The Resale Value of a New Home

You’re sifting through listings in search of a home. The new construction homes are tempting you with the idea of having a move-in ready home that needs no remodeling or updates. But then you compare the price of a resale home and think, “That seems more affordable.” Before you accept this assumption at face value, Cothran Homes advises that you should understand the value—including the resale value—of a new home when compared with an older one. Face value and resale value“What you see is what you get” applies to an existing home. You’ll do a home inspection, of course, and hope there are no surprises after you move in, but there’s no guarantee. How often have you seen a home makeover show where the contractor or homeowner tore down a wall or pulled up the floor, only to expose a big problem. It could be in the structure, the plumbing, the wiring, or all of the above. When you buy an existing home, you face the great unknown. Most experts will tell you that whatever you’ve estimated in time and money for a remodeling job, double it.Let’s say you’re buying a resale home with the idea of remodeling. Whether you’re planning purely cosmetic changes—new countertops, interior wall colors, or flooring—or a major renovation, factor those costs into the total for the home. For example, if you’re buying a $250,000 home that is going to need a new roof, that could cost $8,000 or more. Do you plan to add new appliances, paint a few rooms, replace the floors in the main living area, and upgrade the faucets and lighting? That could cost $10,000 or more, depending on the quality of the materials you choose.Now, that $250,000 home actually costs $268,000.But it doesn’t end there.New homes today are built with more energy efficiency than ever. The construction methods, materials, and processes are engineered to conserve energy (water, electricity, heating fuel), which also saves on your monthly utility bill. An energy-efficient home built to higher standards could easily save you $100 or more in your monthly bills. So, add another $100 to your estimated monthly mortgage payment.Energy efficiency also boosts the resale value of a home—estimated to be up to 8% more than those that aren’t so “green”.Now, do the math.You buy the home that is going to cost $268,000 with the renovations you plan. With 5% down and a 30-year fixed rate loan at 4.22%, using the Zillow mortgage calculator, your monthly mortgage would be $1,586. Add in the extra $100 per month for the high utility bills that come from less energy efficient windows, insulation, appliances, heating and cooling system, plumbing and lighting fixtures. The bottom line is $1,686 per monthYou could buy a brand new home with all new systems and appliances with high energy efficiency for $285,000 with the same loan terms and pay $1,681 per month. The new construction home comes with a builder’s warranty, and all the appliances, systems (HVAC, roof, plumbing, electrical) are also covered by a guarantee. What you pay for this new home is the same as your cost of ownership because there are no hidden expenses.Would you rather work with a builder to get a home that needs no remodeling, renovation, repair, or replacement or take on a home that could become a money pit? That’s not to say that all resale homes are faulty, but do you want to gamble with the largest investment you’ll probably ever make?Take the sure thing. Look at the single-family homes and townhomes that we build in our Greenville, SC, area communities. With prices starting at $173,700, Cothran Homes provides high quality with affordability. Up to $5,000 in closing costsGet even greater value when you purchase a brand new home by March 15, 2019. Cothran Homes is offering up to $5,000 in closing cost credits on our move-in ready homes. Get in touch to learn more and schedule your personal tour right away.