3 Reasons Why You Should Buy a New Build

1. The 1/2/10 Warranty

The 1/2/10 Warranty is available on all newly built homes in Texas, so this reason isn't due to the current Real Estate market. It's a good reason to buy a new build no matter what the current market conditions are.

What is the 1/2/10 Warranty? This is a warranty provided by the builder to the buyer that covers 1 year of workmanship defects, 2 years of distribution systems and 10 years of structural defects. Here's what each part of the 1/2/10 warranty covers:

-1 Year Workmanship Warranty covers: foundation & concrete, site work (grading & drainage), masonry, mechanical, electrical, thermal & moisture protection, doors & windows, finishes (drywall, paint, carpet, etc.), carpentry and specialties (ie, fireplace).

-2 Year Distribution Warranty covers: wiring, piping, electrical ductwork, plumbing, heating, cooling, and ventilation.

-10 Year Structural Warranty includes: footings and foundation systems, columns, beams and girders, load-bearing walls and partitions, floor framing and roof framing systems

2. Builder Incentives

Builders are always willing to credit buyers a certain amount ("builder incentives") if the buyer uses the builder's preferred lender. The reason builders are able to do this is because most builders also own the lending company.

Most builders also allow you to refinance within the first 1-2 years without paying closing costs. Which means if rates fall, like they're expected to, you can refinance for FREE. During the height of the market in 2022, builders were offering up to $5,000 in builder incentives. Today that number is averaging $15,000+, depending on the builder, location, how long that house has been sitting, etc.

If you have a healthy builder incentive you can buy down your interest rate (typically 0.5%-1.5%) and, in some cases, have enough incentive left over to save you cash due at closing. For example: Sales Price - $400,000 Builder Incentive - $20,000 Average Interest Rates - 6%

Cost to Buy Down Rate 1% - $11,000 Incentive Remaining - $9,000 In that example, the buyer received an above average interest rate AND saved $9,000.

3. Near-Record Level of Supply

Most of today's supply is taken up by new construction homes. Why does this matter?

Builder's are eager to cut a deal! More supply = less demand. When the market heats up and resale homes are experiencing bidding wars, many buyers turn to new construction homes to avoid bidding situations.

With interest rates being higher, the buyers that are in the market aren't turning to new construction homes.

The Moral of the Story:

If interest rates are keeping you on the sidelines, new construction is a perfect way for you to buy a brand new home at a great rate and not use your own money in the process!

The 1/2/10 Warranty will give you peace of mind on closing day where a traditional seller can't! This is also perfect for first time home buyers who are used to calling maintenance at an apartment complex! Imagine getting the keys to your new home that has all new appliances, fresh paint, and new flooring, saving money, getting a great rate and having a warranty!

If you'd like to learn more about the different builders, their incentives or current new construction inventory, contact me below!

Justin Tipton

(214) 616-8863

justin@tiptonrealtytx.com