The decision to build or to buy an existing home is driven by many factors ranging from affordability to personal choice. Which makes choosing one option over the other highly personalized.
If you’re facing this decision now, or will be at some point in time, it’s helpful to know the pros and cons of both to help you make the decision that’s right for you.
Pros of buying a resale home
Time
When time is an issue, then buying a resale home makes absolute sense. Even if your new home construction was to go perfectly, it would still take several months to complete.
Desirability
If there is a particular community you want to be a part of, there may be not be available lots to build on. In this situation, you would obviously need to buy a resale home.
Unique
In many cases, older homes can have distinct personalities that set them apart from other homes. They can often have a history that makes them highly desired (e.g. a stately Victorian or charming Cape Cod).
Affordability
The particular market you’re in will dictate the cost of building to a large extent, however it’s often cheaper to buy an existing home than to build, especially if your seller is particularly motivated to move.
Independence
If you relish the chance to transform an old, unloved home into something amazing, then you’ll opt for a resale home every time. In this scenario you can nearly have the best of both worlds; a home that’s already constructed, combined with the pleasure of modifying the home to suit your tastes and needs.
Cons of buying a resale home
Bidding war
If you’re in a tight real estate market or the home you want to purchase is highly desired, you could end up in a bidding war. Not only could this delay the buying process, you could end up spending more for the home than you would have. Or if you refuse to spend more you’re left with putting an offer on yet another property.
Maintenance and improvements
Older homes will often come with systems that will need replacing sooner than new homes. And, unless the previous homeowner(s) made upgrades, the lack of energy efficiency could leave a big gouge in your wallet each and every month.
Pros of buying a new home
Customization
Whether you build the home yourself or purchase a newly built home from a developer, you can make choices about the colors and materials used in your home’s construction.
Which makes it more your home than somebody else’s.
Warranties
As your home is newly constructed you’ll have warranties that you can fall back on in the event of any defects.
Energy efficiency
A new home will be built according to the latest standards and codes in home construction. Both the home’s construction and the appliances and systems in it will be the most energy efficient available.
Cons of buying or building a new home
Location
If you want to live close to the city center you may find it hard to find a newly built home or a developer willing to build one.
Some builders won’t build infills, opting for the more lucrative option of building a new community outside of the city center.
In addition, the cost of tearing down an old home and constructing a new one will be considerably more than simply buying one in a new subdivision.
This scenario means that to find a new home you may have to live further from the city than you’d like.
Costs
In most cases you’ll find it more expensive to buy a newly built home. From land costs to material and labor costs, new homes will almost always cost more than an existing home.
Time
On average it can take as little as four to as much as six months (sometimes more) to build a new home, and unless you lock in the purchase price you could end up paying more (or overpaying in the case of a market decline) by the time the home is completed.
Limitations
If you’d like different upgrades to the basic package the developer is offering it could cost you substantially more, driving the home’s cost out of your price range.
Finally, whether you opt for a new home or resale home purchase, it’s important to consider both your short term and long term needs and wants before making your choice.
