Building Vs. Buying A House: Is Buying Better?
When looking to move into a new home, many people first consider the option of buying a home. Of course, buying an existing house comes with some advantages and disadvantages, as does building a house.
We’ll lay out the facts about both options so you can come to a decision based on what matters most to you.
Pros Of Buying An Existing Home
Below are the upsides you should be aware of when buying an existing home.
Move-In Condition
If you’re hoping to move quickly, buying an existing home is probably your best option. Construction projects will require some time to complete, and that’s the same whether you’re building a home or buying a fixer-upper.
Fewer Risk Factors
In general, you’ll likely find it cheaper to buy an existing home, but market conditions always affect home prices. A home loan is less risky than a land loan and typically comes with a lower minimum down payment and a better interest rate.
Home Renovation Options
Purchasing a home rather than building one doesn’t mean you’re necessarily going to be stuck with a home feature or two that fails to meet your needs. You can make upgrades and customizations to the home when you have the time and money, creating a house that’s your ideal abode or somewhere close to it.
Established Landscaping
An existing home will likely have some landscaping, eliminating that expense. If you like mature shade trees and rhododendrons for days, you might want to stick to buying a home over building one. It could take years for new landscaping to match the beauty of mature plantings.
The Room To Negotiate
There’s not much negotiation you can do when you build a home. When you’re purchasing an existing home, however, you have the opportunity to negotiate with the seller on a different home price. If it’s a buyer’s market, you’re likely to have some real negotiating power.
Cons Of Buying An Existing Home
Of course, buying a home also has some drawbacks, which we’ll discuss next.
House-Buying Stress
Searching for the right home can be time-consuming and stressful. Depending on when you buy, the real estate market could belong to the sellers, who could field multiple clean offers above asking price within days of listing their home. In that case, buyers could face high prices, bidding wars and multiple rejected offers.
It’s not necessarily going to be easier to buy than to build. If you do choose to buy an existing home, working with a good real estate agent can help make the process easier and quicker.
The Need To Compromise On Home Style
Finding a home you like and that reflects your tastes can be tough even when you have a wide variety of choices. When there are few homes for sale versus the demand for homes, you’re unlikely to find many options that meet all of your desires.
Possible Maintenance Issues
With older appliances, plumbing and electrical systems, you may run into major maintenance issues sooner rather than later. One possible solution? Consider a home warranty. With a home warranty, you know exactly how much to budget for home repairs and who to call if a problem arises.
Less Energy Efficiency
Older homes are more likely to be less energy efficient, which can lead to higher energy costs. You’ll likely not be able to achieve the same energy efficiency you could get with a new, sustainable home, but you can take various steps to reduce your older home’s carbon footprint.
The Potential For Hazardous Materials
An older home may present health hazards from years back, and it’s possible the owner may not even be aware of them. Homes built prior to the 1970s, for example, might contain lead paint. If you have children, you’ll want to take this into consideration before buying an existing home.
Building Vs. Buying A House: Is Building Better?
As with buying a home, building a home will come with advantages and disadvantages.
Pros Of Building A New Home
Now it’s time to explore a few benefits of building a home.
Complete Customization
If you have a dream floor plan in mind in a particular location, then building a home will give you the control you’re seeking. You can make the decisions when building the home, so it will reflect your tastes accordingly.
Less Competition
Once you buy the land, you won’t have to deal with any competition for your dream home. However, you’ll be competing against other home builders – and paying more – for limited construction supplies and labor.
Less Ongoing Maintenance
A newer home can mean fewer maintenance costs on the horizon. Generally, new home construction comes with a builder’s warranty for major systems. New appliances will likewise come with guarantees.
Newer Materials
When you have a new house built, you’ll be getting modern materials for your home. You won’t have to worry about potentially dangerous materials such as asbestos or lead paint in a brand-new home.
Better Energy Efficiency
Newer homes are built with energy efficiency in mind. If you’re concerned about your environmental impact, you can make choices throughout the build to prioritize green architecture and sustainability in your home.
Cons Of Building A New Home
Now it’s time to break down a few drawbacks associated with building a house.
More Expensive Financing
Due to the lack of collateral, land loans may be harder to obtain, and they often come with a higher down payment and a higher interest rate to offset the risk to the lender. Next, you’ll need a construction loan to finance the actual building.
Finally, you’ll get a traditional mortgage on the house once construction is complete, using the house as security for the loan.
Unexpected Costs And Delays
While multiple strategies are available to make building a house more affordable, the costs can add up quickly. Although you may receive an estimate of the costs upfront, it’s not unusual for unexpected costs to crop up throughout the project. Delays and cost overruns are typically expected.
Be prepared to pay more for almost everything, starting with lumber. Labor shortages will likely also make wages go up, so expect those to be reflected in your costs.
Build Time
Building a home won’t happen quickly. It will typically be a much longer process than buying a home and moving in. In the end, you should have exactly the home you specified, but the process could be very time-consuming and stressful.
More Effort
Building a home requires a more hands-on approach. You’ll have to make countless decisions along the way and work with a variety of people to create the home of your dreams. You’ll have to approve all specifications and review contracts on top of managing the financial aspects of the build.
The Potential To Be Further From Urban Areas
If you want to be close to downtown, it may be hard to find a lot to build on. In some areas, all the suitable lots have already been turned into homes. You may have to be a further distance away from built-up, urban areas if you choose to build your own home, which could be a negative for some prospective builders.
