Purchasing a newly constructed home is exciting but there can be hidden costs associated with a new build that you may not have considered. Sure, buyers love the option of choosing the layout and finishes and the style of their new house but you should be aware of some of the hidden costs you may come across.
The Benefits of a Newly Built Home
- All new windows, doors, floors, HVAC system and appliances mean their lifespan is longer and lower-maintenance.
- The materials and construction methods used will be up to the latest building codes for safety and efficiency.
- You can create your own style by picking out wall colours, trim packages, countertops and even the exterior brick or siding choices.
- Generally new construction homes come with a TARION warranty so if anything should need repair it may be covered for a time after closing
You can read more about what TARION covers here.
Buying a newly-built home sounds amazing, but what other factors should you consider?
Model Homes Are Filled with High End Upgrades
Model homes are staged to dazzle you
Builders want to showcase everything that’s possible when building a new home so their model houses are full of high-end finishes. They all have glitzy light fixtures, glossy countertops and backsplashes, rich floors and gorgeous furniture—all staged to dazzle potential buyers. However most newly-built homes don’t come with all of these things features included and new construction doesn’t always equal all-inclusive.
Add-ons cost more than the regular price
Things like wider trim packages, high-end doors, railings, and stairs are all add-ons that will cost up and above the advertised price of the home. Even things like shower heads and faucets may be upgraded for an additional cost. You may even consider having higher ceilings or larger windows installed to give your new home a more spacious feel—but it will all cost you much more.
Find out what the upgrades are
When touring a model home, be sure to ask the sales representative what’s considered an upgrade and what comes standard with your home’s purchase. If you can get the chance, tour their design centre and see what’s available to choose from and at what the prices are for each upgrade. In the end, you will need to decide what’s most important to you and spend wisely and within your budget.
Choosing the Right Location
You will most likely be able to choose which lot in the subdivision you want it built on. Certain lots may come with a premium price if they’re larger than the rest, situated on a corner, or allow for nice views of green-space. When it comes to choosing a lot remember to choose wisely, because it’s the one thing you can’t change in the future.
Consider how close your neighbours will be too. Find out if there will be houses directly behind yours or whether headlights will be coming up the street directly into your living room. All of these things and more may affect which lot you prefer and how much it’s going to cost you.
Find Out What You Still Need To Buy
Every builder offers different inclusions with a purchase of their home. Some things that may not come with your new property are:
- Major appliances (lower builder-grade appliances may included)
- Window coverings
- A finished basement (some are finished at additional costs)
- Backyard decks and/or patios
- Backyard fencing
- Landscaping or trees
- Paved driveway or walkways
Before you sign on the dotted line, ask the builder about the features that they particularly include. Some of the features you choose may require you to budget extra money to have done after you move in.
Yes, There May be Things Needing Repairs
Even though your new build home will be brand new and fresh, there may still be things you find that need repairs. As meticulous as home builders are, there could potentially be problems after you are handed the keys.
First and foremost, ask your REALTOR®, friends and family for their experiences with builders in the area. Find out what they’ve heard or experienced. Have they heard good things or nightmare stories? Find out if the builder is known for using quality materials and craftsmanship, or whether they take shortcuts and have lots of problems afterwards.
Inspect things yourself
There are many things you can inspect yourself like an improperly covered roof, loose plumbing fittings, scrapes and scratches on your shelving, and even windows that are not working properly. All these things and more that can happen during the building process can cost you money. Our advice is that you do your homework, find out what the new home warranty will cover, and what you would have to pay through home insurance if any issues arise.
Be Aware of Potential Delays
When you sign your agreement to purchase a new build home, you will be given a “projected date of completion” but take note that this date is not a guarantee that construction will be completed by that day.
Things like weather, material shortages and other factors can adversely affect when you actually get the keys your new home. If you’re currently renting, you may have to ask your landlord to add on an extra couple of months to your lease should there be a delay in the completion of the construction.
Things can get more complicated if you’re selling your current home. You may have a closing date of June 1st but then find out your new build has been delayed to August 1st. In cases like this you will need to find short term accommodations and put many of your belongings into storage while the delay works itself out.
Ask your builder what their policy is on construction delays. Often builders reserve the right to delay your completion date twice, and only on the third delay are they required to give you financial compensation for the hassle.
Remember You Have to Pay HST
Unlike pre-existing houses, newly built homes in Ontario are subject to HST on top of the purchase price. If you’re the first owner of a new construction property you are the one who has to pay the tax. This tax can be a hefty addition to the cost of the home.
For example, on a $700,000 home—even if that includes all your upgrades—you’re going to also pay an extra $91,000 in tax. This will need to be factored into your budget.
In Ontario if you bought a new home from a builder, you may be entitled to claim an HST rebate. This is generally applicable if the home is going to be your primary residence. Most home builders include this rebate in the purchase price and have you assign the balance back to them at the closing of your home. Be sure to ask your builder what their policy is.
Ask Your REALTOR® for Advice!
When you weigh the pros and cons of new build construction homes, it may still be the right decision for you. Whether you’re considering a new home or one that’s had a few years on it, your Kate Broddick team of agents are always available to help you find what you’re looking for.