Should You Build or Buy Your Home?

Although it’s not one of the most frequently asked questions from potential home buyers, wondering whether to build a new home or buy an existing home is something that comes up from time to time in real estate. It all depends on what your goals are though. While there’s no cookie cutter answer that’s right for everyone’s situation, understanding some pros and cons to build or buy your home can help make your decision an easier one.

Should You Build or Buy Your Home?

Up-front cost savings and a convenient timeline are big pros when buying an existing home; for building a new home, the biggest pros lean towards customization and long-term (energy efficient) cost savings. Let’s take a closer look on whether to build or buy your home:

Cost

In most real estate markets, you’ll be able to get more for your money with an existing home; current existing home median sales prices in the U.S. are at $240,200. For a new build, reports show that the average cost to build a new house comes in around $305,372, though obviously this can vary greatly with all the costly variables and customizations involved. From deposits to new construction, upfront costs are often higher on a new build than buying an existing home and unexpected costs can arise at any time; no crystal ball strong enough can predict what will happen once ground is broken. That being said, it’s always important to discuss all costs involved with the builder from the beginning…before moving forward on the excavation for your dream home.

But there’s no question that a newly built home is going to be more energy-efficient in the long run than an older, existing home that was built in 1960. For example, the recommended level of insulation in a newer home will help to keep heating and cooling bills low. Quality energy star windows and smart appliances will also be more energy-efficient than an older home’s components. In addition, a new home will require fewer repairs and less maintenance making it easier to recoup your investment.

Financing

For financing, buying an existing home may be more attractive to most because it’s often easier to secure a traditional mortgage than a construction loan. Construction loans involve more risk, they’re harder to qualify for and they’re much more complex. Plus, they require buyers to have more money available up front. Traditional mortgages, on the other hand, come with more options that are less expensive and less complex. A much more attractive choice for the average homebuyer.

Construction/Closing Time

Build time can vary, but generally, a new home takes approximately 120-150 days for completion, even up to a year or more. Depending on the location of the construction, weather can be a factor into the time it takes resulting in extra costs that can eat into your budget very quickly.

When buying an existing home, it takes 45-60 days once a purchase offer is accepted. This is considerably less than the average build time for a new home. Even though the process of buying an existing home involves quite a few steps (and papers to sign), the convenience of being able to move in right away is enough for the majority of homeowners to choose an existing house over building a new one. If you’re in a hurry, purchasing an existing home is the obvious answer.

Customization

If you decide to build a new house from scratch, a one of the biggest perks is the flexibility to customize and design your home exactly for your wants and needs. Whether you desire an open floor plan, a full bathroom on the main level, or hardwood floors throughout your entire house, you can have it all customized to your desire (and your budget).  You can add endless characteristics to a new layout. The more you add, the bigger the price tag.

When buying an existing home, you get what you can find. Our job is to help you find exactly what you’re looking for – that diamond in the rough…but you must be willing to make sacrifices here and there. Whether it’s the size of the closet or the type of flooring, you need to be OK with a little give and take and be willing to make some renovations if necessary. Before you begin your home search, just make sure you clearly define your wants vs needs.

So, What’s Better? Buy or Build?

Only you can answer that question. But, whether you decide to build or buy your home, it’s going to be a very exciting time. And a very exciting time that will most likely come with a lot of questions in the process. Hire a qualified and experienced Realtor who is familiar with the resale market. He should also know what new home builders are offering today. This is an extremely important first step. Your realtor can help you compare costs, weigh the pros and cons and help guide you through the complex processes for both options…no matter what you envision your dream home to look like.