New condo is better than resale

I recently heard that buying a NEW condo, NOT a resale or short sale or foreclosed home is more beneficially because of 1. You get a warranty on the construction for up to 10 years, 4 years for electrical, plumbing, sewer. And a yr or 2 on cabinets and counters. 2. You are able to get closing costs, pre paid HOA fees, AND your interest rate bought down for 30yrs fixed!!!! All as incentives to buy. Then #3. the only way to be able to take advantage of the Santa Clara county first time home buyers program (which is a deferred payback, interest for 15YEARS!!!!!) is only offered to new condos. I didn't know the advantages until I visited Jackson Park Condos in San Jose and the sales girl actually sat me down for an hour. Here's the craziest part....I had my Agent with me, who was in complete shock because he had no idea that his pushing me towards short sales was actually a disadvantage to me because when the sales girl had their Loan Lady run numbers for me Based on a short sale home "listed price" (not accepted price by the bank mind you) which was $64,780. less than her 3 bedroom home and threw in the incentives, lower interest rate, closing cost credits, and the deferred first time buyer program, I ACTUALLY WOULD BE PAYING $318.00 LESS a MONTH BUYING a Higher price, brand new appliances, 10 year piece of mind warranty, flooring I actually choose home. So, I am just wondering why no one really knows this?.. And do you people realize buying new stimulates our economy. ???? We put laborers, electricians, plumbers, pipe fitters, sheet rock, carpenters, heavy equipment, window installers, framers, painters, landscapers, etc. Etc etc BACK TO WORK AND OFF UNEMPLOYMENT!!!! So... My closing statement is.... "you pay for what you get!"
  • September 03 2010 - San Jose
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Answers (8)

Buying new or a resale home or condo is dependent on the buyers needs.  In a resale or new home transaction there are many people that work on the transaction from labor, lenders to title.

As long as you fully understand the cost involved now and later in the purchase of a condo it looks like you've found a great opprotunity.

Good Luck!
  • September 03 2010
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Hi Cally,

Buying new versus resale is a personal choice and there are many benefits on both sides.  

I must point out that there are risks for buying new.  Despite the warranty, there could be construction defects or underfunding that results in litigation.  If such a situation occurs, you are stuck and will be unable to sell and may possibly lose a whole lot of value.  Also, when it comes time for you to sell, will the HOA be approved for FHA funding.  

Additionally, many people prefer an established community and HOA that is well funded and managed.  You know who your neighbors will be as opposed to a new community.    

I appreciate your enthusiasm and am happy that you found something that works for you.  Good Luck!
  • September 03 2010
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hmmm...let's think about that statement about 'stimulating the economy', shall we?

Why does it require building NEW (often low-grade, low-quality, might I add) construction, when maintaining, repairing, and upgrading the existing homes can also stimulate the economy, as well as improve neighborhoods!

Also keep in mind that new construction is dependent upon a labor force heavily reliant on cheap labor imported from elsewhere--often outside the country. 

This may not always be the case, but one of the reasons that builders are offering these great incentives is because they are in dire straits to raise cash and must make the sale--there have been many cases here in Florida of builders going bankrupt, leaving the associations and CDDs, and new homeowners holding the bag.

I'm always thrilled when I hear someone is happy with their home purchase, no matter what the choice is, however it is a personal choice, and to tag new construction purchase with "better for the economy" is just wrong.
  • September 04 2010
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When you have too many homes, encouraging buyers to buy new and builders to build more is not really a very smart long term policy. But I am really glad to know that California State/County governments have so much money they can give lots away to homebuyers. Education must be perfectly well funded!
  • September 04 2010
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Profile picture for Mills Realty
Cally your specific case which sounds like it is well researched in not necessarily true for all new developments.  Although short sales and REO's in condo buildings can be a nightmare due to poorly funded HOA there are some good deals on resales that make sense.  If you run your numbers and do your research you will be fine.
  • September 04 2010
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There is truth to that your claims. The only exception is the un-welcomed lawsuits that comes with new buildings.  If there is litigation or high rental vs owner occupied ratio one can not obtain mortgage causing housing price drop. Check out the reputation of the builder not just pay attention to the cosmetics features...
  • September 04 2010
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yes everthing you wrote is correct but some of the older buildings are more soundly made.
  • September 06 2010
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Profile picture for gtca
#1.  If you had a buyer's agent and had looked at a specific short-sale home -- you should have already had the numbers on what your monthly payments would be.  The sales staff of a company trying to sell you one of their new condos isn't a good data source for the best loan package available on a used property that isn't theirs.

#2.  Multiple 1-Bed/1-Bath condos the developer at that location is asking $250K for are listed for $175K by people trying to sell similiar units in the  same complex.

#3.  The local government financing the developer at that location is using is subject to a 45-year resale "affordability restriction" that is recorded against the home.  Prepayment of said financing while you continue to own the home will not release you from the affordability restriction.

  • September 06 2010
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