It’s an age-old debate in real estate: Is it cheaper to buy new construction or an existing home?
Dollar for dollar, new construction tends to be less expensive if you’re simply talking about the cost of building the basic house itself. But what many homebuyers miss is that a new house does not automatically come with everything. Many, in fact, were blindsided to find out that they have to pay out of pocket for a bunch of extras such as appliances, landscaping, window treatments, fences, and more.
And these upgrades don’t come cheap.
Recently, a Reddit user queried new-construction buyers in r/RealEstate about the extra costs they incurred to get their home move-in ready.
“New construction is great, but it’s basically a white box. We just bought a new home and we had to pay for the following: sod/lawn, irrigation system, deck/patio, painting, laundry room cabinetry, window shades, light fixtures (upgrade from the builder grade). … Buying new is so much work and cost on top of the price of the house!”
Others weighed in with the extra amenities they shelled out for.
“Landscaping was included with our new build. We spent $4,000 on a fridge, range, dishwasher, over-the-range microwave, chest freezer, and washer-dryer. Window treatments were like $800 but we did those ourselves from Menards.”
“Refrigerator: $2,500. Window treatments: $1,000. Fans: $500. Fence stain: $100. New couch (gift for fiancé): $6,000.
I plan on expanding my fence, regrading the backyard, adding another patio. These are not needs but wants. I don’t plan on selling in a long while and these projects will improve my happiness.”
“Had to have [the house] repainted … $3,000 more. Also ended up having new sod and sprinklers installed. $11,000 for that. Vinyl fence for the backyard so the dog can enjoy herself, $4,000.”
“Washer and dryer: $1500. Blinds: $700. Landscaping: $1000 (DIY). Basement is still unfinished. Total for move in ready $3200.”
“We had to do window treatments; that was a few thousand dollars. … Maybe $500 in fans and light fixtures that we felt needed to be replaced. … We added a storm door for $1,000 including installation. Overall we maybe spent $5,000 bringing it up to ‘liveable’.”
“Appliances (washer and dryer, water softener, fridge) can run you anywhere from $5k to $10K on average.
I never knew how expensive it was to do your backyard landscaping. Because of all the new builds and supply chain issues, landscaping is ridiculously expensive.”
In reading these responses, we noticed a trend: Many of these homebuyers were shocked by the cost of window treatments.
“Window treatments are the biggest rip-off. Margins must be crazy.”
Blinds were shockingly expensive so I just went with the Ikea blinds which looked sleeker and modern! Some were quoting me a ridiculous $300-$400 per window if not more. I went to Ikea and got a bunch of their ‘Tretur’ line which were like $50-$70.
“My house came with appliances, but window treatments have staggered me (cost wise) for both of my new construction homes. I feel like that’s a ‘need’ for move-in ready.”
What comes standard in a new-construction home, and what costs extra?
Each builder is different and will offer different standard amenities. But there are some common fittings and fixtures that homebuyers can count on coming with their new house.
“As a baseline, you can typically expect carpet and vinyl flooring, one-color paint throughout with a flat finish, a few options for builder-grade lighting and plumbing fixtures, a few options for bathroom and kitchen cabinetry, a few options for countertops and backsplashes, a pre-determined number of electrical outlets, a standard appliance package that may or may not include a refrigerator and usually does not include a washer and dryer, and on the exterior you can generally expect an uncovered concrete slab patio or a deck,” says Julie Moore, a real estate agent with Greener Grass Real Estate.
Safety and building codes are also taken into consideration by new-construction builders.
“One bonus for brand-new homes is that they will also include anything mandated by the most current municipal code,” says Josh Steppling, a real estate broker in Stuart, FL. “For example, in Florida, new homes will have up-to-date hurricane protection. In California, new-construction homes will come with fire sprinklers.”
From there, new-construction buyers are often given upgrade options.
“The most popular upgrades new-home buyers will go for are modernized light fixtures, elegant flooring, stone countertops, and electrical additions such as recessed lighting or more outlets,” says Steppling. “Homeowners also usually look for an exterior face-lift by upgrading their new home’s facade, patio space, and landscaping. Believe it or not, many new homes will not include the land as well. You’ll have to pay a lot premium for waterfront, preserve, or other more desirable locations.”
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How much should new-construction homebuyers budget for upgrades and extras?
Builder upgrades and extras can add up quickly, so it’s important to have a budget before you start choosing amenities for your home.
“In order to set your budget, you need to talk to your lender first to find out how much you can afford to add to your mortgage if you don’t plan on paying cash for the upgrades,” says Moore. “Second, you need to talk to your real estate agent and find out what other homes have sold for in the neighborhood to make sure you don’t over-improve the home. You’ll want the home to appraise if you plan on rolling in the costs of upgrades into your mortgage.”
Steppling advises buyers to budget around 10% of their home’s purchase price for upgrades.
“If you have a more refined taste, you may want to budget as high as 25% for your upgrades—especially if a lot premium is needed,” Steppling says.
How to reduce the costs of builder upgrades and extras
The first strategy for saving some dough during your home purchase is to ask about any incentives that the builders are offering.
“Often builders will offer incentives for spec homes (homes that they’ve already built) or if they’re trying to meet a sales quota for the month,” says Moore.
Another thing you can do is work with your real estate agent to negotiate some extras.
“Sometimes builders will be willing to include items such as window coverings,” Moore says. “It never hurts to try to negotiate.”
You could also plan on making upgrades in the future.
“Some items, such as electrical additions, will be easier to take care of during construction. Others, like new light fixtures or even upgraded countertops, should be cheaper after-market,” says Steppling.
Moore offers this pro tip: “Do a reverse Google Image search to find less-expensive dupes of fixtures you love.”