Buying New Construction – Final Sales Price
You see the signs everywhere “NEW HOMES STARTING IN THE LOW $XXX’s”. In the Denver Metro area any sign that says “starting in the low $300’s” will likely get a lot of attention. It’s tough to find a nice house, let alone a brand new house, under $350,000 anywhere along the front range of Colorado. The price listed on the signs are the ‘base price’ of the home. Unlike purchasing an existing home the ‘base price’ on the marketing materials is merely a starting point. Before you start packing up your belongings to move, you’ll want to ask the sales person specific questions about any additional costs.
Below is a list of items to take into account when calculating the actual sales price of a new home.
- Interior Upgrades – Ask for a list of the interior and exterior features, included in the base price, before you start touring the model homes. Most model homes you tour have the premium upgrades. When estimating your final sales price I recommend you use a value equal to 10% to 12% of the base price. ($300,000 home, $30,000 – $36,000 in upgrades)
- Lot Premiums – Lot premiums are fees that are added to the cost of the land (lot) for special features such as size, views and location (adjacent to open space, cul-de-sac, corner lots, etc.) Every community will be different.
- Landscaping – Very often, with new construction, the builder will include minimal landscaping with the building of the home, usually just the front yard. Typically the homeowner must complete the remaining landscaping within a predetermined time frame. It is important to understand this cost and the specified completion timeline.
The cost of the interior upgrades I wanted was about $30,000 (pretty close to 10%). (granite counter-tops, wood flooring throughout the main level, tile floors in the bathrooms, a gas range in the kitchen, an additional bedroom & bathroom and a covered patio). It can add up very quickly. Every lot had a lot premium associated with it. Lot Premiums ranged from $4000 to $10,000 depending on the lot and location. The total of my additional costs was $34,000 or 11 %.
Base Price $311,000
Interior Upgrades $30,000
Lot Premium $4,000
Total Purchase Price $345,000
Please Note: If you are just starting out on the home buying process and aren’t even sure if new construction is what you want to buy, please download my Home Buyer Questionnaire, to get you started.