Hawaii homebuyers face so many challenges. One of them is finding a home that is not a major project. After looking at existing "used" homes for months or even years, are you worn out in advance by all the repairs and maintenance that are needed in most of them?

You may have dreamed of owning a brand spanking new home, where only your footprints have crossed the fresh carpeting. Much like cars, there is that "new house smell" that you experience while looking at new homes.

From Maile to Makakilo and Mililani, it's easy to feel bewitched by the exciting model homes on display, with their up-to-date kitchens, walk-in closets, and other features not found in the older homes. The eye-catching lifestyles captured in the decorating schemes are really captivating.

Yet when you compare new to older homes, you may have noticed that the older neighborhoods have larger yards, more spacious bedrooms, and no long commute. Yes, they need a little fixing up, but old homes have advantages, too.. Some are in great school districts, the areas are more established, and they are not surrounded by ongoing construction with its noise and dust.

How do you choose?

Old vs New - a Dilemma

For each individual or family, the choice of a home and a neighborhood is not an easy one. You will have to define and prioritize your needs in order to choose between new and old. Most buyers realize that they themselves do not have the time, experience, or tools to find the right home on your own. The sooner you select a "buyer's agent" to represent you, the more efficient and successful your home search will be. Your own Realtor will be neutral, whereas the sales agents representing homes, whether they are new home communities or existing individual houses, have a vested interest in their own product alone, and no responsibility to you as a buyer.

An experienced and committed Realtor will be able to help you analyze your needs, and narrow down the neighborhoods, homes, and features that might fit you best. Then the selection of a new or existing home is a systematic task and you will be choosing from the whole range of homes that work for you- and none that are not suitable.

Make a List: Write down all your requirements. Perhaps you need more space, an extra bedroom, a location close to work or a good school district. Put down all the important features you want. Other factors such as timing should also be listed, for example if you need to buy right away to get the maximum tax deduction, or to enroll your kids in school. If financing is a big concern, some homes will have more mortgage choices than others. Be sure you are working with the best mortgage specialist you can find. Some new home communities offer several choices of lenders, and discounted rates and fees, or you may benefit from bringing in your own lender.

Quality of life enters into the choice, too. Jot down the things that you want but can live without, such as a view, pool, or double sinks in the master bath. After your list is complete, prioritize it starting with #1 for the most crucial features, and going down the list placing a number by each one ending with the least important. When you are finished, re-write your list in order of importance. Keep this list with you as you search for homes. Periodically review your priority list as you learn more about what is available and bring your list each time you view homes.

Before you visit new homes, call your Realtor. Don't sign in at a developer's sales office without your agent, since that will limit your agent's ability to represent you and thereby advise you on your choices. More importantly, you need their informed advice more than ever to make the best choice. Your agent will get paid through the developer with no extra cost to you for their involvement. You won't get a discount if you go it alone and rely exclusively on the project broker.

New Home Advantages

Do you love to remodel? I didn't think so. It may look easy and fun in the magazines, but the reality can be quite different. If you buy a new home, it will be up to date both in style as well as building code requirements. Current building standards are stricter than in the past for fire, hurricane, earthquake, and electrical safety. New homes will have a standard 1-year builder's warranty at the very least, as required by Hawaii state law. There won't be any deferred maintenance so you can put your efforts into fun projects such as decorating with furniture, wallpaper, paint, and window coverings.

You may have a choice of various floor plans, and the chance to select your desired finishes such as flooring, counters, and other cosmetic details. You might be able to pick the home's location as well, and go for the corner, view, or lot size you prefer. In some popular developments, you will just have to take what you can get and make any needed changes later.

Semi-custom homes take the choices one step further. You get to make most of the decisions you would make if you started building from scratch, but with fewer hassles. You pick the exterior finishes and color, roof type, and decide on options such as extending the master, consolidating bedrooms, choosing an open den or enclosed bedroom, open loft rooms, decide whether to extend the lanai, add extra windows, and dozens of other choices.

New home financing can be a bonus to buyers. Developers often offer financing at reduced rates by "buying down" the interest rate they offer. Other typical benefits include seller-paid mortgage insurance, rate locks, credits towards closing costs, or 1 discount point paid by developer. Most new homes are financed through developer-approved lenders so you may not have these benefits if you use an outside mortgage company.

Some new homes developers offer other extra incentives besides financing to buyers to stimulate sales. These might include credit towards upgrades, appliances, landscaping, or furnishings depending on the market conditions. Market trends right now are finally starting to give buyers some additional negotiating power. Your agent may have ideas on what you can do to negotiate the best terms. Prices are usually firm, but other concessions may be possible such as credits towards furniture, appliances or landscaping.

Purchase Price can be an advantage of buying new. You have some great choices of affordable new homes on Oahu, perhaps more than ever before. Cost depends on location above all, as well as home and land size, quality, and finishes. Most of the larger new home communities on Oahu are located in the Central and Leeward areas where land is more plentiful and less expensive so you may get a great buy in these areas when you buy new.

Creating new homes has become both a science and an art, and successful builders know what you want almost before you do. They can afford the market surveys to determine your needs, and will hire the best architects and designers to create it for the best price. A large developer will pay less for the land and building materials so your dollar may stretch further and allow you the luxury features you could otherwise never afford - such as central air conditioning, gourmet kitchens, and larger master baths. Small developers may also offer a good value if they are in the construction business, as they have more room to negotiate and price attractively.

New Home No-Nos

What is the downside of choosing a new home? There are some disadvantages to consider:

Timing can be an issue. You may have to wait for the right home to be built, especially if you want to customize the features and finishes which takes time. If you have another property to sell, that might require more time on your part which will be a negotiating issue. If the floor plan or lot you want is in short supply, you might have to make compromises.

Postage stamp lots are the norm in most new neighborhoods. If you want a larger lot, you may be out of luck, as 5000 square feet is considered large in many new neighborhoods. Due to the high cost of land, developers have found ways to get around the zoning requirements for single family home lots. "Single family condominiums" have been created by sharing the land among all of the homes, while giving each homeowner the exclusive right to use his yard. Other variations also exist such as "zero lot line" homes and cluster homes, so be sure to get your questions answered.

Sound fishy? It is, but it works and keeps the cost down. These creatively subdivided properties have become very common in all areas and price ranges. In actual day-to-day living, there is generally very little difference between a normally subdivided lot and a "CPR' lot. Just be sure you understand what you are buying and whether you actually own your lot or it is a "limited common element" for your exclusive use.

Restrictive Covenants are a part of nearly all of the new home neighborhoods. This is a set of rules describing what you can and can't do, created by the developer in order to preserve the quality and consistency of the neighborhood. Because these rules are written by attorneys they are also lengthy, and hard to read and understand.

Reading them is a must - don't just assume they are fine, because they could limit your enjoyment of the property. If you have a boat and want to park it next to your garage for example, this is not permitted in some areas. Other taboos may include satellite dishes, visible clotheslines, auto repairs your neighbors can see, and unusual paint colors to name a few. Some areas limit the number as well as the type of pets you may own. There may be a Design Committee that needs to review any landscaping or home remodeling plans you want to do. You need to know whether these rules will restrict things you really want to do, or whether they will actually help create the environment you want.

Association Dues are a fact of life in many new neighborhoods. Someone's got to pay for the private parks, recreation centers, and landscaped strips that come with the area. There may be private streets, shared driveways, trash pick-up, and even your water system might be a shared one. Review the financial statement and budget to look for red flags. Not a financial genius? Welcome to the club. You can still review the statement to see if the association's expenses are very different than the budget without a good reason, and try to determine if a maintenance fee increase is planned soon.

Are you good at visualizing? You may need to understand what a home will look like from floor plan sketches. Some homes are reserved by buyers from drawings alone, since the models may not have been built yet. You may have to learn how to read and understand the plans in order to select the right one. Other people really do need to walk through the home first to know if it will work for them. This is a way to avoid annoying mistakes like finding out that you have two cars and a one-car garage, or that there is no wall big enough to put your entertainment center!

Not included! New homes do not generally come as fully equipped as resale homes. Be sure to look at what you will need to purchase to make your home complete. Such basics as appliances, fencing, landscaping, retaining walls, and window coverings will probably cost extra. Base prices could be very deceiving once you add up the total. Model homes may also be enhanced with better quality flooring, decorator paint, top-of-the-line appliances, room extensions, air conditioning, upgraded lighting, and more. You might need to make a substantial cash payment towards so-called upgrades to re-create the magic that first attracted you to the property.

Negotiations are very limited when you purchase a new home. You will have to conform to a set schedule of deposits, and pay the price being asked. Now that the market is becoming more balanced, you might get concessions such as an allowance for appliances, upgraded finishes, or credit towards closing costs, especially if you have a savvy Realtor. If you are a cash buyer you may be able to get something in exchange for not requiring the developer's special financing.

Contract Forms: Not an attorney? Then good luck with the developer's purchase contract. These often contain unreasonable and irrational clauses, limit your rights and give the developer all the benefits. Guess who wrote it - the developer's army of attorneys who are hired to protect his interest, not yours. You might not even be able to select the closing date. The contract may allow the developer to even change the floor plan without your OK. You'll want the developer's sales agent to explain everything carefully, since most are difficult to decipher. You will especially need to know about your right to cancel, financing and other contingencies, and the schedule of payments.

Resale values can be problematic for new homes. If there is going to be continued construction around you, what will property values be like if you need to sell in a year or two? Many homeowners in the Leeward area of the island were unable sell throughout the 1990s when the values fell to below the amount of their mortgage. Extensive new home developments were providing too much competition and grabbing most of the buyers. These homeowner's choices were limited - bring money to the closing table to the table to settle with the bank, keep the house until prices go up, or go into default on their mortgage - all bad options.

That sort of market is not in the crystal ball at this time, but it is wise to learn from it. The longer you plan to hold onto your home, the less of a concern you will have. Your home value will always be affected by the unknown future market conditions, and existing homes are easier to add value through upgrading your property. Just remember that as long as new homes are still being built in your neighborhood, you will have stiff competition when you sell.

Realtor Freeze-Out is a problem in only a few developments. Most new home developers will welcome the participation of your own Buyer's Agent and will compensate your agent appropriately. However, you could be left to fend for yourself under several circumstances. The first one is avoidable - Don't visit a New Home Development without your agent. You need the unbiased opinions of someone who can help you understand the pros and cons of each community. If you stop by impulsively "just for a moment" your Realtor may not be allowed to participate, negotiate for you, and get paid for their work. If you must pop in, try to avoid registering if you value your agent's expertise.

The second situation is if you decide to purchase a home in one of the very few developments that will not compensate your agent under any circumstances. You should discuss this possibility with your agent in advance, and come to an agreement in this event to avoid misunderstandings. Some buyers decide compensate their agent directly in this situation, as they are uncomfortable without a guiding hand. Others agree to "go it alone" in the event they select one of these homes.

Stay Focused

Don't act impulsively when you are shopping for a new home. Decide what you need before you run in and take a quick look at new homes. Many new home purchases are made by buyers who have not considered all their options. New home models are "stage settings", designed to push all your hot buttons at once. You may get that tingly feeling when you walk in, wondering, "Can I really step into this lifestyle?"

The excitement can be a good thing, as long as your brain is also engaged. Remember that model homes are not furnished with the real-life functional items that real people need. Many furnishings have been downsized, replaced with cute but nonfunctional decorator pieces, doors may have been removed, basics needs like storage ignored. Trendy and extreme decorating styles may distract you from all of this.

Your experienced Realtor, acting as a Buyer's Agent, will be able to remind you of these realities and keep you focused to make the best choice. Follow these guidelines if you decide to go for a new home, and you will be unlikely to regret it later. Have fun!

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