Whether you’re buying a new construction home or a resale property, the process of closing on a home is one of the final and most important steps in purchasing real estate. While both types of transactions ultimately lead to homeownership, there are significant differences between closing on a new home and a resale home. Understanding these differences can help you better prepare for the closing process and avoid potential delays or surprises. This guide will explain how the two processes differ in terms of timelines, costs, inspections, and other key factors.
The Timeline for Closing
Closing on New Construction Homes
When closing on new build homes, the timeline is often longer and more complex. New construction typically involves multiple phases, including the initial deposit, construction milestones, and final closing after the home is completed. Buyers must be prepared for potential delays in the construction process, which can affect the final closing date.
- Example: Builders may offer estimated completion dates, but weather, material shortages, or changes in design can push back the schedule. It’s common for buyers to wait several months to a year before the home is ready to close.
Closing on Resale Homes
In contrast, the timeline for closing on a resale home is often much shorter. Once the offer is accepted, the closing process usually takes 30 to 45 days, depending on factors like financing and inspections. Since resale homes are already built, the buyer doesn’t have to wait for construction to finish, which streamlines the process.
- Key Point: If you're purchasing a home through a traditional mortgage, most resale home closings can be completed in under two months, provided there are no major issues with financing or inspections.
Inspections and Warranties
Inspections for New Construction Homes
While buyers of new construction homes might assume everything is brand new and in perfect condition, inspections are still crucial. Builders will typically provide a walkthrough inspection before closing, giving buyers the opportunity to identify any final touch-ups or incomplete work. In addition, many new homes come with warranties that cover structural issues or defects for a set period of time.
- Tip: Even with a warranty, it's wise to hire an independent inspector to evaluate the home's foundation, electrical systems, plumbing, and more to ensure everything meets building standards.
Inspections for Resale Homes
When buying a resale home, inspections are often more extensive. Since the home has been lived in, there may be wear and tear, outdated systems, or hidden issues that need to be addressed. Buyers generally hire a licensed home inspector to perform a comprehensive review of the property, which can reveal issues with roofing, HVAC, plumbing, or appliances.
- Key Point: The inspection report for a resale home may lead to negotiations with the seller for repairs or closing cost credits. In some cases, significant repairs could delay the closing.
Closing Costs and Fees
New Home Closing Costs
The closing costs for new homes can vary depending on the builder and location. Builders often cover certain closing costs as part of their sales incentives, especially if the buyer uses the builder’s preferred lender. However, buyers are still responsible for fees like title insurance, homeowner’s insurance, and mortgage origination fees. Additionally, HOA fees may apply if the home is in a new development with shared amenities.
- Tip: In new construction, buyers might also encounter special assessments or infrastructure fees to cover the cost of roads, sewers, and other community infrastructure.
Resale Home Closing Costs
Closing costs on resale homes are generally more straightforward, although they can still add up. Typical costs include title insurance, attorney fees, appraisal fees, and loan origination fees. Buyers of resale homes may also be responsible for prorated property taxes and transfer fees, depending on local laws.
- Key Difference: One benefit of buying a resale home is that, unlike new homes, you won’t have to worry about paying additional assessments or fees for community infrastructure.
Financing Differences
Financing a New Home
Financing a new construction home can differ from a resale property, particularly if the buyer is purchasing the home before it’s built. Buyers may need to secure a construction loan or bridge loan to cover the cost of the build, which is then converted to a traditional mortgage upon completion. Additionally, builders often partner with specific lenders to offer incentives like lower interest rates or closing cost assistance.
- Tip: Be sure to explore whether you qualify for specialized programs like the Doctor Loan Program, which can help professionals in certain fields secure favorable mortgage terms.
Financing a Resale Home
Financing a resale home typically follows the traditional mortgage process. Once the buyer’s offer is accepted, they apply for a mortgage with their preferred lender. The loan is usually subject to a home appraisal and inspection. One advantage of buying resale is that financing is generally simpler and faster since the property is already complete.
- Key Point: Since resale homes typically don’t require construction loans or other complex financing structures, closing on a resale property often comes with fewer hurdles.
Customization and Upgrades
Customization Options with New Homes
One of the major benefits of buying a new construction home is the ability to customize features and finishes. Buyers can often select from a range of flooring, countertops, cabinetry, and appliances, making the home their own. However, these customizations can extend the time to close, as certain materials or design changes may take longer to source or install.
- Tip: Keep in mind that upgrades can increase the overall cost of the home, so it’s important to balance customization options with your budget.
Customization with Resale Homes
With resale homes, customization typically takes place after the closing. Once you own the property, you can renovate, remodel, or make changes as desired. While this allows for more flexibility, it also means that you may need to budget for remodeling or updating certain features to match your preferences.
- Key Point: Buyers interested in fix & flip Columbus properties often seek resale homes with the potential for renovation, giving them the opportunity to add value post-purchase.
The Role of the Realtor in Closing
Realtor for New Construction
When closing on a new construction home, having a realtor for new construction is invaluable. Realtors help guide buyers through the builder’s contracts, ensure inspections are properly handled, and negotiate any issues that arise before closing. They can also help ensure that any builder warranties or special offers are included in the final agreement.
- Tip: A realtor familiar with urban living Columbus or specific areas like Short North real estate can also offer insights into the local market, ensuring the home is priced competitively.
Realtor for Resale Homes
In resale transactions, a realtor plays a critical role in navigating inspections, negotiations, and closing procedures. They help manage any repairs the seller needs to make, ensure the appraisal comes in at the right value, and guide buyers through financing.
- Key Point: Realtors can also assist in making sure the buyer receives fair closing terms, particularly if unexpected issues arise during the inspection phase.
FAQs on New Homes vs. Resale: How Does Closing Differ?
What are the main differences between closing on a new construction home and a resale home?
The main differences include the timeline, with new homes often requiring longer closing periods due to construction. New construction also allows for customization, while resale homes may require post-closing renovations. Closing costs and inspections also differ, with new homes often coming with warranties and different financing options.
Do new homes come with warranties?
Yes, most new construction homes come with warranties that cover structural components, major systems, and certain finishes for a specified period. It’s important to review the builder’s warranty and understand what’s included before closing.
Are inspections necessary for new construction homes?
Yes, inspections are still crucial for new construction homes to ensure that the build meets all safety and quality standards. Buyers should conduct an independent inspection even if the home is new to catch any overlooked issues.
How does financing differ for new construction homes versus resale homes?
Financing for new homes may involve construction loans or special builder financing, while resale homes typically follow the standard mortgage process. Builders often partner with lenders to offer buyer incentives like reduced closing costs or lower interest rates for new homes.
What are the advantages of buying a resale home over new construction?
The primary advantage of buying a resale home is the shorter timeline to close, as the property is already built. Additionally, resale homes may offer more mature landscaping and established neighborhoods, whereas new developments might still be in progress.
For more information and personalized assistance with your home purchase—whether new construction or resale—contact Joseph Speakman Real Estate:
- Address: 800 N High Street, Columbus, OH 43215
- Phone: 614-607-3691
- Website: JosephSpeakman.com | JosephSpeakman.realtor
- Email: [email protected]
