We’ve talked a lot about the difference between new construction homes and existing homes, outlining the pros and cons of each and examining the big picture difference in price (as well as some of the additional costs like homeowner’s association fees. We also took a more general look at the added cost of upgrades and options, but today we are going into more detail.
If you’re thinking of buying a new home, understanding and considering these extra costs is important. Many buyers fall in love with a model home and are disappointed to see that the “real” home they are buying is full of builder basics, like unimpressive flooring and countertops, and no fancy backsplash or tiled shower. There may not be any grass or landscaping in the backyard or window coverings at all either.
Here’s what you need to know.
What is included in the base price?
What’s the first thing you do when you get to a new-home community? You tour the model homes, right? And now you’re all in love and imagining your furniture sitting atop the wide-plank wood floors in the living room and your kids cozying up to the quartz-covered breakfast bar. That’s when you get hit with a big shock of reality: The model costs $200,000 more than the base price of the house.
Can you upgrade for less?
Of course. You may want to replicate that model down to the very last knob and pull, but picking and choosing where to put your money can help you stay within a reasonable budget.
So how much are we talking?
Could be a little, could be a lot. It entirely depends on you. “We visited a builder in our area that advertises low home prices, and were shocked to find out how much of what we saw in the model was an upgrade,” said Autumn of It’s Always Autumn. “I knew that the granite countertops would be an upgrade, but the entire kitchen layout was an upgrade costing $10,000, and the master bathroom layout was another upgrade costing nearly as much. Window sills were an upgrade. A garage door opener was an upgrade. Central air was an upgrade. Any light fixtures other than fluorescent bar lights in the kitchen were an upgrade. Not to mention 2-tone paint, the trim, the doorknobs, all the fixtures, the carpet, the tile, etc.”
In general, everything you add or change will cost you. Individual prices will vary depending on the builder, the home, and the specific finishes they offer, but here are some examples of what to expect:
• Wood flooring throughout the entire house could cost between $20,000 and $40,000, depending on the brand and quality.
• Upgrading a kitchen could bust your budget. Depending on the builder and community, you could add better appliances, more expensive countertops, a fancy backsplash, and a nicer grade of cabinets. Before you know it, you’re looking at the cost of a luxury car.
• Adding another bedroom could cost $15,000.
• Raising the ceilings? This could be a $10,000 upgrade.
• Bathroom upgrades can get also get costly quickly. Want an expanded shower, freestanding tub, and upgraded flooring? You’re likely well over five figures.
Where should I start with my upgrades?
In the kitchen. “The kitchen is the heart of the home, the spot where you will spend the majority of your time and make the most memories,” said New Home Source. “It can never be overly well equipped. Pay special attention to cabinets and appliances, as this is what future buyers will focus on, as well as the tools you will use every day.”
Do any builders include upgrades in the base price?
Some do. For example, Lennar’s Everything’s Included (EI) program includes some of the most popular amenities, such as GE® or Electrolux® stainless steel, energy-efficient appliances, upgraded polished granite or quartz countertops, and upgraded cabinets and flooring, in the price of the home.
Other things you need to know about new-home upgrades:
You’re going to have decisions to make.
Many, many, MANY decisions. You’ll need to choose products and colors and finishes for every room and nearly every surface. Sometimes, there will be multiple decisions that need to be made at once. Just selecting your cabinets from among the standard options and colors can be an adventure.
Thankfully, many new-home builders today have design centers that are staffed with professionals who can provide guidance.
Upgrades can often be rolled into your mortgage.
This makes them seem painless since you don’t have to come out of pocket for those wood floors. But it will raise your monthly payment. And, if you’re already at the limit of what you’re qualified for, or what you feel you can afford, that increase may be problematic.
It’s important to consider the value.
Are you making smart upgrades that will add value to your home? Obviously, you have to weigh the importance of your personal wants and needs against what the general public might want when it’s time to sell. Your real estate agent should be able to provide important insight into items that will—or will not—make the home attractive to future buyers.
You also want to think about whether you are over-improving for the neighborhood. If you put $100,000 in upgrades into the home, will you ever be able to get that money back out of the home? If your improvements make the home more expensive than any of the other homes in the neighborhood, you may end up losing money down the line.