Dozens of open houses, countless showings – and still you’re no closer to finding your dream home than when you started looking. Perhaps just opting to build a house to make sure you can get everything you want is the way to go. Yes, your wants and needs may be completely fulfilled, but the home-building process has its own challenges and it’s critical to weigh the advantages and disadvantages of building a house vs. buying before you take the plunge. It’s still one of the biggest purchases you will make in your lifetime and sometimes the road to a fully custom home is more complex.
Just as you evaluate and check out a potential real estate agent, you’ll need to vet your architect or builder before you get started. Checking references and talking with previous clients is important before you sign on with anyone. As you get started, take a look at these pros and cons of building a house vs buying:
Pros of Buying an Existing Home
It’s more convenient
If you set aside all the steps that building a house vs buying have in common, such as finding a real estate agent and getting qualified for a mortgage, buying an existing home can be a lot simpler. You just shop around, find one you like, do your homework on the property and then make an offer. If you don’t have a lot of free time, this is the better option.
It can often be cheaper
Depending on the particular housing market you are located in, data from the National Association of Home Builders have shown that it can sometimes be cheaper to buy an existing home. Areas that have been affected by the housing crisis may still have good deals on houses.
You Can Live in an Established Neighborhood
Frequently, areas where home construction sites are available are in new subdivisions that are on the edge of the suburbs. These newer neighborhoods sometimes are not in the most popular school districts or most attractive areas. By choosing an existing house, you can pick a location near your workplace or children’s school. In addition, it’s likely that landscaping and trees are already mature and enjoyable.
Cons of Buying an Existing Home
You Can’t Always Get What You Want
Despite the advantages of buying an existing home, it’s unlikely that anything you find will have everything you want. If you’re looking at older homes, the little luxuries you want like the latest technology or luxurious bathroom style won’t likely exist there. Even more so, sometimes the additions you want to make aren’t possible for a variety of reasons.
Buying Someone Else’s Problems
When you buy an existing home, you’re getting all the bad with the good. Even if you check everything out thoroughly before you buy, it’s possible that a home will develop a new issue after you move in. Of course, this happens with new construction too, however, the older a structure, the more repairs and replacements you’ll have to make over time.
The Pros of Building a Home
You Get Exactly What You Want
This is by far the main reason that people opt for building a house vs buying. The floor plan, the finishes, the style and colors are what you choose right from the start. Love an open floor plan? You got it. Want a grand entryway? Sure. Generally, the only thing that will reign in your desires is your budget.
…And Nothing You Don’t Want
You might have found an existing home that has almost everything you want. At the same time may also have a number of features you really don’t want that are driving up the price of the house. Perhaps it has a fancy lower level with a fully-equipped bar and a wine cellar. Maybe it includes a home theater or a backyard pool. These may be plusses to some buyers but if you don’t want them, they are just adding to the cost with no benefit. If you are building a house vs buying one, you don’t have to pay for those extras. Also, in a new construction, everything is fresh, clean and all yours. No old crud to clean from around baseboards or odors to expunge from the previous owner’s pet dog.
New Construction is More Energy Efficient
It makes sense that new construction with all new energy-efficient appliances and equipment will bring with it lower utility bills. When you choose building a house vs buying an existing one, it’s likely the insulation will be better as well. It’s also easy to prep a house as it is being built for further technology upgrades down the road.
New Homes Can Be Healthier
When you build a new home, you can choose to use materials that are less toxic than those that have been used in older existing homes. Choose low-VOC paints, lumber that is less toxic or reclaimed natural materials for your home. A new house also won’t have any hidden toxic dangers such as molds and allergens, or more dangerous substances such as asbestos or lead paint.
They are Usually Easier to Resell
While it’s more complicated and likely more costly, building a house vs buying an existing one can lead to quicker resale. Assuming that your new home is in a desirable area if you have to move it will likely be more appealing to buyers than an older home. That said, in many areas, you might not be able to recoup the entire cost of construction when you sell, especially if you don’t live there very long.
Lots of warranties!
In a new construction, all the appliances are new too and for at least the first few years, most everything will likely be covered by various warranties. Even so, you never want to forego the inspection process on a home, even if it is brand new. People are human and make mistakes, so for your own security, you’ll want to have the new place inspected before the final payments and closing. The inspector will also make sure that everything was done to meet local building code requirements.
If you chose a neighborhood that a specific builder is doing, the construction and installations generally come with a warranty from the builder. It should cover the integrity of the building and craftsmanship for at least a year. These warranties can go a long way toward making the initial years in your dream home more worry-free.
The Cons of Building a Home
Building a house vs. buying an existing home is nowhere near as convenient. Before you even begin to dream about designs and décor, you have to find a suitable lot for building. Sometimes it’s a bit easier if you are moving into a new subdivision, where a builder has dealt with issues like sewer and water connections, building conditions, etc. If the lot you want is not in such a neighborhood, you will need to find an architect to design your home and a builder to oversee and manage the construction and all the subcontractors. In addition, you’ll need to worry about all the building permits, and possibly digging a septic system and drilling a well for water.
You’ll Spend More Time On New Construction
Building a house vs buying one definitely requires a longer lead time before you can move in, but that is just one of the time considerations. For the overall project, construction experts suggest you have a contract that includes a construction timeframe. This also helps keep the budget in check. Even with this type of contract, other factors can add to the timeframe. Weather can delay some aspects of construction, especially in the initial phases. Items on special order, such as custom components or exotic materials, can be delayed, pushing back schedules.
Regardless, if you have to sell your current house, where will you live before you can move in? According to the US Census Bureau, a new house takes about seven months to build, on average. More complicated designs may take longer. If you’re not planning on listing your home until the new one is nearly complete, can you afford the double mortgage?
Another time factor has to do with the significant amount of time you’ll need to invest in making decisions. Yes, you will choose the style and finishes of all the elements in your home, from the doorknobs and bathroom fixtures to the woodwork style. This means looking at what you want, what your budget allows and evaluating the options before making a choice. All these choices take time and might fuel a bout of “decision fatigue” before all is said and done.
Last, but far from least, you will need to be in good communication with your builder throughout the process. Many people who are building a house vs buying one also make time to visit the construction site on a regular basis. Of course, you want to strike a balance and keep tabs on what’s going on without becoming a nuisance to the builder or the contractors.
It’s going to cost you more
Typically your builder and contractors can present you with options for saving money throughout the process. Many will show you choices that are good/better/best for the different finishes and elements in your new home. The most important thing is to have a strict list of your priorities for the home and spend accordingly. If a more costly option isn’t going to fit with the list, then it’s not worth the expense.
Also, just as with renovations, you’ll want to have some money set aside for unexpected expenses. It’s impossible to say what these might be, but there’s always a risk. If you don’t have a reserve, you might need to cut back on some optional upgrades that you really want in order to cover something that crops up during the process.
The Landscaping Factor
Building a house vs buying has a major expense hiding in plain sight: Landscaping. Plenty of home buyers get caught up with what is on the inside of the house and forget about budgeting enough for the outside. While an existing home may have plenty of trees and flower beds along with a party-ready patio, a new construction won’t have anything that you haven’t planned for. If you don’t want to end up with a great house sitting on a bare plot with no outdoor amenities, these considerations need a solid line item in your budget. Keep in mind that it is possible to choose trees and plants that are larger than usual, but they will cost significantly more.
It’s a blank slate
While you might have budgeted for all the built-in bells and whistles, did you set aside money for the décor? When you move into an existing home, there are likely blinds or curtains on the windows when you move in, whether you like them or not. When you move into new construction, you’ll be hanging sheet over the windows if you haven’t accounted for buying window treatments. If you opt for all hardwood floors, you’ll want area rugs in some places. Also, will all the furniture from your old house fit the new place? These are all costs that buyers sometimes forget to plan for.
Building a house vs buying one might seem like a daunting prospect, but for homeowners who really want a custom house, it’s the only way. By starting the process well-education about what’s involved, it will be a more enjoyable undertaking with a result that can’t be beat: Your own dream home.