, make sure you do it with a neutral third party (or your own lawyer), and also include a "return" clause to ensure you can get the money back if the builder doesn't follow through. A neighbor of mine decided to let the builder's lawyer hold money in escrow for some issues - dumb. He never got that money back, the amount was apparently large enough to want back but too small to hire lawyers, etc. In this specific case the builder also set up a separate LLC for each house they built (see previous poster), which may have made it tough to get their money back as well.

Long story short - would definitely recommend existing vs new if at all possible. I would never build new again.

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Midpack
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Re: Any downside in buying a brand new house ?

Postby Midpack » Mon Mar 20, 2017 2:45 pm

With a new house, you get to choose everything (unless it's a spec home), that's a big plus. With a new home, there should be a warranty, typically a year where I've lived. If there are any gross issues, they should surface within a year.

But it's imperative you choose your builder very carefully, that's the most important factor IME. Be thorough. I wouldn't go with a builder who hasn't been in the area for at least 10 years, preferably longer - but longevity alone isn't a guarantee. If you get a good home from a shoddy builder, or an inexperienced builder, consider yourself very lucky.

If you can find homeowners with homes by your prospective builder, go ask them what their experience was like - of course you have to do this entirely on your own, don't ask the builder. I've always gone to find at least one, hopefully more, homes in progress by the builder. Once the siding is on and the drywall is in, you can't tell what kind of construction went into it (materials and workmanship), nor can you see plumbing, electrical, HVAC, etc.

If you're going to pay any kind of premium, and I would, make sure the construction warrants a premium. Most people don't ask, and if you're talking to a sales rep, they may not know anything about construction details.

Don't go for the cheapest options either, but you may not want the top rung either. Choose wisely.

And do everything you can to keep the relationship amicable while construction is in progress. If you see an issue, be firm, but give the builder the benefit of the doubt and don't start accusing them of anything. You'll do better if you can keep the relationship reasonable.

I've bought resale and brand new. We prefer brand new to get exactly what we want, but if you're not willing to do your homework to choose carefully and stay on top of the progress (without hovering) - new is a bad choice. At least with resale, you know the house isn't going to have major problems if your have a good inspection.
You only live once...

jodydavis
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Re: Any downside in buying a brand new house ?

Postby jodydavis » Mon Mar 20, 2017 3:21 pm

We bought a new house several years ago, and I agree with a lot of the advice. Because we bought before everything was finished, we were able to ask for certain changes and modifications, which greatly improved the utility of the house for us. So there were definitely substantial upsides. That said, I would echo the following points:

1. Thoroughly research the builder and make sure they have an established and preferably long track record in the particular area. If they have a reputation to protect, they will be less likely to cut corners. And as others have suggested, find owners of previously-built houses and ask them about their experiences. Any shortcomings in build quality will be apparent, and you can find out whether they have a reputation for doing quality work.

2. Recognize that new houses will take some time to "break in." There will always be some things that need to be fixed, new issues/problems, etc. This is why you have the builders warranty, and make good use of it. Ask existing owners how responsive the builder was to their requests for fixes.

3. Recognize also that some issues will not be apparent within the first year. For example, if you live in a northern climate and don't have a tough winter the first year or two, you may not know whether your house is prone to ice dams. Similar issues with drainage, etc. Hire a good housing inspector and listen carefully to their suggestions/concerns.

LarryAllen
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Re: Any downside in buying a brand new house ?

Postby LarryAllen » Mon Mar 20, 2017 3:34 pm

I have bought several new homes over the years and have had good luck.

The surprises: window coverings, landscaping and other such items add up! Especially landscaping.

The upgrades cost a ton if you let them. It seems so easy to spend another $1,500, then another $1,200, etc.... It adds UP. It's easier to buy from the builder but not always cheaper and certainly not always (or usually) better quality than you do after the fact. Plus, a higher sales price might effect your property taxes!?

Most large builders have had some problems but the question is how do they resolve them? Look for reviews of the big builders in the area more so than nationwide as I get the feeling that many of them have totally different operations in different states.

I personally like new homes.

rralex1
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Re: Any downside in buying a brand new house ?

Postby rralex1 » Mon Mar 20, 2017 5:10 pm

LarryAllen wrote:I have bought several new homes over the years and have had good luck.

The surprises: window coverings, landscaping and other such items add up! Especially landscaping.

The upgrades cost a ton if you let them. It seems so easy to spend another $1,500, then another $1,200, etc.... It adds UP. It's easier to buy from the builder but not always cheaper and certainly not always (or usually) better quality than you do after the fact. Plus, a higher sales price might effect your property taxes!?

Most large builders have had some problems but the question is how do they resolve them? Look for reviews of the big builders in the area more so than nationwide as I get the feeling that many of them have totally different operations in different states.

I personally like new homes.


Good points. I would add that that a conversation about a new home means very little on it's face. New home builders vary greatly in terms of quality and reputation. To generalize around buying a "new" home can miss the mark greatly.

Having purchased new and "used", my experiences have been the following. New homes come at a premium compared to existing homes. The better the reputation and experience of the builder the greater the premium. There is generally (note generally) a reason for that. Add on's and the ability to customize are terrific as referenced, at a price. Landscaping comes at a premium, and the larger the lot the greater the price..as it should be. Getting in early to choose the right lot adds to the location value, at a premium.

My choices have most often resulted in finding an existing home, although that process is more time consuming, complex, and time sensitive.. I have learned a great deal by understanding and considering both the new and existing market fully, figuring out what my needs and wants really are and making my choices accordingly.

greenfire
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Re: Any downside in buying a brand new house ?

Postby greenfire » Mon Mar 20, 2017 5:31 pm

Many newer materials are toxic. Some particle boards will leach formaldehyde. New carpets, etc. often off-gas harmful chemicals for a while.

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vitaflo
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Re: Any downside in buying a brand new house ?

Postby vitaflo » Mon Mar 20, 2017 5:40 pm

We bought a new home while it was still studs in 2011. We looked at lots of new homes in our search. If you go around and check lots of different builders out, the quality is usually evident if you look hard enough. It will be somewhat obvious when builders are trying to cut corners. One thing I would say is don't get caught up in the fact that the cabinets are white and look cool. Check the drawers instead and see if they open and close well. Stuff like that will tell you a lot.

Every home has issues, and it's part of the reason for the warranty. Over that first year be diligent and look for issues all over the house. You will find them and they should get fixed. Have an inspector come at the 11 month mark so you they can find issues you didn't. Have them fixed before your warranty is up.

While we had a lot of fixes done over our warranty period they were mostly pretty minor. I think the biggest one was they forgot to put static vents on our garage roof. We also had some rooms that were cold that ended up needing more insulation. Many of our neighbors had the same issues but never contacted the builder about it so it never got fixed.

You will be spending a lot of cash putting all the things in the house that don't come with it (drapes/curtains/blinds, washer/dryer, water softener, etc). Our house came with landscaping (and a really nice retaining wall that would have cost us $20,000 to put in). But all of these costs add up. As others have said the appliances are fairly "meh", though I certainly saw a lot of worse stuff at other builders new homes.

Since we got all of our items fixed under our warranty period our house has basically been maintenance free the last 6 years. I'm sure it's only a matter of time before something goes wrong, but at this point I would chalk it up more to just things starting to get old than I would shoddy workmanship. We've had brutal winters, extremely hot summers, massive rainfalls, and wind storms and the house has survived them all well.

That said would I do it again? Maybe. It was a bit stressful the first year finding lots of little things that needed fixing and scheduling people to fix them. You start to wonder if you bought a lemon or what else you're missing? It also sucked to buy all the other stuff you would already expect in a house. It actually leads to a bit of stress. After that first year it's been pretty smooth sailing though.

jr6857
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Re: Any downside in buying a brand new house ?

Postby jr6857 » Mon Mar 20, 2017 5:49 pm

Purchased two new construction homes in past seven years - most recent one a year ago. Typically one year warranty covers most problems. However, total price will be significantly above the home itself.

In my area, the additional items out of pocket include deck and or patio, window treatments, interior paint (builders grade paint is typical), landscaping enhancements, and garage finishing (dry wall finish and paint).

These extras require some combination of sweat equity and adder to the house price so time and cost should be considered.

pasadena
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Re: Any downside in buying a brand new house ?

Postby pasadena » Mon Mar 20, 2017 7:26 pm

Thank you so much for all the responses! I will go through them in details and respond when I come home from work. This forum rocks.

Slacker
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Re: Any downside in buying a brand new house ?

Postby Slacker » Tue Mar 21, 2017 1:01 am

We purchased new in late 2014 and the construction completed by mid 2015.

Get a Real Estate Agent - most of the "big companies" don't give you discounts for going without representation so it doesn't really cost you anything to have another person in your corner. This will be "easy money" for the agent, so go ahead and bug the heck out of them for every little tiny question you have. They can also be a resource to steer you clear of selections that may make your home harder to sell in case you end up having to move in a few years.
Get a professional home inspector.
Don't miss out on any of the inspections through the build process and make sure the builder has several checkpoints scheduled in. We made several notes along the way of items that were done incorrectly (not to code, not to standard layout and/or not how we had specified in the options we selected).
As others had stated, check the reputation of the builder online.
Also, as others stated - new subdivisions will likely have special assessments. In our case, we get special assessments AND our water bills are automatically higher than established communities.
I don't know about building a deck - we had a 15' x 24' concrete patio (with colored and textured concrete) poured for $4900 plus a 3' x 100' walkway from the patio to the front of the house. $20K for a deck sounds pretty outrageous. The builder wanted $4800 for a grey slab of concrete that measured 9' x 9'.
Carefully check the builder options catalog. We found a few appliances were the same cost with the builder vs on the market but with the additional changes to the layout we would save several thousand going with the builder for the specific upgrades (in our specific case it was getting a stainless steel vent over the GE profile cooktop, slide in convection over and additional 2 other built-in convection/microwave ovens; the standard options were a more basic all-in-one range, microwave over the range so cabinets would have needed to be cut and refinished to get the upgrades done ourselves). On the other hand the A/C unit is a crappy brand with poor reliability and $5000 - I could have a third party install the same unit for $2700, instead I picked a nice carrier A/C unit with a higher SEER rating for $4750 installed.

In the first year, during your warranty period - make sure you have a notepad handy and record every single slightest issue you encounter no matter how small. When you do your warranty checkups (with our builder it was at 3mos and 11mos) keep on them to fix all the issues. Our builder did a fantastic job of taking care of every tiny detail we complained about.

Set aside the money (as others noted) for Landscaping that meets your HOA's or city's standards, back patio, and window treatments. We spent roughly $14,000 on these three items alone. Throw in $14,000 for solar (after tax rebates), $4750 for AC, $7000 in closing costs...boy that was a ton of money! At least the VA let us have a very modest downpayment.

Valuethinker
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Re: Any downside in buying a brand new house ?

Postby Valuethinker » Tue Mar 21, 2017 6:32 am

RoadHouseFan wrote:Can't beat the brand new smell!


In a car, that is the smell of *solvents*. Most people don't realize that. That is solvents you are breathing.

In fact I think the manufacturers have researched that point, and as regulations have tightened up on solvents, they have manufactured an add on "new car smell" which is sprayed in the car before shipping?

It's like the satisfying clunk of the car door. It's not necessary and it doesn't tell you anything. But they test every car before it goes out of the factory that the doors clunk (or so am given to understand).

awval999
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Re: Any downside in buying a brand new house ?

Postby awval999 » Tue Mar 21, 2017 6:42 am

cockersx3 wrote:Agree with all the posts so far. I think the main risk / downside with building is the cost premium from the fact that it's new. Unless you're in an area with rapidly appreciating home property values, there's a good chance that you will need to sell lower than you bought it for - new buyers near your home are likely to bias towards new construction if nearby, and will only "settle" for pre-owned for a discount.

Another downside is potential risks to your closing / move-in schedule. My sense is that the risks of a schedule delay from new construction is higher than the risks with purchasing existing, since there are so many more moving parts involved in addition to just the usual mortgage delays. If one of your builder's subs has a delay, or an inspection doesn't happen on schedule, etc, your move-in day will be delayed. Happened to us, almost spent Christmas in temporary housing due to delays in construction and permitting.

Also, if you do have to hold escrow for any open items, make sure you do it with a neutral third party (or your own lawyer), and also include a "return" clause to ensure you can get the money back if the builder doesn't follow through. A neighbor of mine decided to let the builder's lawyer hold money in escrow for some issues - dumb. He never got that money back, the amount was apparently large enough to want back but too small to hire lawyers, etc. In this specific case the builder also set up a separate LLC for each house they built (see previous poster), which may have made it tough to get their money back as well.

Long story short - would definitely recommend existing vs new if at all possible. I would never build new again.


This is absolutely true.

In NE Ohio where I live (but probably similar to other non-HCOL areas), if you want new and big you are building in the exurbs. If you've already decided you're ok with a 40 minute commute there's already endless and endless farm land. So the next person that wants big and new is just gonna build their own house on another part of that endless farmland, so what if it's a little bit farther -- now a 45 minute commute -- they aren't gonna want yours.

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jharkin
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Re: Any downside in buying a brand new house ?

Postby jharkin » Tue Mar 21, 2017 7:14 am

I kinda skimmed the other responses so apologies if I repeat what others have stated.

My background - I'm an admitted old house lover. My wife and I live in a 220 year old antique right now, and before that a series of 80-100 year old multi family houses. As a kid through my 20s I lived through a bunch of new construction houses.

Homes of any age can have problems. BUt I have to mention that in my 200 year old antique, I have more problems fixing bad workmanship of recent renovations than I do with the original hand made build quality of the house. An old house has a lot of other "issues" however that have nothing to do with build quality - limited storage, small rooms, draftiness, electrical systems that can be undersized for modern living, etc.

When you buy new you are going to get a living space better designed for modern life, and typically lower utility bills. But I see people who buy new dealing with a different set of problems:

- Generally the houses are too big for the lot so you dont have much of a yard if you like outdoor living.
- Generally these new developments are clear cut so you have no trees/shade and you often get that look out my back window and stare right into the neighbors living room feel :( Not fun if you like privacy.
- Location. In HCOL areas of the country, desirable locations are all built out. My antique is walking distance to town center, schools and shopping. If you want new construction you are a 15 minute drive out into the outskirts of town.
- HOAs. I personally dislike living in developments with an HOA. I dont like my neighbors telling me what I can and cannot do on my property
- Architecture... or lack therof. Most contemporary construction lacks any sense of style. Ask any architect and they will tell you these McMansions with the zillion roof lines are an aesthetic disaster. And they are also a potential maintenance disaster and just asking for roof leak problems down the road.
- Build quality. I have heard many horror stories of builders cutting corners on materials an d workmanship. First hand experience - a builder put in a new $750k 3000sq ft luxury house right next to my little old antique - the buyer had ice dam and roof leak problems their first winter.

cherijoh
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Re: Any downside in buying a brand new house ?

Postby cherijoh » Tue Mar 21, 2017 7:54 am

cheese_breath wrote:New houses can have problems too either from poor quality materials, poor workmanship or building site issues. Require a home warranty from the builder, make frequent visits to the site as the house is being constructed, and do a through inspection before accepting the completed house.


I was able to get several potentially serious issues corrected because I visited my house at least twice per week while it was under construction. These included:
  • Getting the deck I was promised instead of a small landing with stairs down to a poured patio. (This was related to house placement on a small lot and county set-back requirements). I was okay for the deck but neighbors were not.
  • Shoddy sheetrock work where it would have been noticeable.
  • Standard paint scheme vs. the upgraded paint package for which I had paid.

Be selective in which upgrades you contract with the builder vs. doing yourselves later. I paid for padding/carpet upgrade, flooring upgrade in kitchen and bath, upgraded lighting (builder provided an allowance that I went way over). Otherwise I knew I'd be ripping out the builder grade stuff very quickly.

I also had extra outlets, phone jacks, cable jacks, etc. installed to my preferences having pre-determined my furniture layout throughout the house. And I had the builder prewire ceiling fans, but I purchased them and had them installed after I moved in. I also put in pocket doors in the master BR to give me more effective space and to make my furniture work in the room. It was a cheap fix (especially compared to new furniture :wink:), since they hadn't started on the wiring yet.

Rupert
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Re: Any downside in buying a brand new house ?

Postby Rupert » Tue Mar 21, 2017 8:04 am

jharkin wrote:Homes of any age can have problems. BUt I have to mention that in my 200 year old antique, I have more problems fixing bad workmanship of recent renovations than I do with the original hand made build quality of the house. An old house has a lot of other "issues" however that have nothing to do with build quality - limited storage, small rooms, draftiness, electrical systems that can be undersized for modern living, etc.


I have found this to be true in my 100-year-old antique as well. I'm slowing removing the recent renovations and returning it to the original hand made build quality (just with updated plumbing, HVAC, and electrical). Old houses still standing tend to be very well designed if people would just leave the original design alone.

letsgobobby
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Re: Any downside in buying a brand new house ?

Postby letsgobobby » Tue Mar 21, 2017 8:13 am

We shopped 'new homes' from tract builders and true custom homes as well. At the end of the day we bought preowned. The costs of new were simply too high to justify, especially once we got under the hood of tract builders. We found that the basic materials used were spotty if not shoddy, and practically everything we would have considered standard was an expensive upgrade. A house listed for $599k became $750k when properly equipped with amenities we expected. A true custom would have been near 7 figures. The other major drawback to new builds in our area was postage stamp lots. 6000-8000 sf are now standard even for homes over $500k. At $750k before upgrades you could get 10,000 sf. Just not big enough for kids to grow up on. The home we ended up buying ended up costing a similar $750k, was fewer than 10 years old, was solidly built (it had originally been custom built so no cheap materials were used), and got a lot of space (almost 2 acres). Even though we didn't get exactly the layout we wanted, it was good enough and had so many other advantages we feel we made the right choice.

Miakis
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Re: Any downside in buying a brand new house ?

Postby Miakis » Tue Mar 21, 2017 8:29 am

orca91 wrote:
Miakis wrote:We bought a house that was 1 year old. The builder lived in it for a year, which conveniently means he didn't have to offer a warranty. It took about 3 years to work the kinks out. In that first 5 years we had to fix the roof multiple times, fix the gutters, replace the sump pump, repair every toilet, and do a variety of other minor repairs. Almost every repair was due to poor installation of low quality materials.


You didn't buy a "new" house. What did you expect warranty wise?

Did you have an inspection done? Doesn't sound like it. A good inspection should have caught some of these things.


We were first time home buyers and didn't have a lot of expectations. We didn't think we had a warranty - but did find out later that he would have had to provide one if he hadn't lived in it for 1 year. We did think we were buying a "new" house direct from the builder - in that naive first-time home buyer sort of way. But we didn't know enough to even ask about what that really meant.

And yes, we had an inspection. I'm not sure why our inspector didn't catch the more obvious issues (the gutters and sump pump installation problems were apparently easy to spot with the naked eye by professionals). He did catch one or two things, but otherwise gave us a clean inspection report. Maybe he was dazzled by the new-not-new house and didn't look very closely. Who knows. We didn't have a realtor, so for all I know, the builder recommended the inspector. We really had no way to know whether we had a good inspector or not.

The whole issue has made me think that on my next house, I would possibly get two inspections done. But no one does that - so maybe it's unreasonable. I don't know, this is still the only house I've ever purchased.

Rupert
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Re: Any downside in buying a brand new house ?

Postby Rupert » Tue Mar 21, 2017 9:04 am

Miakis wrote:We were first time home buyers and didn't have a lot of expectations. We didn't think we had a warranty - but did find out later that he would have had to provide one if he hadn't lived in it for 1 year. We did think we were buying a "new" house direct from the builder - in that naive first-time home buyer sort of way. But we didn't know enough to even ask about what that really meant.

And yes, we had an inspection. I'm not sure why our inspector didn't catch the more obvious issues (the gutters and sump pump installation problems were apparently easy to spot with the naked eye by professionals). He did catch one or two things, but otherwise gave us a clean inspection report. Maybe he was dazzled by the new-not-new house and didn't look very closely. Who knows. We didn't have a realtor, so for all I know, the builder recommended the inspector. We really had no way to know whether we had a good inspector or not.

The whole issue has made me think that on my next house, I would possibly get two inspections done. But no one does that - so maybe it's unreasonable. I don't know, this is still the only house I've ever purchased.


Your experience is not unusual. Sad truth is that most inspections are not worth the paper they're printed on, particularly if the inspector is recommended by the builder or realtor. Such inspectors are likely to overlook things to help the deal close because they're counting on repeat business from the builder or realtor. Better to cold call inspectors you find on Angie's List or even Google. Best to choose an inspector recommended by someone you know. It's hard as a first-time home buyer, when you don't have experience with home maintenance/construction and thus don't even know what questions to ask the inspector to make sure you're getting a solid product.

Runner01
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Re: Any downside in buying a brand new house ?

Postby Runner01 » Tue Mar 21, 2017 9:12 am

A new house my mother lived in with her long term boyfriend experienced substantial settling to the point that interior doors could not be closed without forcing them. There was substantial cracking of the sheet rock as well. The worst part of the situation was that they had to pay for all of the repairs as the builder was bankrupt shortly after completing their house.


I would consider a manufactured home (not a "mobile home") if that is an option as they are built in a factory setting to repeatable quality standards.

researcher
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Re: Any downside in buying a brand new house ?

Postby researcher » Tue Mar 21, 2017 9:24 am

greenfire wrote:Many newer materials are toxic.

Why can't we go back to the good ol' days, when they used non-toxic materials like asbestos and lead-based paint.

AZAttorney11
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Re: Any downside in buying a brand new house ?

Postby AZAttorney11 » Tue Mar 21, 2017 9:28 am

Watty wrote:For big ticket items a new home warranty is not all that useful. The problem is that the builder will create a new LLC corporation for each project and maybe even each house they build. If there is some big problem a few years later then the LLC is just an inactive empty shell with no assets so being able to sue the builder is difficult since the LLC has no assets to pay any judgement.


That is utter nonsense.


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