Fifty years old. That is the median age of a home in Suffolk County.
Long Islanders know land is at a premium. As of this writing, out of 3,179 available residential listings on the Multiple Listing Service of Long Island, just 327 listings (10.33%) are brand-new houses for sale.
An aging supply of residential structures and a dwindling supply of buildable land is a bad combination.
Despite the abundance of new construction homes, the benefits of a new house are undeniable. The ability to design your home and floor plan, significantly reduced energy costs, and minimal initial replacement costs are just a few of the tremendous benefits a new construction home can offer.
There is a right way to go about buying a new construction house on Long Island. Avoid dreaded Buyer’s Remorse by adhering to these 8 Essential Tips Long Islanders Must Consider When Buying a New Home:
1. Know Your Timeline to Close
Sometimes this can be the deal breaker. If you need to vacate your current residence next month and you do not have an interim place to stay while your home is being built, then chances are a new construction will not work for you. Hopefully, you read this post before it gets too late!
There are a lot of different factors that will determine just how long it will take to build your home. Here are a few questions to consider before sealing the deal:
Has a building permit been issued by the town or municipality?
Some municipalities are fairly quick with their approval process and others are not as much. If the permit requires a variance by the zoning board then that can add an extra wrinkle to the process, too. If permits are in place, the ground can be broken quickly. If not, it may be several months before construction can begin.
What time of year is the foundation expected to be poured?
If it’s the dead of winter the ground is frozen, and your land clearing or foundation pour may incur a slight delay. Plan accordingly.
Does the builder own the land at the time of contract signing?
There are times when builders enter into a contract to build you a house before formally closing on the parcel of property. Yes, this is possible and quite common. Typically, this means permits may not be in place or other procedural title issues may be delaying the sale.
The larger the home the more time it will take to build. Smaller homes can be built in just a few months. If the builder has the permit and owns the land by the time you’re ready to commit, it could take as little as three or four months from the contract to close. However, let’s say you have a 3000-square-foot house that still needs a permit. The timeline will more likely fall in the nine to twelve-month range. Sometimes more. The ability to plan ahead and be flexible with timelines is one of the most important traits of a successful new construction home buyer.
2. Consider Energy Efficiency Upgrades
Current energy efficiency standards for new construction homes are extremely favorable toward a home buyer. At a minimum, a buyer is receiving an energy-efficient utility system and windows/doors rated for energy efficiency.
Owners of new construction homes have significantly cheaper utility costs versus the average Long Islander living in an older house.
Take advantage of the opportunity to explore additional energy efficiency options to further reduce your energy costs. Think long-term and try to free up more disposable income. Items like dual flush toilets and LED lighting won’t break the upgrade bank and it’ll save a considerable amount of money over the long haul. If the budget permits, consider solar or geothermal.
3. Are There Clearing Restrictions on the Land?
Some towns, as a consideration for allowing a building permit, will restrict the number of trees the builder (or future buyer) can remove from the property. This is called a deed restriction. It can be as high as 50%! That half-acre lot you’re buying could end up being just a quarter-acre of usable space. Do your due diligence upfront if you’re dreaming of a grass-filled backyard oasis.
4. Get Your Estimate of Property Taxes From the Town Directly
Most towns are unable to provide a definitive annual property tax amount until the house is built and ready to be lived in. That doesn’t exactly help you try to determine your expected budget, does it? Your lender will also need an estimate of taxes to properly underwrite the loan. Most towns will be able to provide a written or verbal estimate of the property taxes by calculating purchase price, lot size, square footage, bedrooms, etc. Try to confirm this directly from the source instead of just taking someone’s word for it.
5. Research Your Location Extensively
Look into future developments and planned downtown revitalizations. Long Island has many ambitious projects planned for the immediate and near future. How are they going to affect your quality of life and the future resale value of your brand-new home?
Look into all the surrounding properties of the lot you’re looking to purchase. Especially look at other vacant lots of land in the vicinity. What is their current zoning? Do as much research as possible to ensure that the location is the right fit for your current and future needs.
6. Confirm Whether There’s an HOA or Not
If this is a new subdivision or community, verify up front whether there will be a Homeowner’s Association to take care of any common areas, if any. If there’s a beautiful entrance way that is professionally landscaped with in-ground sprinklers, someone is paying for it. Find out whether that someone is you.
More importantly, an HOA will have a separate layer of rules to follow. Restrictions on future additions to the property, fencing, exterior color schemes are just a few of the many items that can be regulated by a Homeowner’s Association. It’s important to know all this up front instead of waiting for that fine from the HOA to arrive in your mailbox for not adhering to their rule book.
7. Get Your Financing in Order Now
This should be the first step any buyer takes before purchasing a residence and it’s especially important for new construction buyers. Just because the house may not be ready to close for six months doesn’t mean you won’t need your financing to break ground. In fact, it’s a necessity.
Get your anticipated closing costs confirmed.
We get it. This is Long Island and we have absurdly high closing costs that can run anywhere from 4 to 6% of the purchase price. One of the few downsides to building a new home is the higher closing costs. It’s common for a buyer to pay additional taxes and fees associated with buying a new construction home. New York State Transfer Tax, a final survey, and the cost to hook up to the utility companies are typically paid by the buyers of a Long Island new construction house. Many times, upgrades are also required to be paid out of pocket.
Don’t be surprised if the builder requires you to be pre-approved for a mortgage through a lender of your choice. They can’t require you to use any specific lender however they certainly can require a second set of eyes on your finances to ensure you’ll close once the house is finished. There is no cost or obligation to the buyer, but it provides a valuable vote of confidence for the builder. Trust is a two-way street.
8. Understand the Contract
This should go without saying but sadly there are instances otherwise. Meet with your attorney and discuss, at minimum, your contingency deadlines, the timeline for the builder to finish construction, and language pertaining to upgrades and warranties.
If you haven’t finalized it by this point, then the specifications sheet that details everything that’s included in the house should be supplied. This can sometimes be the biggest bode of contention between a builder and a buyer during construction. Just because the model house had a fireplace doesn’t mean it’s automatically included in the house you’ve entered into an agreement to buy. Ideally, it’s done beforehand but contract signing is the final opportunity to verify every single detail before your agreement is legally binding.
For some people, buying a home can feel like a daunting task. This was especially true with buying a new construction house. It doesn’t have to be. There is a right way to do it. These tips will hopefully serve as a building block for your pursuit of a new construction house.