Hey guys. So these are the five biggest mistakes that I've seen people make when they're planning to buy a brand new construction home here in Temecula, California. So myself and my team, we've helped dozens and dozens of people buy brand new construction homes here locally in Temecula and the surrounding areas. So Murrietta, Menifee, Winchester, really just the whole valley here. And then as well as myself personally, my family's actually bought a couple brand new construction homes ourselves over the last couple years. And these are the five biggest mistakes that we've seen people make, or the five biggest things that people didn't know and didn't pay attention to until once they found out about 'em. They realized that maybe a new build wasn't the right direction for them. So let's go ahead and get into it and I'll give you all the info.

Hey guys. Hey again, my name is Justin Short. I'm a realtor and team leader for the short real estate team here in Temecula, California and Murrieta, California. And like I mentioned, this video is all about the five biggest mistakes that I see people making when they're planning to buy a brand new construction home here in the city of Temecula. And so actually all this advice that's going to go well for anything local here in the area. If you're going to buy a new home in Murrieta, Menifee, Winchester and Wildomar. I think it's going to be good advice for any of you. Really that same advice is going to go across the board. We're going to get into all the info in just a minute, but if you like videos like this and you want more information about the local real estate market or to keep on updated and what's going on, do me a favor, please hit like please hit subscribe to the channel.

So obviously it helps me, it helps the channel. We're trying to continue to grow it, but we have videos like this that come out each and every week. So we have market update videos, we have neighborhood tour videos, we have new advice videos about talking about new construction or worst neighborhoods, best neighborhoods, all types of different stuff. So if you like stuff like this, like I said, hit subscribe and we're going to keep 'em coming. And then if you have any specific real estate questions, of course I'd love to hear from you. So you're going to see all my information below, and at the end of the video you can feel free, you can call, you can text, you can email, of course, happy to answer any questions that you guys may have, whether it's just to be a resource or course myself and my team would love to help you out with your search and actually help you with your purchase as well.

So feel free to reach out, of course, we'd be happy to hear from you and answer any questions that you may have. But I guess let's go ahead and get into the actual video here. So again, we're talking about new construction. We've helped dozens of people buy new construction, new builds over the last few years. We've seen more and more of our clients opt to go the new construction route as opposed to the traditional resell route. And there's some good reason for that right now as a home buyer, if you watch our other market update videos is there's just not a ton of inventory out there. And when there's not a lot of options to choose from or what's out there maybe isn't super nice or might be dated or feels like it needs too much upgrading, a lot of times going with a brand new construction home can be a great option.

I mean, it's hard to find something better than to go live in a brand new home that no one else has ever lived in. You get to pick out a lot of the furnaces, a lot of the colors and paint combos and flooring and countertops and cabinets and all the spun pretty stuff. So I think everyone loves the idea of brand new home, but it's not going to be perfect for everybody. So can I give you my top five things that people don't think about? And hopefully it'll be a good perspective for you. And if new construction is awesome and it's a great fit for you, then that's great. I think it could be a really great thing. I think it just depends on your situation and what you're looking for. And I kind of hinted at it earlier, but even myself and my family, we have bought two brand new construction homes over the last few years.

So again, the market was a little bit different then. It was a super, super crazy seller's market and it was really, really hard to get your offer accepted as a buyer. So that was kind of our case. We tried to buy three or four different resell homes and we couldn't get our offer accepted. Everything had 10 offers, 12 offers, 20 offers on it, and unfortunately we couldn't compete and that's how we ended up with a new construction home. So for us and my family, it made sense. It might make sense for you too, but make sure you take this stuff into account. So, alright, so number one. So the biggest mistake that I see people make when they're planning to buy a brand new construction home is they do not take into account the property taxes that are going to come with that home. So what happens is when you get a brand new construction home, you are going to have kind of your base standard tax rate that the rest of Riverside County has, which is about, call it about 1%.

It's like 1.1% and that's going to be the same whether you're buying a home in Temecula or most any other part of Riverside County, about 1.1%. But from there, what people don't realize, especially further from other parts of the country, is that different neighborhoods will also have different special assessments, taxes on top of that base tax rate. So what that means is when a builder, when they're going to go develop a brand new construction community, they're going to buy a big plot of land, say it's 20 acres, whatever it is, and they're going to subdivide it. So they're going to buy it, they're going to chop it up in all these little different lots and they're going to sell 200 tract homes. And that's how they do it. That's how they develop it. In the process of developing that community, the builder is they're not just building 200 homes, they're also building the infrastructure for 200 homes.

So what that means is based on what the city tells 'em they have to do, they're going to have to put new streets in, they're going to have to bring out the utilities to connect all those houses. A lot of times they're going to have to build a new park for the community. A lot of times they're going to have to build a new fire department, sometimes they have to build a new school, roads, sidewalks, all this different type of infrastructure that they have to build as well. And so what used to happen is the builders would just kind of pay that cost as part of the cost to construct a neighborhood. But what happened over, I dunno started about 20 years ago, I think we started to see it more popular here in this area, is that the builder found that they were able to take a chunk of the cost for that development of the rest of the community.

And instead of them paying for it, they were able to pass that off to the homeowner in the form of taxes and special assessments. Or sometimes they're called Melrose, used to be called Melrose. So basically those are additional taxes that you as the homeowner are going to have to pay with a new construction home that you would not have to with many other neighborhoods, especially an older home that has a lower tax rate. So what that means is most new homes, they have a higher tax rate than a traditional older home is going to have. So let's say those older homes have that 1.1% tax rate, like we talked about a new construction home on average, probably about 1.8 to 1.9, up to 2% for the tax rate. So let's say that it's a 0.9 difference between 1.1 to 2%. It doesn't sound that high 0.9% tax rate can't be that bad.

But if you're buying an $800,000 home, that 0.9 tax rate difference, it could be massive, it could be 6800, 70 $200 per year that you're going to pay in additional taxes with the new construction. And that's a big deal. So if you divide that up be it could be anywhere between an extra 400 to $600 per month in additional taxes that you're going to pay for that new construction home. And then a lot of times these new construction homes also have HOAs. So you have to take that into account as well. And that's not necessarily the total kiss of death or a total deal breaker for people, but it's something that you as a buyer, you should absolutely know this, right? You should know, hey, when I'm looking at the new home, it's going to be higher taxes, it's going to cost me, even if two homes are 'em, say they're both 800,000, the new build might cost me an extra six, 700 bucks a month because of the taxes.

You should know that you're going to be showing out that mortgage. You can need to prepare for that before you make your decision there. Alright? So the second biggest mistake that I see people make when they're buying a brand new home is really all about timeline. And I don't think most people have the right expectation on what it's like to actually buy a brand new home and how long a home takes to be built. So when you go a builder, you're going to go to one of these big builders, whether it's KB or Lena or Woodside or Richmond American, whatever Pulte homes, whatever builder it is that we're deciding to go with. When you decide, Hey, I want to buy your home and I'd like to buy this new construction house, great. Typically what's going to happen is they are going to do phase releases.

So what that means is the builder's going to have let's say a hundred, let's say it's 200 houses that they're selling and they're going to release five of them at a time and they kind of cycle through the neighborhood and release one after another, after another, after another. Okay, cool. But what happens when they release those five, typically where they're at in the process is they're releasing a dirt lot. So what that means is there's no construction, very little grading that's been done, there's no concrete slab, there's nothing. So the house in order for you to live in there needs to be built, it needs to be constructed. And the timeline for that is typically between four to six months. So when a new construction lot is released, and that's usually when you're going to be assigned the lot is right when it's released as a dirt lot, you are typically not going to get the keys for about four to six months.

And so for most people, depending on your situation, if you have a home that you need to sell or you have a rental contract that's coming up, or if you're moving from state and you've already sold your home and you're bringing your family from Oklahoma and you need a roof over your head, that's not going to be a great fit. You're going to have to find some temporary housing, whether it's an apartment situation or a month to month rental, which can be competitive or whatever it is. So there's going to be some inconvenient time, there's some downtime before you can get into the next home. So that's definitely something you got to know. And that really walks us right into the third biggest mistake that I see people make. And that is really ties in with the timeline. But when you have a home that you're currently living in and you're going to be selling that home to buy your next home.

So let's say you have a bunch of equity. Let's say your house is worth $600,000, you only owe $400,000. So you have your $200,000 sitting here and you're going to buy a new home that's 800,000, that's awesome. So you're going to take your 200 grand, you're going to sell this one, plop it down on the new one, and that's going to be your big fat down payment on the new house. That's a great spot to be in. The problem is when you're buying a brand new construction home, the builder who's constructing the house, they will not accept your offer on the new house until you've already started the sale process for your old home. And so what happens is when typically your home that you're selling needs to be listed for sale on the market and you will need to have accepted an offer from a buyer before this builder up here will entertain your offer.

And then that kind of ties into what I just said is that the timeline. So if you're selling your home to a buyer down here, you're going to have an escrow here that's typically probably a 30 day escrow. Great. And then when you go get that new construction lot over here, like I mentioned, the house isn't going to be ready for four to six months. So if this house isn't ready, let's say it's six months and your house is sold in 30 days, that leaves, that's a gap. That's a four month, five month gap where you're between houses. So that is something that you as a buyer are going to have to prepare for. You're going to have to think about some type of temporary housing situation. You're going to have to think about living in an RV at a campground. You're going to have to do a month-to-month rental, you're going to do a month-to-month rental and an apartment, you're going to do some type of vacation situation like something.

But if you have a home that you're selling in order to buy a brand new construction home, especially when that lot is just being released, there's going to be some downtime. So that's a big one for people is they don't necessarily think about that downtime and think about how that process is going to be. I've had many clients go through that and have that four or five month period and just find something fun to do or find some other situation or be with family, whatever it is. But if you're planning to say you're home to buy a new one, that's definitely something that you're going to want to think about. Alright, so the fourth biggest mistake that I see people make really has all to do with the real estate agent. So there's a couple things that kind of tie in here, but the first part of that is that clients don't always realize that us as real estate agents can absolutely help you with your purchase of a new construction home.

So most builders that are out there will pay us a commission to help represent you as a buyer and bring you as a buyer and help you through your transaction. So a lot of people don't know that you can actually have a real estate agent when you're buying a new construction home. So that's a good thing to know. And then also from there, most people don't know that the builders are super, super strict and they have a super strict rule that if you want a real estate agent to help you through the transaction, that we as real estate agents need to be with you on your first visit to that community and they are strict about it. So if you want us or any other real estate agent to help you with the purchase of a Pulte home or a Woodside home or Richmond American home or any of those other communities, or even really, if you're vaguely interested, you're 100% going to want to make an appointment with your real estate agent and have us meet you there at the community.

Because if we don't, let's say if you're just casually looking and you walk in and let's say you fall in love with a model or whatnot or a floor plan or you just think this is the greatest places where I want to live, that's great, but if you don't have that agent with you, you're not going to have that representation. So it's really advantageous to have the real estate agent with you. We can one help make sure we can negotiate and get you all the credit, all the best credits that are out there, all the best closing costs credits, all the best lender incentives, all the best design center incentives, all that type of stuff. And also make sure that we point out some of the cons that are out there, even some of the things we're talking about in this video, to make sure you guys have a full perspective on what it's like to actually buy the new home and make sure that this is something that you're okay with and it's something that we get.

We're not necessarily costing you anything. We do earn a commission. The builder is going to pay us a commission to represent you as a buyer, but you're not going to have to pay us a separate fee or anything like that. So that's really point number four. So us as real estate agents, we can definitely help you with your purchase and help guide you through that process. But if we're going to do that, we absolutely need to be there with you on your first appointment. And of course we would love to help you do that. So you could feel free to reach out. We can set up an appointment to check those out, but hopefully that helps. Alright, and so the fifth biggest mistake that I see people make when they're buying a new construction home is just not setting aside a proper budget. And really what that means is when you go buy a new construction home, you have to realize that one.

When you walk in, you're going to take a look at a new construction community, you're going to walk in a brand new model and it's going to be a beautiful home. I can say I have never seen a model home that I don't think is totally awesome and totally beautiful. These are professional interior designers have come in, picked out super nice material for the flooring, super nice paint colors, super nice cabinets, super nice countertops back, splashes, appliances, light fixtures, window coverings, furniture. They always look awesome. It's like they're right out of a magazine. They're always going to be beautiful and it's a great place to go for design ideas actually, but they're always going to look awesome. But a lot of times the buyers or the client does not realize how much money it upgrades that the builder has put into the property. So you need to realize that hey, yes, although this model is super beautiful, has all this really cool stuff, and the price might be advertised as here, well what's included might be slightly less so it's going to have significantly less features, doesn't have all those upgrades.

You can typically add those in, but now you're going to pay premiums to do that. And if you're going to buy one or two premiums, it's probably not a big deal. But if you're going to buy 52 different premiums to make it look like the model, it's going to be pretty expensive. So those are things that you got to know. And then also there's some other hidden costs that are going to come into play at closing. So you have to realize when you buy a brand new construction home, the day you get your keys when you walk in, there are no window coverings on the home. So you have your glass windows, there's no blinds, there's no shades, there's no shutters, there's nothing that's going to be there. So you need to make sure that you set aside some budget to put blinds up or put some type of window coverings or shutters on the property once you close escrow.

So that's something to think about. And then also the backyard. So when you buy a brand new construction home, you have to realize that you're buying a piece of dirt and they're selling you a house with all the different upgrades that you talk about and the design center, all that type of stuff. But at the end of the day, the backyard is still just going to be a piece of dirt. You literally have a little concrete square that's like two and a half feet wide by two and a half feet wide, just a little square, just something to stand on out there. And other than that, you're going to have all dirt. So you as a homeowner, you're going to need to come up with a plan to develop the backyard, whether that's laying concrete, putting grass in, putting turf in, putting a pool in, trees, landscaping bushes, all that type of stuff.

That stuff's going to cost money. And so you got to make sure that you're going to have a budget set aside to pay for that type of stuff. And I would would probably get a couple quotes. I would tell you in this post covid world, everything is more expensive than it used to be. And especially any type of construction or any type of work that people are doing in your house is just so much more expensive than it used to be. So the cost is probably going to be double than what you think it's going to be. So I would probably get a couple quotes, get an idea for what that's going to look like, and just realize that you're going to pay a chunk of money for someone to develop the backyard unless you're going to go out there and do all that sweat equity yourself.

So I hope that's going to be a good perspective for you guys. So again, those are the five biggest mistakes that I see people making on a new construction home. And a lot of times once we go over this stuff, they realize that maybe a new construction home isn't the right fit for them. Like I said, I'm not trying to talk you out anything. I think new builds can be a great thing. Again, myself, my family, we bought a couple of them ourselves over the last few years, so I think it could really be a good thing. But you got to look at pros and cons and think about the decision, make sure it's the right thing for you. So again, if you guys are liking the videos, hit like please subscribe. Feel free to reach out with any questions and hopefully we'll talk to you soon. Thanks.