Additional Cost and Options for New Home Purchase

[OCgasman]

@OCgasman:

For a 3500sft home that's in the $1.5m+ range, many of those upgrades you listed should be standard.

As you know, a lot of the builder's profit margin comes from upgrades so while some standard stuff is "nice", most ppl will upgrade to their personal preference.

But that's the problem, as long as people pay for the upgrades, the builders will keep padding their profit. Most of those things you listed don't cost what the design center is selling them at. And again, at $1.5m+, stuff like real wood kitchen cabinets, upgraded counters, upgraded stair railing and even flooring needs to be "standard". If people don't complain, they won't do it. Remember when granite used to always be an upgrade? Or tall baseboards?

When we were looking at some homes in PP, I was astounded at how much cheaper their "upgrades" were compared to TIC projects.

If you're spending $300k on upgrades on a $1m (or even $1.5m) home you are either:

1. Getting ripped off by the builder
2. Putting gold toilets in your bathroom

If you don't agree with #1... that's why every "luxury" home now has just a Great Room and a 2 car garage.

Everyone is so different on what they prefer in a home.  At $1.5M, 15% is $225k.  I don't begrudge anybody on what they think is "worth it" to upgrade either through the design center or after COE.  It's not unheard of for buyers at this price level to spend over $20/sq ft for flooring, either through the design center or after COE.  If someone wants to put marble in every bathroom and it'll cost $15k just for the master bath, <shrug>, it's their money.  What if a buyer wants the Rolls Royce of built in fridges, the Subzero Pro 48, for $16k and it's the same price as going outside or possibly cheaper with the design center.  I'm just saying it's very easy to spend money at the design center and not everything is a rip off, some things are just super expensive.

 

[irvinehomeowner]

The even more curious aspect to this is timing.

Before, homes were already framed, drywalled and closer to completion so picking "upgrades" would be a significant cost difference.

But now, with homes only being a pad when you purchase, you would think a builder would give you more options on what is "standard" considering they have so much lead time to order.

For example, there is very little cost difference to give a buyer a choice of "standard" kitchen cabinets... or even something as easy to change as a choice of paint colors.

But that's Irvine for you, in areas that are less desirable, I think you will find many upgrades as standard and the builder is not only willing to work with you on choices, but also at a lower cost.

I think the biggest issue with Irvine is a large portion of buyers are happy just to buy a new home (I'm looking at you FCBs) and are not making the builders change their ways.

 

[Irvinecommuter]

The even more curious aspect to this is timing.

Before, homes were already framed, drywalled and closer to completion so picking "upgrades" would be a significant cost difference.

But now, with homes only being a pad when you purchase, you would think a builder would give you more options on what is "standard" considering they have so much lead time to order.

For example, there is very little cost difference to give a buyer a choice of "standard" kitchen cabinets... or even something as easy to change as a choice of paint colors.

But that's Irvine for you, in areas that are less desirable, I think you will find many upgrades as standard and the builder is not only willing to work with you on choices, but also at a lower cost.

I think the biggest issue with Irvine is a large portion of buyers are happy just to buy a new home (I'm looking at you FCBs) and are not making the builders change their ways.

Actually...the relatively few options thing could be based upon human psychology.  I read a study a few years back that people actually chose few upgrades if they were overwhelmed with upgrade options.  When given fewer options, people actually got more upgrades.

I am sure that the builders also get a better price for the costs of the upgrades as a result of the few options.

Also...I think you actually get more things already included in your homes as a part of updated building codes and competition.  It's like comparing a 2014 car with one made in 2000.  A lot of the "options" are now standard.

 

[paperboyNC]

Actually...the relatively few options thing could be based upon human psychology.  I read a study a few years back that people actually chose few upgrades if they were overwhelmed with upgrade options.  When given fewer options, people actually got more upgrades.

I am sure that the builders also get a better price for the costs of the upgrades as a result of the few options.

Also...I think you actually get more things already included in your homes as a part of updated building codes and competition.  It's like comparing a 2014 car with one made in 2000.  A lot of the "options" are now standard.

Exactly. That's one reason why cars come with option packages rather than choosing each option individually.

One advantage of buying a brand-new home is that it comes standard with things older homes don't:

- Tankless hot water heater
- Energy efficiency all around (insulation, appliances, water usage, etc.)
- Open floorplans with large kitchens w/island, large master suites, attached garages
- Granite Countertops
- Cat 5 pre-wired
- Ceiling fan hook-ups
- Can customize wall colors, flooring for no additional charge
- Relatively inexpensive (compared to retrofitting an existing home) options to do many pre-drywall changes

We have a myth here on TI that homes in other states / parts of the country are $400,000 for 5,000 square feet that is fully upgraded, beautifully landscaped, etc. The reality is that adding square footage is cheap and land is cheap so they do build huge homes, but if you have 5,000sq ft fully upgraded it will cost you an arm and a leg whether you do it in Irvine or Austin.

 

[irvinehomeowner]

Exactly. That's one reason why cars come with option packages rather than choosing each option individually.

One advantage of buying a brand-new home is that it comes standard with things older homes don't:

- Tankless hot water heater

Not sure if this is an advantage, pros and cons (I have had both).

- Energy efficiency all around (insulation, appliances, water usage, etc.)

I don't think there has been leaps and bounds in the last 10-15 years, esp if you have updated appliances in your home.

- Open floorplans with large kitchens w/island, large master suites, attached garages

Both resale and new have these... with the exception of large master suites... that's hit or miss in both.

- Granite Countertops

Usually not the nicest one.

- Ceiling fan hook-ups
- Can customize wall colors

Not always standard, esp wall colors.

- Relatively inexpensive (compared to retrofitting an existing home) options to do many pre-drywall changes

Again, depends on the floorplan of the resale.

Look, I understand the allure for new, but don't make it like resale is unlivable, esp considering that most of the better places in Irvine, you can only buy resale. New or resale... location rules. And since most new is smaller, has less living spaces... in *my* opinion, that tips it towards resale.

 

[paperboyNC]

Look, I understand the allure for new, but don't make it like resale is unlivable, esp considering that most of the better places in Irvine, you can only buy resale. New or resale... location rules. And since most new is smaller, has less living spaces... in *my* opinion, that tips it towards resale.

I never said new is better than resale. I'm just pointing out that you do get certain things standard with new homes that attract buyers. I wouldn't pay a premium for new. I bought new because I got a discount. If I were moving up a new home now I'd be very tempted to buy in Foothill Ranch or Tustin and buy a resale.

 

[OCgasman]

There is no right answer on new vs resale.  Strictly personal preference.  I wish new had 3CWG, in fact, I think $1.5M should have 2+2 garages, but that ship has sailed.

You're right IHO that builders will continue to offer less and less for more $$$ because that is what the market will bear.  As long as ppl keeping buying, builders will keep offering less.  If ppl demanded 3CWG and izzy-o layouts, builders would make those.  Just seems like the current trend is to offer giant great rooms with mammoth islands.  Formal dining room and formal living room just isn't in vogue right now.  But, everything is cyclical.  Who knows in 10 yrs.

But getting back on point, upgrading a home can be expensive going through the design center or after COE.  Even window treatments for a large house can run $10k easily depending on what you want.  Fancy master closet organizers run $4k, and that's through 3rd party after COE.  To make a house exactly the way you (your wife more specifically) envisions her dream house costs money.  But, most ppl will make sacrifices cuz we don't have endless funds.

 

[Irvinecommuter]

There is no right answer on new vs resale.  Strictly personal preference.  I wish new had 3CWG, in fact, I think $1.5M should have 2+2 garages, but that ship has sailed.

You're right IHO that builders will continue to offer less and less for more $$$ because that is what the market will bear.  As long as ppl keeping buying, builders will keep offering less.  If ppl demanded 3CWG and izzy-o layouts, builders would make those.  Just seems like the current trend is to offer giant great rooms with mammoth islands.  Formal dining room and formal living room just isn't in vogue right now.  But, everything is cyclical.  Who knows in 10 yrs.

But getting back on point, upgrading a home can be expensive going through the design center or after COE.  Even window treatments for a large house can run $10k easily depending on what you want.  Fancy master closet organizers run $4k, and that's through 3rd party after COE.  To make a house exactly the way you (your wife more specifically) envisions her dream house costs money.  But, most ppl will make sacrifices cuz we don't have endless funds.

It's always an ebb and flow.  When the selling was hot in 2004, builder gave basically nothing.  After the bubble burst, builders started adding in upgrade packages as a selling point so that they could justify the prices.  Builders continue to up the packages when they started in on later phases of a model.  It's a way to "increase" the value of the home while keeping prices up.  I suspect that builders are going to start increasing the upgrades once the selling slows. 

Good thing is that once you start packaging upgrades into homes, people expect them to be there in the future.  Again, like cars.

 

[irvinehomeowner]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

 

[Irvinecommuter]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

If you want to do any sort of upgraded tiles in the bathrooms (3 or 4)...you will hit your $50K cap pretty quickly. 

 

[bones]

asdf

 

[eyephone]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

Good thing Im not married to you, b/c I spent $4500 on 7 fans + 2 chandeliers + labor to hang.  Another $850 at the design center for Jboxes where the builder didn't provide one.  So total $5k+ just for fans.  I should add - regardless of resale or new - I'm going to spend this $4500 regardless.  Only savings on resale would be if JBoxes existed in the locations I needed them to be.  So in this case.  Resale = savings of $850 (maybe).

Haha 

 

[usctrojancpa]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

Good thing Im not married to you, b/c I spent $4500 on 7 fans + 2 chandeliers + labor to hang.  Another $850 at the design center for Jboxes where the builder didn't provide one.  So total $5k+ just for fans.  I should add - regardless of resale or new - I'm going to spend this $4500 regardless.  Only savings on resale would be if JBoxes existed in the locations I needed them to be.  So in this case.  Resale = savings of $850 (maybe).

Yeah even basic options that you should do their the builder (jboxes, recessed lights, cabinet upgrades, counter upgrades, etc) can start adding up very quickly.  Then there's landscaping which can be as nice as deep as your pocket is.  I'd say on average (without landscaping) my new home buyers put in about 4-6% of the base price in upgrades (includes through the builder and contractors outside of escrow). 

 

[Arman]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

Seems quite low to me. What do you think is reasonable to spend on the outdoors? I think that 10% or so of the purchase price is reasonable. Frankly, I don't care what the inside of your home looks like. I want the outside of my neighbors' homes to look nice, and it shows when someone's hired a landscape architect, and when someone's gone to Home Depot to do their landscaping.

 

[Irvinecommuter]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

Seems quite low to me. What do you think is reasonable to spend on the outdoors? I think that 10% or so of the purchase price is reasonable. Frankly, I don't care what the inside of your home looks like. I want the outside of my neighbors' homes to look nice, and it shows when someone's hired a landscape architect, and when someone's gone to Home Depot to do their landscaping.

Funny...I'm the reverse.  My front yard is HOA landscaped and I just want my background to be low maintenance and presentable.  Again, I spend 99% of my time in the interior of my house so that is what I care about the most.

 

[eyephone]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

Seems quite low to me. What do you think is reasonable to spend on the outdoors? I think that 10% or so of the purchase price is reasonable. Frankly, I don't care what the inside of your home looks like. I want the outside of my neighbors' homes to look nice, and it shows when someone's hired a landscape architect, and when someone's gone to Home Depot to do their landscaping.

"when someone's gone to Home Depot to do their landscaping." lol

There are many people that go cheap on landscaping. I have seen crooked/not even pavers, crack concrete, bad drainage. (You get what you pay for)

 

[irvinehomeowner]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

Seems quite low to me. What do you think is reasonable to spend on the outdoors? I think that 10% or so of the purchase price is reasonable. Frankly, I don't care what the inside of your home looks like. I want the outside of my neighbors' homes to look nice, and it shows when someone's hired a landscape architect, and when someone's gone to Home Depot to do their landscaping.

That's why I said 5%... ~$25k on the inside, $10-25k on the outside depending on size (using the minimum 5-figure ZeroLot estimate).

@IC:
Most of the $1m+ homes I've seen had decent bath counters (usually eStone), the only option I would consider is maybe subway tile layout in the master shower but that's not too expensive.

@TAFMKAB:
$5k for fans and cans, that leaves $20k for flooring... should be doable.

USC's data says 4-6% for indoor upgrades, so whoever is spending 30%, like I said, either the builder is fleecing you or you are getting your toilets fleeced in gold.

 

[Irvinecommuter]

Back on topic:

I would not want to put more 5% of the purchase cost in upgrades on a new home.

Even at that, I think $50k on a $1m house is already too much... if you do the fans, the cans and flooring... that shouldn't be more than $25k on a 2500sft house.

Seems quite low to me. What do you think is reasonable to spend on the outdoors? I think that 10% or so of the purchase price is reasonable. Frankly, I don't care what the inside of your home looks like. I want the outside of my neighbors' homes to look nice, and it shows when someone's hired a landscape architect, and when someone's gone to Home Depot to do their landscaping.

That's why I said 5%... ~$25k on the inside, $10-25k on the outside depending on size (using the minimum 5-figure ZeroLot estimate).

@IC:
Most of the $1m+ homes I've seen had decent bath counters (usually eStone), the only option I would consider is maybe subway tile layout in the master shower but that's not too expensive.

@TAFMKAB:
$5k for fans and cans, that leaves $20k for flooring... should be doable.

USC's data says 4-6% for indoor upgrades, so whoever is spending 30%, like I said, either the builder is fleecing you or you are getting your toilets fleeced in gold.

It may work for you but most people I speak with like to upgrade their master baths (and the guest bathroom-downstair) with stone...that's going to run you like $10-15K.

 

[bones]

[qasdf

 

[irvinehomeowner]

Looks like the marriage is off.