Many homebuyers, both first-timers and experienced movers, have wondered whether buying an existing home or building one to their specifications is a better fit for their needs. Here’s what you need to know:
The Upfront Costs
Existing Home: The price of a home varies widely depending on location, square footage, condition, amenities, and other factors.
Building a New Home: All things being equal, generally speaking, building a new home costs about $60-$70k more than buying an existing home with similar attributes. But that is not always the case. There are some instances where the cost per square foot comes out significantly less in a custom-built home than in an existing home.
How is this possible, you ask? Consider when you build, you also have the advantage of paying for only what you want to put into the house. While an existing home may have additional perks, like hardwood floors, it may not be something that you want or are willing to pay for in a custom-build.
Existing Home: Older homes require more maintenance because they have more wear and tear. Some homes may even need a big-time overhaul! As with any home purchase, never skip the home inspection and understand that even with well-maintained homes, repairs are inevitable.
Building a New Home: Maintenance on a new home is very little, and it's one of the central benefits of building a new home. Since everything from appliances to the HVAC system is new and under warranty, you'll enjoy several years of worry-free living.
Existing Home: A mature garden with large trees and well-established landscaping is a big plus of buying an existing home. Mature trees and landscaping not only add value to the property but can even help to reduce energy costs by providing shade and efficient drainage.
Building a New Home: Professional landscaping can cost thousands plus many years to come to fruition. The benefit, however, is that you'll be able to design your outdoor space precisely to your liking. Depending on the project, you can have a custom-designed yard in two weeks or less.
Existing Home: Older homes that have had little-to-no updating use more energy. Appliances that are older than ten years, single-pane windows, and poor insulation are some updates you'll want to consider if you buy an existing home.
Building a New Home: When it comes to energy efficiency, new construction can't be beat. On average, new homes use about 21% less energy than older homes. However, this savings comes mostly from high-efficiency appliances. Meaning that if you purchase new, HE appliances for an existing home, you can save just as much money on energy with an existing home as you would with new construction.
Existing Home: With an existing home, you make your purchase with some context. You can see the home's previous sale prices, the cost of similar homes in the area, and have a good idea of what the market value of your home will be in the future.
Building a New Home: New homes, especially those in up-and-coming neighborhoods, can be more of a gamble. Without any sale history or comparables to reference, you have very little to go on when thinking about the future value of your home. Of course, if this is your forever home, which is often the case with custom-built homes, then not having a history to predict the future may not matter.
Whether you're buying an existing home or building a new one, they both begin the same way --getting pre-qualified. Reach out today to see which option is best-suited for you and your financial situation.