One of the largest investments most people will make is a home purchase. Undoubtedly, home buying is wrought with paperwork, inspections, contingencies, and that ever-looming escrow process. Each step along the way can feel like it’s dragging on into infinity. But, does buying an already existing home differ greatly from building your own home?
Buying an Existing Home: Pros and Cons
There is a definitive upside to purchasing a home that’s already built: you don’t have to wait for it to be constructed. Also, depending on if you’re interested in one of the fully constructed homes in a new neighborhood, most neighborhoods are already established. As such, you can readily see how others maintain their homes.
One nice thing about mature neighborhoods is that they are more likely to have land and trees which in turn adds privacy. New communities are often built on top of each other with a large community space allowing for the builder to maximize their profits. We wrote an article giving tips to those buying a new home. If space and privacy are a priority you may find yourself looking more towards established neighborhoods and existing homes.
If the home is an older construction, there is a risk that an inspection may reveal serious issues (e.g. roofing, mold, structural repairs). These can be taken care of by the seller and buyer agreeing to contingencies, which can involve added time due to negotiating the who, what, where, why, when, and how of any repairs. But, this can also mean whittling down the sales price and translate to an overall lower cost for the buyer. Prefer an established neighborhood? Want a quicker move in date? Purchasing an existing home is more likely to meet those needs.
Building a Home: Pros and Cons
Whether or not you’re able to customize a new home construction depends on the locale. Building a home doesn’t consistently mean buyers are able to completely tailor their home to match their preferences. Production homes are the “cookie cutter,” tract style construction where there is a selection of pre-designed floor plans. However, because all of the planning has already been completed by the home builder, a tract home purchase may offer the comfort of controlled costs. Tract home builders often provide upgrade options for features such as cabinets, countertops, and flooring.
If you prefer greater control overall home building details, then building a custom home from start to finish may be the best choice for you. This option has a larger price tag. On the bright side, the home will reflect your lifestyle. Need an extra room for an office? Want an open floor plan? The custom building process accommodates those choices.
You’ll still need to have the home inspected, and it’s wise to do so for each phase of the construction. Additional research about the builder’s reputation is also warranted. As such, you’ll invest more time ensuring all aspects meet your specifications and any other legal requirements (e.g. building codes and ordinances). Should you build in a community that has a homeowner’s association, their regulations will need to be adhered to as well. Keep in mind that you’ll have a longer wait for that final move in date. It's not often that prices increase when inventory does, this is not a typical housing market though.
If the new construction is within a multi-phase community that still has empty lots awaiting construction, then you will likely experience the noise and activity of a construction site – though this isn’t the always the case.
Buy or Build?
Custom homes take longer to construct. Production homes may have a quicker move in date, but if the neighborhood is still under construction, you might be dealing with the rumbling of trucks and other heavy equipment at 7 am. Older homes might require additional repairs; however, this is not guaranteed. All homes should have a thorough inspection to catch potential problems before they become expensive repairs or renovations.
When is your ideal move in date? Do you have the financial wherewithal to construct a completely customized home? Ultimately, your decision to buy or build a home comes down to time and cost.
When buying an existing home you have to account for the fact you’re buying a home that has wear and tear. The maintenance on an existing home is likely going to be far greater than a new home. Buying a home that is twenty years old, a buyer needs to make sure the HVAC, Water Heater, Roof, siding, plumbing are some of the main items that have aged and will need to be replaced in the future if they haven’t been already.
What about monthly expenses such as heat, water, electricity, etc. New homes are far more energy efficient than resale homes thanks to better building materials and new technologies. If a new house can cut your monthly utility bills in half that’s an expense that could go towards your mortgage.
In Raleigh, North Carolina
If you’re paying attention to the numbers here in Raleigh, one of the first things you will notice is how well the entire real estate market is doing. If you dive in deeper, you’ll notice that newer homes are doing far better in terms of resale value.
Homes that are less than 10 years old are far more popular in the eyes of a buyer, so keep that in mind, especially if you’re buying on the outskirts. Appreciation and future desirability will come into play when you buy a home, you’ll want to be sure you buy one that is going to increase in value. New construction homes have a better history of being a better investment / maintaining their value.
These numbers could be in part due to the fact that builders have been buying land for cheap in areas like Holly Springs over the last decade, allowing them to sell new homes for less and keep their margins. Towns like Holly Springs have exploded with growth leading to a great increase in resale value.
Final Thoughts on Buying or Building
Whether you decide to buy an existing home or build a new one is totally a ‘YOU’ decision. There are pros and cons to both parts of building a house and buying one that has already been constructed. Timing is likely the biggest factor in your decision if you’ve already committed to a neighborhood.
Are you willing to sacrifice the ability to customize for a faster move-in date?
Let us know in the comments below...
Hi there! I'm Ryan Fitzgerald, a REALTOR in Raleigh-Durham, NC and the owner of Raleigh Realty. Chances are you and I share a similar passion, Real Estate! I also have a passion for technology, sports, and people. Would love to hear from you. Drop me a note in the comments section below and feel free to share this article socially!