Today we talk about the truth of buying a new construction home in Winnipeg and weight the pros and cons of building or buying! Which option would work best for you and your situation? Stay tuned for some insight! #ProsAndConsOfBuilding #ToBuildOrToBuy #BuildingInWinnipeg
Spoiler Alert:
Pro #1 is Design: You get to have the say along the way of different Design processes! This is expanded upon in the video.
Con #1: Mortgages There are two common types of mortgage structures when building homes. The first option, which most buyers do seem to prefer, is more of a typical mortgage in which the builder will want a deposit with your offer, perhaps a further deposit upon removal of any contingencies.
The other mortgage product that people often use is called a construction mortgage. Usually there is a pre-specified amount of payments that will then be due as work continues. Builders often like this form of mortgage better, as it gives them access to more liquid funds throughout the process, but banks don't love them.
Pro #2: Home Warranty In Manitoba, you will typically hear what is called a 1, 2, 7 warranty or a 1, 2, 5, 10 warranty. What this typically means is there are different warranties for varying lengths of time. More info can be found here:
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Con #2: Escalation Clauses - An escalation clause is something that builders have put into effect (some have always had one in their contract, however after the rising costs of lumber that we saw during COVID, many more builders adopted these clauses). What an escalation clause allows a builder to do, is increase the price of the contract if their cost of goods goes up.
Pro #3: Maintenance - You are buying a new home. Everything is brand spanking new! This means you shouldn’t have to worry about things like replacing windows, or your hot water tank getting older, or shingles starting to leak, or old unsafe electrical.
Con #3: Fluctuating timelines - New construction can be great if you have a flexible timeline. However, if you have a dedicated date for when you need to be out of your home or rental, chances are new construction will be a challenge. COVID was a great example of this – we experienced major supply chain shortages in materials such as lumber, as well as trades which resulted in lengthy delays.
Pro #4: Less Competition - There are far fewer buyers willing to go through the build process. Which usually means that the selling process for new construction homes is a little slower than what we see in the resale market. Not as many buyers are willing to wait for many months for a home to be ready, or want to go through the stress of the build process. Which means, less competition. It would be rare to see a bidding war on a lot or new construction home. However, in the strong seller’s market we’ve been experiencing, the choice lots are still selling VERY quick!
Con #4: Hidden fees: Oftentimes you will see advertisements saying homes starting as low as $400,000! And you think – Great! I’m going to get a brand new home for the same price as a resale option. I have rarely found this to be the case. There are many factors that can increase these prices. Such as: lot premiums, lot elevations, central Air Conditioning, Landscaping, Appliance packages, etc.
Pro #5: Efficiency - New homes have to meet very rigorous building codes, many of these codes address issues that have to do with the energy efficiency within the home. What you will often find as a result, is that new construction home options are far more efficient than their older counterparts.
Con #5 Having to make quick decisions without representation
It isn’t uncommon for people to just stroll into a show home on a Saturday afternoon and tour show homes. If you register or give your name without your Realtor, there is a good chance that if you move forward with the build, that your realtor can’t represent you. You are basically waiving your right to representation.
The representative within the show homes are often incredibly friendly and helpful and can answer many questions quickly. But keep in mind, that they work for the builder. Having your own representation does not actually cost you anymore money. The builder has to pay the agreed upon commission, regardless. It is so important to have an experienced set of eyes, help you review that contract because so many decisions have to be made upfront.
Whether you are buying new construction or resale homes, do your due diligence and make sure you pair yourself with a really good and knowledgeable Realtor. Your Realtor needs to be aware of what is happening in the market now and advise you on those conditions. They should also understand the gravity of your situation. This is a HUGE life decision, and your Realtor should be prepared to explain every detail to you until you feel comfortable to sign on that dotted line.
The Jennifer Queen Team
RE/MAX Professionals
(204) 797-7945
