What Does a Builder Have to do With the Value of a Newer Home?

The Pedigree of a New Home

All builders are the same. Wait a minute . . . that would be like saying children are all the same. They have the same parents, same upbringing, same household yet two kids from the same family and parents can often be completely opposite in personality and interests.  Newer homes throughout the South Bay also can be as diverse, even though they have similar beginnings. In our unique South Bay Real Estate market, values can vary dramatically, lot to lot, street to street, and builder to builder. I am often asked what the significant difference amongst the builders is locally and what does this mean when considering a home for purchase?

Whether you support or oppose new construction in the community, knowing who built your newer home is very important. When looking for a newer home in the area you will often note that the realtors will commonly state who the builder is/was. Once you become alert to this trend, you will also notice that sometimes there is no mention at all of the builder. Certain builders and developers have earned a local reputation for being premium, quality builders while others have earned a less prestigious reputation. Buyers often ask what makes one builder better than the next.

The key differences are finish quality and overall design. There are builders that have a keen sense for design, much like a professional design firm, while other builders have somehow overlook the fine nuances of design altogether.  In a rapidly appreciating Real Estate market almost any builder can build a home that meets city guidelines, sell it, and turn a profit. The question is: will the home stand the test of time?

Sometimes the quality of finishes can be difficult to detect for a novice buyer. The biggest challenge is the installation process that is used for many items, including but not limited to, flooring, tile, and granite. For example if the proper installation of tile is not used, normal settling can occur, however the cracks that normally form in slab work can make its way to the finish tile. Although the installation may meet city code it may not withstand normal settling issues. 

There are also numerous, completely undetectable materials in homes that can vary in quality, such as; the thickness of drywall used (which is either ½ inch or the higher quality thickness of 5/8 inch drywall). Thicker drywall will withstand the normal movement in a home much better than ½ inch will. With insulation there are many walls where it is not required by standard building codes, but some builders will go the extra mile to insulate those areas that are not required by simple code in order to help with sound control, as well as to promote future energy savings.

The lists of these types of upgrades are endless. The important thing is to ask questions of your agent and builder. Be sure to ask for references about the builder that built the home you are about to buy. Are they still in business? Are there warranty items that are still within their responsibility? If there are warranty items, how has that builder responded to the requests in the past? How does the general Real Estate community feel about the builder that built the home? Do they speak positively about them or negatively?

It has been proven that certain builders can demand a higher price for what appears to be the exact same home that another builder has built.  It is certainly OK to buy the more inexpensive home, especially when budget is a large factor in your decision. My recommendation when considering a newer construction home and examining future equity reserves is to just be very aware that your 3,253 square foot Mediterranean home built in 2006 by builder B may realistically sell for less than your neighbor’s 3,253 Mediterranean home built in 2006 by that was built by builder A.

Armed with that knowledge, you will be able to make a more sound decision when either buying or selling a home in the area. The South Bay is very unique as the newer homes are not built in tracts like many new home communities throughout the nation. New home communities are much easier to analyze as they are typically built by the same builder, with the same quality and are much more clearly compared side-by-side.

When considering any purchase, whether it be a newer construction home or an older, historic one, be sure to ask questions and demand logical answers! It makes home ownership and planning for the future a much more positive experience.