How Much Should I Spend on Upgrades for My New Home?
The following is provided to give you, the new home buyer advice of how to navigate what is included in the base package for your new home and what possibilities you might consider to enhance your home. You will learn from this and hopefully establish a budget for those extra and hidden costs of buying a new construction home in San Diego County.
The Value of Your New Home
Like a new car, when you drive it off the lot it loses value. That is unless you are in a market that is rapidly appreciating. If you spend $100,000 on options and upgrades it does not necessarily increase the value of the new home by that amount – it just increases what you spent on the home. Of course the money you put into it makes the home exactly the way you want it. Most likely that is why you are buying new.
When it’s time to sell your home, the value is based on recent comps in the market. If all your neighbors, or in the case of a 200 home new community did not upgrade their homes to the extent you did you will not recapture all the additional upgrade expense and it may not necessarily appraise for what you have in it. The home may show better than the rest and have a greater opportunity to sell faster at a bit more than the rest of the market. If you are planning to live in the home for a very long time spending the extra money may be worth it as you will have years of enjoyment and satisfaction living there.
After surveying a number of builders in the area, the average amount spent on upgrades and options for new homes is about 10% - 15% of the purchase price. If you are on a budget you can probably spend less than $10,000 just upgrading a few items such as carpet or padding or a full height backsplash for example.
Many builders offer incentives or credits towards upgrades and options. Credits are also often provided if you use the builder’s preferred lender for the purchase of the home. Be sure to ask early on in your home shopping what incentives are available.
Be prepared to pay a cash deposit for a portion or at times the entire amount of the options and upgrades at the time they are selected. Some lenders will allow you include the amount of the options and upgrades into your loan and others may not meaning any expense over your loan will have to be paid in cash.
Before you get too deep in the new home buying process create a detailed budget of what you would like to spend on options and upgrades and consider how you will be able to pay for it including the deposits early on in the process. Don’t forget to add to your new home budget the additional expense that will be needed to complete the landscaping, additional decorating, window coverings, closet organizers and appliances not included. Although minor in cost, there could be utility deposits and hookup fees.
What is basic?
One of the first steps during the new home buying process is to determine what is included in the base or standard finish home. Unfortunately you will seldom see a furnished model at a new home community that shows only the standard features and finishes. Builders make more money selling you options and upgrades. So the more they show, hopefully the more they will sell. You will need to perform a detailed evaluation of the standard features which can be accomplished by reviewing the marketing materials from the builder or examining a features sheet which some builders display in their models. The features sheet will display what is considered standard for that plan and what is displayed as an upgrade in the home. The next step if you decide to move forward and consider buying is to sit down with the on-site builder’s sales professional and review each item that is included. Do not wait until they send you to the design center to pick your options and upgrades or you may have many unexpected surprises and have challenges meeting your budget.
The Design Center
On your visit to the design center you will be presented with unlimited options. The consultants are experts at helping you choose colors, materials, finishes and equipment that accommodate your taste and needs. As I mentioned earlier be sure to have some expectations of what you are able to spend prior to your visit. Design centers earn a commission on what they sell you.
Your builder will provide you with cut off dates as to when you need to make certain selections in order to keep the construction of your home on schedule. If possible go in earlier then the last possible date and spend the time to evaluate all that is presented to you. If you can, try to make an additional appointment to return with your decisions after you have time to consider the prices and options they have presented to you.
Don’t miss your cutoff dates to order your options and upgrades. Everything you select needs to be special ordered and if you miss the deadlines you will most likely be charged a fee to expedite your order or put in default of your home purchase agreement.
Whenever you are considering making changes to any of the above be aware that those changes may affect the builder warranty. If you crack a countertop installing faucets yourself or cause leaks in the plumbing you may lose your warranty converge. Remodeling and making changes at later dates could prove to be much more costly then if the builder did the work.
Tips for Common Upgrades for Your North County San Diego New Home
In the San Diego area most new homes come with a graded dirt rear yard, usually with a fence and a small stoop just outside any doors to the yard. The rest is up to you. Typically you will have a deadline established by the HOA or community when the rear yard landscaping must be completed which could be 3 months to a year depending on the community rules and regulations. You will also have to submit landscape plans to the community for approval. Since all you get is dirt in most cases you will have to provide your own irrigation and drainage systems. It would be wise to carefully read the CC&Rs for the community to understand all the conditions and requirements you will need to conform to which might limit the types of plants or lighting. If in doubt, prior to purchasing you may want to discuss your options with a landscape contractor, who can review the communities requirements with you and assist in developing a plan and budget for you. You may be able to get by with under a $10,000 cost depending on the yard. Or you could spend 10’s of thousands or more creating the perfect rear yard living space with hard surface patios, outdoor kitchens, pools and more. Be sure to save some cash as this is a cost that will occur after closing on your home and the cost will be out of pocket.Many communities provide basic front yard landscaping which is usually very minimal and can always be upgraded later. Most likely you will have to present any changes to the front yard to the HOA for approval. There are some communities that provide no front yard landscaping at all so all the conditions mentioned above will apply.
In Southern California, water is expensive and short in supply. Take into consideration the amount of plants and grass in your yard as the more you plant the more water you will need. Your landscape designer should be able to assist you in choosing the native plants that require the least water and have less maintenance. Water Smart San Diego County is a good resource for many topics related to water conservation and use in the San Diego area. Be sure to check out their e-Guide to a Water Smart Lifestyle.
Be sure to ask the question of your new home sale professional what landscaping is included, timeframes for completion if you must complete it yourself and most importantly, review the CC&Rs prior to purchasing the home to determine what your obligations and costs are.
Structural Changes and Plan Options
All home builders vary on the type of structural, room configuration/floor plan options and window/door configurations. Some offer none while others allow various configurations. The changes allowed by the builder are usually demonstrated on the marketing floor plans and may allow you to add balconies, covered patios, extra bedrooms in place of lofts or other areas, super laundry rooms, dens, offices, casitas, vanishing patio doors and much more. These are all changes that need to be approved early n the construction process as these changes will affect the issuance of building permits. The advantages of buying early, prior to the start of construction is that you have the opportunity to make these changes at an additional cost.
The new home sale professional should know and be able to supply you with costs for these predefined changes prior to purchasing.
Often the home builders will display in their models at least one home with the standard appliances that will be included in your home – but not always. Most builders do however stick to at least one brand for their standard appliances and upgrades. Some will allow you to select among other brands that they have purchasing agreements with. Refrigerators and whether they are included varies between communities and builders. The average new home and the kitchen layout will usually accommodate a slide in refrigerator. Higher priced homes may offer layouts that accommodate a built-in. If your layout is not configured for a built-in refrigerator and the builder will allow cabinet layout changes to accommodate one, you will have to coordinate this early with the builder and be prepared to pay for the layout changes.
See what he builder provides and upgrade as you wish. If the builder cannot provide the brand you desire then stick to the standard appliance, purchase what you want and switch it out later after you close on your home. Most builders will not give you a credit as they need to provide the basic appliances to finish the home and get a Certificate of Occupancy. If not included and you desire Wine Chillers, Double Ovens and Trash Compactors you should order from the builder and configure you cabinet layouts and electrical service to accommodate them.
Washers and Dryers. Most new homes do not include the washer and dryer although the laundry areas are ready to accommodate your new or existing laundry equipment. Most new homes will provide the option for an electric and/or gas dryer. Be sure to check what the builder provides if you plan to use your existing equipment. Some new condominiums and townhomes do include the equipment.
When you walk into a furnished model you will be wowed by the beautiful floors and how they enhance the home. Many times you are looking at floors that will cost an additional $10,000 to $30,000 or more. Most home builders in the area offer as a standard finish, a hard surface floor at the entry, kitchen, bathrooms or any defined “wet areas”. This hard surface could be anywhere from vinyl flooring to ceramic tile with some higher end builders offering a step above such as porcelain, travertine or other quality hard surfaces. The rest of the home will come with their standard grade of carpet and padding with options to change the color of the carpet at no cost. Any upgrade in carpet materials and padding are at an additional cost. If you cannot afford to upgrade the carpet at the time of purchase and might consider it at a later time, I suggest you consider upgrading the carpet padding as the better padding should allow the carpet to last longer and show less wear over time, especially in high traffic areas like stairs and hallways. This will also give you a better feel on the floor.
You will be presented an option to replace the carpet with a variety of hard surfaces such as wood or tile. This is all about your personal taste and budget. If you are new to Southern California you will find that many homes have all hard surface floors. Your design center professional or personal interior designer can assist you in choosing the right materials for your home.
If you are buying a new townhome or condominium there may be regulations that restrict hard surface floors in certain areas or have specifications required for proper installation to reduce sound transmission through the floors.
All home builders are different in what they provide for kitchen, bath and other cabinets. The basic home usually as a standard provides you with one style and finish throughout the home although you may have a few color choices. Any changes in door design, finish and color are at an additional cost.
Many model homes show more cabinets than what is included in the base price. When choosing your cabinets you will have options to include all the bells and whistles such as pull out and rotating shelves and many various configurations. If you want door hardware on the cabinets be sure to check if they are included or not. Door handles/hardware can always be done at a later date if you decide to add them.
Just like everything else the models do not always show the standard countertops although the standard for most new homes in North County San Diego is a granite countertop with about a 6” backsplash. Most builders have a few different types and colors of granite that are available for the same price. If you want something different be prepared to pay more. If you are looking at a higher quality or unique granite see if you are able to go to the granite supplier and select the slab for your tops. Kitchens backsplashes can be upgraded to be full height at the design center. If you are considering other materials you will have to see if the builder can accommodate you. If you are not familiar with the various countertop materials here is a link to a good source that describes the pros and cons of the various countertops materials. Remember that granite and marble are natural materials and no two tops are exactly alike and there may be variations throughout each slab.
In the bathrooms you will see ceramic tile, Corian or other hard surface tops as standard. Master bathrooms usually have a higher quality top supplied. You should have the option to upgrade all the countertops in your new home.
Lighting and Electrical
If you feel the need to add additional junction boxes to accommodate installing light fixtures, ceiling fans or adding electrical outlets it is wise to have this all handled by the builder. The cost to do so later will be considerably higher as it may involve drywall and painting repairs after any remodel work. Some lighting additions to consider are wall sconces, lighting for artwork, accent lighting, ceiling fans (where not supplied), can lighting in ceilings. If you have your own light fixtures to place in your new home, not all builders will install your fixtures unless they are purchased through the design center. The builder will typically install the additional boxes and provide a cover for the box where you can install your fixtures later. By having the builder add your requested changes they should be able to ensure they are on sufficient and/or new circuits.
Ask yourself if there is future need for any 220 service such as for a future hot tub, additional ovens in the kitchen or any other appliance that you may want at a later date. You may want to install extra outlets in areas where you will install entertainment equipment or office equipment. Planning ahead will save you money in the long run.
Sound Systems, Flat Screen TVs, Security Systems
The same as electrical changes above hold true for and sound systems or security systems that you desire. It is well worth the money to have your home pre-wired for any sound systems, flat screen TVs, and security systems. Once pre-wired you can take your time later to purchase and install the speakers and systems later. Many new home builders now include electrical service and sleeves in walls where they think flat screen TVs will be installed. Make sure it all works with your furniture layout and consider relocating or installing optional areas to install the TVs. Flat screen TV locations are not limited to the family room. Consider wiring for lofts, dens, offices, master bedrooms, kitchens and even outdoors. Wherever you plan to install a TV that is not in an area supplied by the builder make sure you include electrical service, cable and data connections at the location.
The builder will seldom display the standard plumbing fixtures in their model homes. Some will show at least one model home with the fixtures included. When you are touring the models ask the question if they display the standard sinks, toilets, tubs and faucets in any of the homes.
Upgrading the plumbing fixtures could be a big cost. However, it is wise to do these upgrades through the builder unless they do not furnish a certain brand that you require. Countertops need to be fitted for the sinks and the faucets you desire. It is expensive to modify both after construction. Same with tubs and shower surrounds which need to be handled by the builder. If you do not like a plastic shower surround and would prefer tile or other hard surface get it done by the builder.
Toilets can always be done at a later date as they are stand alone and do not affect anything else except for the builder warranty.
Gutters and Downspouts
Not all homes include gutters and downspouts. It does rain in Southern California. You may not need them but when it rains the water runoff from the roof falls everywhere which can wreck havoc with your outdoor living and landscape. This will also cause splashing and possible dislocation on your exterior walls. It may be wise if not included to have gutters installed by the builder if they provide that service. Make sure that the drainage is incorporated into subsurface drainage and that the drainage conforms to the community CCR&Rs.
Some builders will offer through their design center a variety of window coverings including shades and shutters at competitive prices. Unless you are buying a model home no new homes come with window coverings. There are plenty of resources to purchase either yourself or with your personal interior decorator. Plan early and get your supplier in the home prior to your closing to take measurements to speed up delivery and installation so you have something ready before you move in.
If buying a new condominium or townhome be sure to check with the CC&Rs to confirm if there are any window covering regulations.
Most builders will provide one color of paint on your walls, trim and doors which is usually some shade of white. If the builder offers custom colors for a premium consider using them to do so. If not try and get your painter in early after closing and prior to moving in.
Molding, Doors and Woodwork
Very few builders offer any changes in their moldings and doors. Some luxury home builders will have upgraded packages that include higher quality or custom millwork, crown molding and doors. If you want it done and the builder offers this service it is suggested that you have the builder take care of it instead of waiting to do it with your own contractor. It will cost more to demo the existing woodwork and make modifications to any door frames due to varying floor heights.
In another way to cut costs by some homebuilders, limited finish work is completed in garages. You can expect that all garages in new homes will be drywalled but not necessarily painted or even primed. Be sure to ask the question to the builder how the garage will be finished as this will be an extra cost to you to hire a painter or self perform the work. Some buyers do not care but most want a painted garage.
Since most new homes have limited storage before you buy is a good time to evaluate how you can add storage to the garage by either adding cabinetry, overhead ceiling storage and shelving.
Prior to moving in to your new home is the ideal time to have your garage floor either painted or epoxy coated. The builder may not provide this service so you might have to coordinate this through a vendor of your choice
By Rob Pontarelli ©. Rob, with over 20 years experience in the new home industry is a local San Diego area Real Estate Broker that specializes in new construction homes.