From Contract to Closing: What Florida Home Buyers Need to Know for New Construction vs. Resale Homes

Florida, going from contract to closing differs between buying a resale home and purchasing new construction. Knowing what to expect—and how each step varies—can help you make the best decision for your needs. Here’s a look at key areas like deposit requirements, home inspections, appraisals, and negotiations in each type of transaction.

1. Deposit Requirements

New Construction:

• Pros: Typically a fixed deposit (often 3.5-20% of the price), set by the builder.
• Cons: Deposits for new construction are usually non-refundable, especially if you back out due to factors not covered by the contract.
• Timeline: Payment is due upon signing the contract.
• Risk: There is a higher risk of losing your deposit if you don’t proceed.

Resale Home:

• Pros: A lower deposit, usually 1-3% of the purchase price, is more common.
• Cons: The deposit could be risky if the buyer backs out without a valid contingency.
• Timeline: Typically due within a few days of signing the contract.
• Risk: Easier to negotiate contingencies, which can reduce the risk of losing the deposit.

2. Home Inspection Options

New Construction:

Cost: General estimate $650 (varies per inspector and what additional inspections are ordered). 

• Pros: Many builders offer a final walk-through; a warranty usually covers repairs.
• Cons: Some buyers skip independent inspections, but getting a third-party inspection is wise to catch potential issues.
• Timeline: Usually after the home is built but before the final closing.
• Risk: Less control over issues, as builders often have set procedures for handling repairs.

Resale Home:

• Pros: Buyer can choose any inspector and negotiate repairs based on findings.
• Cons: No builder warranty, so repairs are the buyer’s responsibility after purchase.
• Timeline: Inspections typically occur 7-10 days after signing the contract.
• Risk: More flexible negotiations, with buyers able to request repairs or credits to offset unexpected issues.

3. Appraisal Steps

Cost: General Estimate $600

New Construction:

• Pros: New construction homes often appraise closer to the sale price, especially in rising markets.
• Cons: If the home appraises for less than the contract price, you may have limited negotiation power with the builder.
• Timeline: Appraisal occurs shortly before closing once the home is fully completed.
• Risk: There is a higher risk if appraisal falls short, as builders may not adjust prices.

Resale Home:

• Pros: If the appraisal is lower than the sale price, buyers can usually negotiate with the seller for a price reduction.
• Cons: If no agreement is reached, the contract may be canceled.
• Timeline: Usually happens within the first few weeks of the contract.
• Risk: There is low risk for the deposit, as the appraisal contingency allows for renegotiation or contract cancellation.

4. Negotiation Experience

New Construction:

• Pros: Builders may offer incentives like upgrades, closing cost assistance, or flexible move-in dates.
• Cons: Less room for price negotiation; builders often have fixed pricing.
• Timeline: Limited opportunities for negotiation before signing the contract.
• Risk: There is minimal risk if you agree to the terms upfront, but there is less chance for last-minute changes.

Resale Home:

• Pros: More flexibility to negotiate on price, closing costs, and repairs.
• Cons: Sellers might be less willing to negotiate if they have multiple offers.
• Timeline: Negotiations happen quickly, typically during the first week of the contract.
• Risk: It is easier to reach a win-win with sellers on repairs or price adjustments, lowering the risk of a deal falling through.

Final Thoughts

Each path, new construction or resale, has its advantages. New construction offers the benefit of a brand-new home, often with warranties and fewer repair concerns, while resale homes provide flexibility in negotiation and sometimes a quicker timeline. Understanding the deposit requirements, inspection options, appraisal process, and negotiation strategies for each type can help you confidently navigate the Florida real estate market.

For more insights on buying a home in Florida, especially as a first-time buyer, check out our blog or connect with a local real estate expert!