Why Buying A New House Is Like Buying A New Car (At First Glance)

August 20th, 2007 categories: 3 Legged Horses, New Construction, Real Estate News

162238697_83d1371801_m Spaceball 1. Criteria. I know little about the mechanics of a good car and before I became a Realtor, I knew little about the stuff houses are made of (and I’m not claiming I’m an expert on that either). So my reasons for purchasing usually involved a short list; the color, the comfort, the price, and how nice the salesperson was. Not good ways to evaluate purchases that involved years of income! I’m sure I was not the only one who bought a car or house with this criteria in mind.

2. Uniqueness. New cars smell good and they are clean, and you do get to customize depending on your ability to pay for the features you want. The same goes for new houses. There are no smells that aren’t yours, they are clean(at least of personal items) and you do get to customize your house to your desires depending on your ability to pay for those features.

3. Newness. With a new car there is absolutely no eating in this vehicle, you have to wash and vacumn it weekly, and that first scratch just tears your heart out. I remember with my first new house, there was no eating except in the dining room, shoes were removed before entering the house, and everything was kept looking new as long as possible. That first nail hole is usually put off for at least the first year…..

4. Payments. This is where the things become quite different. With a car, you decide what you what and how much you can afford, what your monthly payments will be and then you drive away. With a house, you decide what you can afford, what you need and what your monthly payments will be then you walk into your brand new house and guess what? You need all kinds of things that are not rolled into your monthly payments like shades, fencing, storage, landscaping and the list goes on. Those expenses have to come out of your pocket or savings. And these are not inexpensive items. It amazes me that so many first time homeowners buy brand new. Not only do they have all these added expenses, they also need personal items like furniture, lawnmower, vacumn cleaner, and the list goes on.

5. Equity. With a new car, you drive it off the lot and you will probably never recoup what you paid for it. A house in recent years, could easily recoup on the average 5% yearly. But if you have to add all the things you need to finish a new home, like a lawn, fence, blinds ect… you will not get that high of a return. Living in it for only 2 years and then selling it in this market, you’ll be lucky to break even.

Buy an existing car (fairly new) with some warranty left on it and your depreciation expenses will be much lower. Buy a existing house, with all the things you need rolled into the mortgage and historically,you could see that 5% gain in only 2 years.

Right now in our market you can get really good deals on existing homes. There are people that need to sell or are very realistic about what their home is worth. You can get great value and not have to put in a yard, a fence or shades. Some of these homes are practically brand new and are being offered at the same price or even better than brand new.

But still I see another new home has a sold sign on it. Personally I think it’s that nice looking salesperson!