Deciding Whether to Buy or Build a Home

If you’re thinking about making the move to a new home, you may have wondered if you should buy an existing house, or build a new one from scratch. It’s a decision many homebuyers struggle with, and unfortunately there’s no easy answer. But the good news is that by considering the pros and cons of each, you can better decide which option is right for you.

Pros of Building a Home
 

• Opportunity to customize everything. When you’re building your dream home from the ground up, you can make it exactly that. You’re able to customize the home to your own specifications, picking out your cabinets, flooring, paint colors, lighting, and more.

 

• More energy efficient. New homes are usually built with energy-efficient materials, and with a new home build, you can take advantage of the latest “green” advances, such as low-flush toilets, smart thermostats and lighting, effective insulation, and energy-saving heating and cooling systems. And the more energy-friendly your home is, the lower your energy bills are likely to be.

 

• Ability to choose your ideal location. When buying an existing home, you’re not only tasked with finding the home of your dreams, but finding the home of your dreams in your dream neighborhood. That’s easier said than done! When you’re building from scratch however, you can purchase land in a perfect location, and then get to work on building your perfect home.

 

• Not as much competition. According to a monthly survey done by the National Association of Realtors, the average time an existing home was on the market in April 2019 was 24 days. With homes being sold so quickly, the competition can be fierce when you’re trying to locate an ideal home among limited inventory. On the other hand, when a new neighborhood is being developed there are typically dozens of lots available at the same time.

 

• Less expected repairs and maintenance. With a brand new home, you shouldn’t have to worry about repairs for quite some time. You’re starting off with new electrical, plumbing, and heating systems, all of which will be under warranty for a certain period of time. Your roof will be brand new, and you shouldn’t have to worry about lead paint, mold, or foundation issues. As long as your builder is qualified and reputable, major repairs won’t be on your radar for a while.

Cons of Building a Home
 

• The to-do list is long. You’ll need to buy a vacant lot of land to build on, secure the building permits, find and hire a reliable contractor, ensure you’ll have access to utility hookups, get construction financing in place, and more. And remember that the more things you have to worry about, the more likely you are to get stressed out or overwhelmed.

 

• The cost of customization. Sure, you’re building your dream home, but keep in mind that all of the latest and greatest technology and top-of-the-line features and fixtures are going to come at a price. Remember that amenities and upgrades can add up quickly.

 

• The process can take a while. How quickly you want to move is another important consideration. Depending on the size and complexity of your new home’s construction, it could be several months to a year or more before the house is ready to be occupied. And since you won’t be able to move in right away you may need to find temporary housing, which can be expensive.

 

• Not as much ability to negotiate price. Most new home builders won’t sell below base prices, so there’s not as much room for negotiation as there is with an existing home, especially one that’s been sitting on the market for a while.

 

• Lack of landscaping. Unless you’ve purchased a tree-lined lot, or a piece of land deep in the woods, you’re likely to be starting from scratch as far as landscaping is concerned. Keep in mind that it will take some time for new grass, trees, and plants to grow and mature. And landscaping costs can escalate quickly, especially if you install trees and bushes that already have some established growth, or lay down sod instead of starting grass from seed.

Pros of Buying a Home
 

• Can be less stressful than building. The to-do list for buying a home is not quite as long as it is for building a home. You’ll still need to find a reliable realtor and mortgage specialist who can help guide you through the home buying process, but buying an existing property can be a lot more manageable and straight-forward than building one from scratch.

 

• It’s usually quicker. Buying an existing home still takes a lot of time and commitment, but the process generally goes a lot faster than building a new home. According to a 2016 article by Homes.com, buyers spend one or two months on average searching for a home, and then another month or two securing financing and finalizing the sales contract. So, you could realistically move into your new home within a few months if you buy an existing home, while you’re likely to have to wait anywhere from six months to a year if you build a home from scratch.

 

• More likely to have existing landscaping. When you buy a home instead of build one, there’s a greater chance your yard (and neighborhood) will have mature landscaping, which can enhance the home’s curb appeal. A lot with large trees can also provide desirable shade and privacy that you might not get with a newly-built home.

 

• Customization is still possible. If you buy a home, you can still make it “your own” with some renovations and updates. There are even specific home loans called FHA 203k loans that are available to qualified borrowers who are buying homes that need remodeling and repairs. These loans make it possible to purchase a home and get the funds needed for renovations at the same time.

 

• Opportunity for more character and quality craftsmanship. You’ve probably heard the phrase, “they don’t build them like they used to”. Many older homes will have interesting, period-specific architectural features, such as hard-carved woodwork, stained glass windows, or butler pantries. And many older homes feature thicker walls and solid wood, which are generally harder to find in today’s newer builds.

Cons of Buying a Home
 

• It can be hard, if not impossible, to get all of your “must-haves”. Finding an existing house that has everything you’re looking for is easier said than done. You could get lucky and quickly locate a property that suits you perfectly, or your search might require a lot of time and effort. And, you not only have to find the perfect house, but you need to find that house in an ideal location as well.

 

• The competition factor. In a hot market, it can be hard to find a suitable home within your budget. And, when you do find one, competition with other buyers can be fierce. This can drive up the cost of the house as you compete with other buyers, and what they’re willing to pay.

 

• The cost of cosmetic upgrades and customizations. When you buy an existing home, there’s likely to be something you don’t love. Whether you’ll be replacing carpets with hardwood floors, repainting a bedroom, or doing a full kitchen remodel, you’ll need to consider the added expense of renovating the home to your specifications.

 

• The cost of ongoing maintenance and repairs. A pre-existing home typically comes with older systems, unless there have been recent upgrades. Be sure to inspect things such as the furnace and electrical wiring, as well as the heating system and roof, to get a sense of when they will need to be replaced. There’s also likely to be more wear and tear in an older home. There may be holes in the walls that need patching, broken floor tiles that need to replaced, leaky faucets that need tightening; the list goes on. And depending on its age, an existing home could contain toxic materials like asbestos, lead paint, or mold. It’s important for you to have a qualified home inspector review the home prior to making an offer. That way, you’ll have some idea of what you’re getting into as far as upkeep and repairs are concerned.

 

• May not be as energy-efficient. An existing home could come with higher energy bills than a new home. Drafty windows, insufficient insulation, and inefficient heating systems can all lead to energy waste, and diminish the home’s comfort. The good news is that both Massachusetts and Rhode Island offer free home energy assessments that can help you identify which improvements to focus on, and you may even qualify for no-interest financing to make certain energy-saving upgrades.

Deciding whether to buy a home, or build a home, is certainly a tough decision. But by evaluating all of your options you’ll be in a better position to choose the type of home that’s best for you. And if you’re still stumped, you may want to consider consulting with a mortgage professional who can help you review your finances and see what option best suits your unique situation. Best of luck!