New Construction Sticker Shock – What to Expect

New Construction Sticker Shock – What to Expect

There are several new home subdivision and communities popping up all around Lee and Collier County, Florida. To many homebuyers, this is exactly what they’ve been looking for. Many buyers are looking for a home that no one has ever lived in before; features that they can customize and designs all their own. But how do you avoid sticker shock with certain costs and upgrades that are to be expected in new construction?

If you’ve been considering a new construction or preconstruction home in Bonita Springs Florida or anywhere around our community, are some tips to keep in mind to avoid sticker shock when pricing out these newer homes.

Currently about 54% of buyers are willing to consider purchasing new construction and these homes can run $50,000 to $100,000 below upgraded costs. Buyers need to be aware that increasing these costs must fit within their financing budget or home loan. Adding granite countertops sounds like a great idea that he could add $10,000 to the home. High end finishes, water features or views can also add to the cost. Just because a subdivision says that home prices start at $350,000 doesn’t mean that every home in the neighborhood will be at that price point. Builders and developers have to start somewhere but buyers end up spending 30 to 40% more than they budgeted on a new home typically. “If the buyer is building with a production builder, the buyer picks out the floor plan, exteriors and finishes based upon the options at the builder offers. The builder notifies the buyer of the final price 5 to 7 days later. At that point, the buyers have already committed to having the home the way they designed it. Cutting back at this point is extremely difficult. The same is true with custom builds when the buyers work with their own decorator.” [Source]

Other cost overruns could be because of changing fees. If buyers change the tile or flooring, countertops or finishes, they could be looking at a changing fee (cost for switching out the previous material.)

Related: Making your Home Bid Stand out Every Time

It’s always smart to compare builders. During your homework and speaking with a real estate agent that is familiar with new construction and the subdivisions within the community that you’re looking at, can make a world of difference. Higher taxes, lower material costs, and a variety of green materials can make a huge difference on the cost. Newer homes will require upgraded insulation, wiring and plumbing so naturally that will be included with the cost of the home. It’s really the finishes and final cosmetic touches that will add a lot of cost to the home.

Being aware of what a home costs and what the upgrade costs will be just makes more financial sense upfront. Just because a subdivision says they have homes starting at a certain amount, doesn’t mean that is the price you will pay. Knowing that going in can make sticker shock much less “shocking”.