Dangers of New Construction Upgrades
Purchasing a home is a very exciting journey, especially when purchasing a new construction home. There’s something about knowing the home was built just for you and you’ll be the first occupants to make memories within the walls that seems nothing short of perfect, however not all aspects of purchasing a new construction home are perfect.
Oftentimes, prior to your purchase, especially if you’re buying within a master-planned community, you’ll tour a model home that is staged beautifully, boasting beautiful backsplashes, lights, and extra features, and you’ll fall in love and begin your buying journey. While you can indeed build a home with just as many if not more features and upgrades there are a few red flags you need to be aware of when choosing to put the extra upgrades in your home.
First are foremost, new construction upgrades are the easiest way to send you well over budget. While some of the upgrades may be cheaper to add during construction vs. a few years down the line, you have to make sure that these upgrades are within your budget so that you don’t accidentally go over and thus, end up with a home that you are unable to afford.
Another big issue that buyers often overlook, is the appraisal. Just like existing homes, New Construction homes still have to go through both the inspection and appraisal process. If you purchased a New Construction home for $400,000, and then added $50,000 of upgrades and features, you may run into issues with the appraisal. If you’re financing the home through a mortgage lender, your home will either have to appraise for $450,000, or you may be required to come up with extra funds for an Appraisal Shortfall, thus adding to your cost even more.
Oftentimes the builders will have a rough idea of what the home’s estimated appraised value will be, so try to make sure that you stick to that number and only go above it if you are financially able to afford both the upgrades as well as the possible appraisal shortfall. As with all home purchases, make sure to work closely with your lender and realtor to help the process go as smoothly as possible.
If you’re currently searching for a new home, whether an existing home or new construction, are ready to sell your home, or if you have any questions regarding Texas Real Estate, please feel free to contact our office at any time.