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One of the first choices home buyers face is whether to buy an existing home or to build a new one. Both options have distinct advantages and disadvantages that are important to consider.
Convenience. The process of buying an existing home is relatively straightforward: You get pre-approved by your lender; together with your real estate agent you tour available homes that meet your criteria; you make an offer on a home; the offer is accepted; and within a month or so you have the keys to your new home. The prospect of moving into your new home quickly can be an important consideration if you are relocating for job or have children in school.
Cost. The initial costs of buying an existing home are generally (but not always) less than purchasing a new construction home. Click here to calculate the cost of purchasing your new home.
Other advantages of buying an existing home include living in an established neighborhood with mature landscaping, and eliminating the stress that comes with managing the details of building a home. (Picking a lot, deciding on a home design, choosing finishes, and staying under budget - just to name a few!)
Unless a miracle occurs and you find an existing home that has all the features you want and is in perfect condition, you have two choices: live with it or plan to spend additional money on updates and repairs. These expenses can add up quickly and have to be paid for outside of your mortgage payment.
Customization. The biggest advantage to building a new home is that you get something tailor made for YOU. From floor to ceiling the home will reflect your style - no expensive updates or remodeling necessary!
Resale Value. Since newer homes typically require fewer updates and less maintenance than older homes, they are more appealing to most people, which means new homes usually have a higher resale value than older homes.
Energy Efficiency. Thanks to new regulations and innovations, new homes are much more energy efficient than older homes. And better energy efficiency can save you money on your utility bills and is good for the environment.
Building a new home is a process that takes time, energy and money. From breaking ground to moving in, the average new build takes from 6-9 months. And delays are inevitable. There are also myriad decisions to be made, from picking a builder and a lot, to selecting every detail from floor to ceiling. And each of these decisions has potential to increase costs.
The initial higher cost of building a home can be a drawback for many buyers. A good builder should provide options to help you reduce costs, including offering a variety of materials and fixtures at different price points. Buyers should also note that any design selection out of the ordinary or any last minute changes will cost extra.
Whichever option you choose - Existing Home or New Construction - buyers can mitigate the risk that the project will go over budget or take longer than expected by working with a professional real estate agent who will represent their interest, choosing a reputable builder and having a good contract in place.