Sometimes choosing something that you thought was totally out of your range becomes the obvious choice. In a tight real estate market with little inventory, for some buyers, new construction is the best choice.
I don’t need to tell anyone reading this that the sound of hammering has become the backdrop music on Anna Maria Island. New homes are going up all over the place, some built on spec and some custom. This is also happening all over the country to compensate for the national lack of inventory.
Newly-built homes accounted for nearly one-third of single-family homes for sale nationwide in May. Historically, new homes represent between 10% to 20% of the market. Even investors are getting into the new home market to use as rentals or to flip down the road and there are plenty of these buyers represented around the Island.
With no inventory to choose from, buyers across the country are improving new home builders’ bottom line. The big builders are offering incentives to buy one of their new homes, some even with temporary advantageous financing benefits. Based on rising demand, builders are adding more homes to their inventory and buyers are more than happy to find a home that doesn’t need renovation.
As always, what happens on Anna Maria stays on Anna Maria, and very little of what happens in the Midwest or western parts of the country transfers to Florida. But there are still some basic caveats to follow when buying a new home.
Builders always want you to add upgrades to their basis home price. If you can afford major upgrades, better to do it while the home is under construction, but chose your upgrades carefully. Upgrading plumbing and electrical is smarter than upgrading kitchen cabinets, tile and countertops.
Look for areas during construction to cut corners without sacrificing quality. Sounds impossible, but an honest conversation with the contractor may reveal ideas you never thought of.
Read the fine print on the contract. Are appliances included and what are they? Be specific. What paint colors are included in the contract? If everything is getting a couple of coats of builder’s white, what will it cost you to have the builder paint colors in specific areas? New construction contracts usually have construction timelines with deadlines. This frequently coincides with incremental payments either from a cash buyer or draws from a bank construction loan.
Finally, even though it’s new, it may not be perfect. Don’t think that because you have a warranty it covers everything. A warranty on new homes covers items like materials, workmanship, systems and structural defects. A bad paint job may not come under the workmanship umbrella and may require more specific wording in the contract.
It’s also recommended that buyers hire a structural inspector to check the property at specific times during the construction process. This might be before the foundation is poured, and before the drywall is installed to make sure anything behind the walls like electrical work is up to code. The last inspection is at the completion of the home.
Local contractors are pouncing on older Island cottages, calling in the bulldozers and erecting mega homes. With little coming on the market and even less in pristine condition, new construction may be the only viable game in town, a no-brainer for those who can afford it.