Looks like this “Ask Lila” feature is becoming more of a bimonthly occurrence, versus this weekly interval I had originally planned.
Based on a recent article I read by the Florida Realtors Association, I decided this week’s Ask Lila question would be one of much interest to new home buyers: Foreclosures vs New Development, Which is Better & Why?
Before we get started, here’s a little snippit from the aforementioned article that inspired this week’s post:
PHOENIX (AP) – March 8, 2011 – Homebuilders trying to fight off customers’ attraction to cheap foreclosures are doing more to show buyers that the good deals can come with pitfalls.
The companies are increasingly trying to woo buyers like Katie and Mike Zwanziger, hoping that warnings about unknown repairs, limited selection and haggling with banks might help them recover from the most dismal year for new home sales in more than 50 years of record-keeping.
The Zwanzigers were ready to move to a larger home and were enticed by the number of resales and foreclosures in the area they liked. But after several weekends of hunting, the physical therapists from the Phoenix suburb of Gilbert decided to look at a new development.
“And we got in there and found out that, truly, we spent maybe $50,000 more and got the exact house we want, the layout we wanted, the backyard we wanted,” said Katie Zwanziger, 31. “So we could be happier with just a little bit more money.”
Many national builders are using some form of marketing to try to make that point and beat back the quiet competition from lower-priced foreclosures and short sales… View the full article here.
So the question stands: Which is better for current home buyers, New Development or Foreclosures?
The real question, in my opinion, is which is the better investment?
Well, consider this: In today’s market, newly developed homes are priced very competitively. In several Nassau County, FL areas these new homes are priced right at or under market value. The nearly nonexistent difference in price makes it very difficult for comparable pre-owned homes and some foreclosure properties to compete with new development.
This is how I look at it. On the one hand, some developers are offering to pay all buyers’ closing costs, provide all new appliances, plus other upgrades like granite, tile, and crown molding, making buying a new home devoid of the additional costs incurred when buying any type of pre-owned home.
On the other hand, many foreclosure buyers find many appliances missing, walls and doors in need of major repair, flooring needing replacement, and painting, interior and exterior maintenance necessary.
It’s not a fair fight.
The result is basically a market place in which buyers are now able to purchase a new home with everything they want for the same price as a foreclosure, a less-than-new home with a certain level of risk involved.
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