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PURCHASING IN A NEW DEVELOPMENT VERSUS AN EXISTING NEIGHBORHOOD: PART III (PRIVATE HOMES AND CONDOMINIUMS)

12/21/2011

   In this article we will discuss the pros and cons of purchasing a newly constructed home as opposed to an older house. This article will concentrate on the generic advantages and disadvantages of new construction as opposed to older buildings.  Many of these issues raised here, apply equally to Lakewood, Brooklyn and many other areas.
 
INFRASTRUCTURE
 
   Every residence requires connections to the various neighborhood utilities and facilities. These include structural infrastructure, such as connection to streets and highways, basic utilities such as sewage systems, plumbing, gas, electricity and telephone lines, and optional utilities such as cable, and other popular utilities.

   Many of the older houses in Lakewood are not connected to a central sewage system, have no underground connection to electrical mains, nor are they connected to a gas line. Instead they have septic tanks to dispose of the sewage, they use oil heat, and have overhead electrical lines to provide power.

   On the other hand new construction has the benefits of more efficient and more modern systems. Another example is the telephone connection. Many older houses were wired to allow for a maximum of two telephone lines. Today many houses have two phone lines, a fax and internet connection as well as a basement tenant who may have two phone lines. Additionally, many of the older houses do not have the electrical capacity to operate two central air conditioning systems, a washing machine, a clothes dryer and a boiler (for hot baths, showers and dishes) simultaneously. After a two or three day yomtov many families will be using all these appliances thereby challenging the electrical service.

   Although the above may be of immediate concern to a homebuyer, he should consider the resale value at the time that he may wish to sell the house, at which point these utilities will be a necessity.

   Another point of concern is home insurance. Insurance premiums for houses using oil heat and septic tanks is considerably higher that the more efficient and safer gas heat and sewage systems. As time progresses, it may be more difficult to service and repair these systems, effectively requiring a complete overhaul and renovation of the house. This can often be an example of “penny wise, pound foolish”. The house may initially be cheaper, but will require expensive and extensive renovation at a later date.

STRUCTURE

   Although technology has improved the way that structures are built, and better quality materials are available, most builders will use the cheapest materials available to them as long as it will pass inspection. Coupled with the fact that many builders have a relationship with the various municipal inspectors, caveat emptor is especially applicable.  It is up to the homebuyer to hire professionals who will certify that the house is what he expects it to be.

   Many contractors will not repair any defects after they have closed on a house. Every new house has certain “punch-list” deficiencies which are uncovered by the resident within several weeks after occupancy. These will generally be repaired by the contractor gratis. However, certain defects will only appear during the next season, and some will only be uncovered after several days of consecutive rain, snow, or extreme heat.

   A minor leak in a finished house can cause tens of thousands of dollars of damage to the structure and the furnishings in a residence. Even with a comprehensive home insurance policy, no homeowner wants to go through the headache of negotiating with the insurance company and eventually repainting the damaged areas. Faulty installation of windows, air conditioning ducts and piping, may wreak havoc on the temperature in a house, causing parts of the house to be virtually uninhabitable during the extreme temperatures of the summer or winter. All the readers have undoubtedly experienced or heard first hand reports of stupid architecture or negligent construction.

   When purchasing an older house from a person who lived there for several years, assuming that the seller is honest, one can generally rule out any major hidden defects that will routinely appear with the change of season or temperature.

   In our next segment of the series, we will discuss some additional points to ponder, in deciding where to purchase your investment home.
 
 
 

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