Good to see you here again. My thought when working with buyers purchasing a new home is this:
1. Whatever is structural, have the builder do it.
2. Many other upgrades can be done after closing and moving in.
3. Your $20,000 in upgrades will generally take you further along that the overpriced and limited upgrades of the builder.
4. But if you can;t stand a little dust and debris for a while, let the builder do it all up front. Sometimes the builder is offering upgrade incentives if you ask.
5. Each builders policy is different in how you pay for upgrades. That is why it is sometimes good to work with a custom builder who has more flexibility in how they approach upgrades and method of payment. It is generally better to pay upfront rather than over the term of the loan. But that all depends on your budgetary concerns and discretionary funds available. All the best.
Robert McGuire ASR
Your Castle Real Estate
Direct - 303-669-1246
1. If the builder completes the upgrades, the work is done prior to you closing and moving into the home. This may more be advantageous than living through the remodeling process to do those upgrades after the fact, which can often drag on for months. They will also be covered under the builder's warranty (usually 1 year after closing) as to workmanship, etc. If you do not have time to shop for the upgrades at numerous retail stores, be available for workmen to come and go from your home, or have the knowledge/expertise to act as your own general contractor, you may find the time you'll need to invest costs more than the money/interest you would have saved.
2. Alternatively, the builder may have limited options available to you. Are they what you want? Are they priced competitively to what you can purchase on a retail basis with the extra labor needed for installation? Do you have a designer you can work with to help with color selection and making sure that your choices are good quality, compatible with what you are trying to accomplish and are aesthetically pleasing?
3. If you are making structural changes, it is much less expensive to have the builder do them at the time of construction. Also, you run less chance of surprises that cause your great idea to now be your worst nightmare. If you are only making cosmetic changes, that may be less of an issue.
4. Don't forget that you often need a permit and to have inspections done to pass the work done. The builder is already aware of those permits and inspections. So unless you want to hire a professional (architects, designers or general contractors) to help you "retrofit" the changes, you might have a lot less brain damage by working with your builder. Don't be afraid to ask if the builder can include certain things, or give you a better deal by working with them.
Enjoy the process. Whichever route you decide to go, it can be exciting to see your dream home take shape. Be sure to be involved in the process from day one and don't hesitate to ask questions, make suggestions and create a great home.
Karen Hermelink, CRS, e-Pro
You also might have a bit more bargaining room if you write a check so ask that question!
Feel free to reach out if you have further questions. Hope this help,
Bill Pearson GRI, SRES |"Your Denver Realtor For Life"
ERA Herman Group Real Estate| 201 Columbine Street| Suite 301| Denver CO 80206
5280 Magazine FIVE STAR Real Estate Professional â€“ 2010, 2011, 2012
I hope this helps.
Cherry Creek Properties
You might also want to keep in mind that you may need that money (of course I have no knowledge of your personal situation) to pay for things like landscaping and window coverings.
Update: I don't have a specific time in mind for how long I will be in the home, but I would guess it would be 5-10 years, certainly not longer than 10.
I am planning to hold myself to $20,000 worth of upgrades at most.
I believe that it depends on whether or not you want your money tied up (paying cash, increasing down payment, etc.) or would rather add some to your monthly payments ($50,000 increase in your mortgage would add about $225/month to your payments at 3-1/2% interest rate). Also depends on how long you plan on staying in the house, and this analysis should factor in estimates for appreciation and what the value of these upgrades would be, should you sell the home.
Finally, you might also, in some cases, want to see what you could buy these upgrades for from someone other than the builder. Just for comparison purposes if nothing else, particularly if you decide to pay cash for the upgrades.
Your Realtor should be able to assist greatly in offering information to help make these decisions.
Best of luck.
Your Castle Real Estate
Of course a lot depends on your individual financial situation, but you'd probably be surprised at how little increase there would be in your monthly payment even if you rolled in several thousand dollars' worth of upgrades. While there would be quite a bit of extra interest over the term of the loan, it's a rare case these days that anyone actually pays off their mortgage in the first home they purchase - most folks will sell and move to another home within 10 years. It may be that there are better investments you can make in the meantime with that cash, rather than locking it up in your home's equity. While it's often the financial foundation for many families, a home is a very non-liquid investment. You should definitely talk to your financial planner if you have one...
Feel free to give us a call if you'd like to chat!
Tony & Karen