Are you thinking about buying your next dream home, but struggling with the idea of building a new home vs buying an existing home? Here is a list of some pros and cons of each to help make the decision a little easier for you.
Pros of Building a New Home
- Full Customization
If you decide to build a new home, the largest pro is the ability to customize the home to your exact wants and needs. In addition to choosing the floor plan you desire in your home, you also have the ability to select the quality of finishes. If you’re looking for a home with granite counters, high end cabinetry, and tile flooring, you can have it customized to your desire. YOU control exactly how your home will look when it’s completed.
- “New Home” Smell
New homes look, feel, and smell new. There is nothing worse than walking into an existing home, and being hit with a foul odor. New homes have never been lived in; therefore, you don’t have to deal with leftover smells from smoke, pets, garbage, or other unpleasant odors.
- More Efficient Home
New homes are significantly more efficient than older homes. Another benefit to building a new home is that the home is going to be more efficient than an existing home. HVAC systems, insulation quality, windows, siding, sheathing, roofing, exterior doors are all far more energy efficient. It would not be surprising at all for your utility bill to be less than half of those for ten year old homes.
- Fewer Potential Health Hazards
Newly built homes have considerably fewer potential health hazards than an existing home. Lead based paint, asbestos, radon, moisture, and mold are just some of the issues more common in older homes.
Cons Of Building A New Home
- Resale Value
There are circumstances where new homes will appreciate less than existing homes. The reason is that everyone prefers new, and therefore will pay more to get it. However that “new home” premium is not there when that buyer goes to sell the home. It is very difficult to sell your home in direct competition with the builder. As a result, if the builder is still selling in the community, other sellers must undercut the builders pricing to sell their existing home.
Of course, like everything else, there are exceptions. The longer you stay in the home, the better your resale will be in comparison to an existing home. Housing trends do not change rapidly. Therefore that new home you just bought is still relatively new when you go to sell it ten years from now. Also, if you have lived there long enough for the builder to have sold out and moved on, then you are not competing head to head with them.
- Higher Upfront Costs
An existing home comes with many features that either do not exist or are additional costs in new homes. You will pay extra for items like: window treatments, mature landscaping, decks and patios, finished basements, and decorative painting. Of course, since you are paying for everything, you do get to make it exactly the way you want.
- Build Time
Anticipation often can drive home buyers crazy, whether it’s a new build or an existing homes. Waiting for the closing to occur on a home can often be a very anxious time period for a buyer. It typically takes 30-45 days to process the loan and get to closing on an existing home. However, for a new home, you will be waiting 8-10 months.
- Future Construction
Depending upon the stage of the development, and the rate of sales, you may be living in a construction site for a while. That means construction trucks, workers, and noise. On the flip side, the kids will love it, playing in half built homes and climbing on the equipment.
Pros Of Buying an Existing Home
- Quicker Closings & Possession
As stated above, it usually takes 30-45 days to close on an existing home. The contract to closing timeframe typical for new homes is 8-10 months.
- Better Value
Existing homes do cost less, and you can get a better price per square foot. However, remember that an existing home is a package deal. You are getting a better price, but you are paying for everything you see. It may have high end bamboo flooring throughout the entire house, and you are getting a great value; however, had it been your choice, you may not have put that flooring everywhere, or may have not chosen that style.
Apples to apples, the new home will always come out more. However it is rarely an apples to apple comparison. In the new home you are only paying for what you want, the style you want, and only as much as you want. New is more expensive than existing, but rehabbing is even more than new. If you plan on making a lot of changes to the existing home, it may be better to by new.
- Established Neighborhoods
Tree-lined streets and established landscaping is always nice, and a definite perk of older communities. Location is one of the main deciding factors when considering whether building a new home vs buying an existing home is the way to go, and oftentimes, existing homes win out due to their close approximation to city centers, schools, parks, and local shopping and dining.
- Classic Charm & Character
Charm and character can certainly be added to a new home, but it comes with a price tag. Finding those features in an older neighborhood is fairly easy, and much more affordable.
Cons of Buying an Existing Home
- Not Getting Exactly What You Want
The biggest negative to buying an existing home is not finding what you want. Buying an existing home always involves compromise.
- Upgrade & Renovation Expenses
When looking at an existing home, always factor in the age of the updates that are needed. What is the age of the roof, HVAC system, hot water tank, appliances, carpeting etc. These expenses will all be out of pocket, and not factored into your mortgage.
There are pros and cons to every decision. It is important to weigh them all to get your best value when debating whether building a new home vs buying an existing home is right for you. Also, have a good realtor representative, one who knows you, and has extensive experience in both the new and existing housing market.