New Construction vs. Resale Homes

Choosing between a brand-new home and a well-positioned resale is less about “which is better,” and more about which aligns with your budget, timeline, and tolerance for variables like HOA rules, special taxes (including Mello-Roos/CFDs), builder incentives, and near-term maintenance. Your decision should be driven by total monthly carrying cost, contract terms, inspection strategy, and realistic move-in timing—not just the list price.

Why this decision matters in Los Angeles County

Los Angeles County offers everything from master-planned communities and new infill construction to established neighborhoods with decades of sales history. That diversity creates opportunity—but it also makes comparisons harder. A “great deal” on a new build can look different once you account for upgrades, lot premiums, HOA dues, and special taxes. A “cheaper” resale can change materially once you price in repairs, insurance, and modernization costs.

1) Price vs. total cost: compare the full monthly payment

The headline price rarely tells the full story. To compare fairly, build an apples-to-apples monthly carrying cost for each option.

New construction: how pricing really works

New homes often start with a base price, then add:

• Options and upgrades (finishes, structural options, design packages)
• Lot premiums (view lots, larger lots, corner lots)
• Builder incentives (rate buydowns, closing cost credits, upgrade allowances), which can materially change your cost of funds

Also, new homes typically trigger property tax reassessment, and many newer subdivisions include Mello-Roos or other special taxes—plus possible supplemental tax bills that arrive after closing.

Resale: value is tied to comps and condition

Resale pricing is generally anchored by:

• Comparable sales and micro-location
• Condition and any deferred maintenance
• Lot size, layout, and improvements (permitted vs. non-permitted)

You may have more room to negotiate on a resale, but it is essential to budget for near-term repairs, improvements, and ongoing maintenance.

Your “all-in monthly” checklist

When comparing two homes, estimate a single monthly number that includes:

• Principal + interest (your actual loan scenario)
• Property taxes (including any special taxes and expected supplemental bills)
• HOA dues + any known or likely special assessments
• Homeowner’s insurance
• Utilities and a realistic maintenance reserve
• New builds: upgrades/lot premiums amortized into monthly cost
• Resales: a repair/renovation budget spread over time

Key takeaway: compare the monthly carrying cost, not just the purchase price.

2) Taxes, Mello-Roos/CFDs, and HOAs

Mello-Roos / Community Facilities District (CFD) and special taxes

Mello-Roos is a special tax commonly used in planned communities to fund infrastructure and services. It appears as a separate line item on the property tax bill and can range widely depending on the district and the remaining bond term.

Best practice for buyers and sellers:

• Obtain the current tax bill and the CFD/Mello-Roos disclosure
• Confirm the remaining term and any escalation schedule with reliable sources (title, HOA, or district documentation)
• Include the annual amount in your monthly comparison

HOA due diligence (new and resale)

HOAs vary significantly in Los Angeles County, from modest maintenance associations to amenity-heavy communities with meaningful monthly dues.

What to review before you remove contingencies:

• Budget, reserves, CC&Rs, bylaws, and recent meeting minutes
• Litigation history and special assessments
• Parking, pet, and architectural rules (these can affect daily living and resale value)

3) Warranties and inspections: protect yourself either way

New construction: warranties are not a substitute for inspections

Most builders provide written warranties, but coverage and timelines vary—so you should review the warranty package carefully. Independent inspections remain critical. Many sophisticated buyers schedule:

• A pre-drywall inspection (before walls go up)
• A final inspection prior to close
• An 11th-month inspection to capture items while still under warranty

Resale: inspections and disclosures drive the negotiation

For resales, a strong inspection plan often includes:

• General home inspection (structure and major systems)
• Pest/termite inspection (common in Southern California)
• Targeted inspections when warranted (roof, sewer, foundation, drainage)

Sellers in California also provide mandated disclosures, including the Transfer Disclosure Statement (TDS) and Natural Hazard Disclosure (NHD). Older homes may require extra attention to permit history and prior improvements.

4) Timelines and move-in certainty

New construction

Two common paths:

• Inventory / quick-move homes: often a 30–60 day close
• Presale / to-be-built: commonly 6–18+ months, with potential delays due to permitting, scheduling, or supply constraints

Resale

Resales often close in a more predictable window (frequently 30–45 days, depending on terms and contingencies), and timelines can be negotiated to match job start dates or school calendars.

5) Financing and incentives: evaluate the net outcome

Builders frequently offer incentives—rate buydowns, closing cost credits, or upgrade packages—often tied to a preferred lender. That can be valuable, but it should be compared against outside lender quotes to confirm the true net benefit. Also, ensure the appraisal is expected to support the total price inclusive of upgrades.

Smart approach: compare the total cost of financing (rate + fees + credits) rather than focusing on a single attractive incentive.

6) Negotiation strategies: builders vs. resale sellers

With builders, focus on what they can move

Builders may be more flexible on:

• Incentives (rate buydowns, closing credits, upgrade allowances)
• Lot premiums (in some market conditions)
• Included items (appliances, window coverings, landscaping)
• Punch-list completion expectations and timelines

With resale sellers, negotiations often center on risk and condition

Common negotiation points include:

• Price relative to comps and days on market
• Repair requests, credits, or price reductions based on inspections
• Buyer closing cost concessions (when market conditions allow)
• Personal property items and contingency timelines

7) Seller guidance: how to compete when buyers have “new build” options

If you are selling a resale home—especially near new construction—your job is to reduce uncertainty and make your home feel like the lower-risk choice.

High-impact moves:

• Price against the builder’s net deal, not just their base price (buyers shop monthly payments)
• Provide a clean package: recent repairs, clear disclosures, and (where possible) documentation on upgrades and permit history
• Consider a pre-listing inspection to control surprises and keep negotiations grounded
• Highlight differentiators new builds often cannot replicate: lot size, mature landscaping, established neighborhood character, improved privacy, and any advantage in HOA/special taxes (only if verified)

If you are selling a newer home in a planned community, be prepared with the tax profile (including CFD/Mello-Roos) and HOA documentation, and clearly itemize paid upgrades so buyers can understand what is truly included.

Due diligence checklist

For any purchase (new or resale)

• Preliminary title report (liens, easements, CC&Rs)
• Current property tax bill and any supplemental tax expectations
• Natural Hazard Disclosure review
• Utility history and maintenance records (when available)

New construction: add these items

• Builder warranty package and claim process
• HOA documents (CC&Rs, budget, reserves, minutes, disclosures)
• CFD/Mello-Roos documentation and levy schedule
• Permits, inspection sign-offs, certificate of occupancy
• A clear spec sheet showing included items vs. optional upgrades

Resale: add these items

• Permit history for major improvements
• Pest/termite report and repairs (if needed)
• Focused inspections as appropriate (roof, sewer, foundation)

Which option is right for you?

New construction may fit best if you value: modern systems, lower early maintenance, builder incentives, and you are comfortable with HOA/special tax review and construction timelines.

Resale may fit best if you value: established neighborhoods, mature lots, architectural variety, and a more predictable closing timeline—while budgeting realistically for condition and updates.

FAQs

What is Mello-Roos (CFD) and how does it affect my payment?
It is a special tax that appears on the property tax bill in many planned communities. Always verify the current amount and include it in your monthly cost comparison.

Do new homes in California come with warranties?
Most builders provide written warranties, but coverage varies. Request the full warranty package and confirm what is covered, for how long, and how claims are handled.

Can you negotiate with a builder?
Often yes—particularly on incentives, upgrade allowances, and sometimes lot premiums, depending on market conditions and inventory.

Are inspections still necessary for new construction?
Yes. Independent inspections at key milestones can identify issues early and document items for warranty resolution.

Which is typically faster to move into: new or resale?
Resales and inventory new builds can often close in a similar timeframe, while to-be-built homes can take many months and may be delayed.