For many, a house is more than a place to rest their head at night; it’s their dream. They spend years saving up for the perfect place to call home. But it’s not just about the memories they will make there. Many people have a specific vision for their future house that includes a list of wants and needs. But which will help you achieve those goals: a brand-new homestead or a charming pre-owned property? If you’re considering your options as a present or future home buyer, here are some key differences to keep in mind when building vs. buying.
Building vs. Buying: Advantages of Buying a Home
A pre-existing home may not come with the same frills as a newly built one, but it presents its opportunities. From lower costs to a developed community, buying a home benefits those on a tighter budget with more important things to worry about such as kids or even a job relocation.
The sale price is negotiable. When buying a home, you can negotiate the sales price. The range of that price depends on the market, of course. For example, if it’s a seller’s market (like it is right now), you might have a more challenging time since the demand is higher than the supply. Having the right real estate agent on your side can help with this. A good agent will support you during negotiations and make sure the seller hears your side.
Room to renovate. Even though you might not have the perfect house going into the purchase, that doesn’t mean you can’t change it. You may even buy the property with that idea in mind. So, as long as you have the budget, you can alter the house as you see fit. For example, you might want to update the house’s paint job or replace the tiles in the kitchen.
Character. Some people prefer buying a pre-existing home because it was owned before them. It’s that vintage appeal they want to preserve. Others simply appreciate the charm a house gets when someone puts love and work into it. It would be hard to replicate this in a new home.
Mature neighborhoods. When building new, you have to find the right location, too. Land near settled neighborhoods is often already taken, though. Pre-existing homes are already in established communities, so you don’t have to go hunting for one. Some people buy a home with the neighborhood as a deciding factor, so this might be important if you have young children or want access to specific amenities.
Drawbacks of Buying a Home
While a pre-existing home can come with plenty of charm, it might be hard to connect with personally. Changing it to reflect your or your family may take long-term and expensive alterations. So, all those concessions you made when you bought it will not only hurt you but your wallet as well.
Less customization. The home is already designed and built when you purchase it. That means you’ll probably have to settle or compromise on some wish-list items. Too much compromise can lead to resentment, but finding a pre-existing home with all the features you want will drive up the price.
Market competition. When you’re looking to buy a pre-existing home, the chances are that you’ll have to compete with other buyers. That competition can be even harder to navigate when you’re in a seller’s market. Since there are fewer properties to meet the demand, people will be more aggressive with their offers. A professional like a real estate agent can help you navigate these conditions
Repairs and maintenance. Since the home has been standing for some time, things might need to be replaced or fixed sooner. Remodeling, repairs, maintenance, and decorating all contribute to a house’s functionality and appearance. They also can help or hurt the home’s resale value. So, they can’t be left alone, either. If you want to go into your home without worrying about its longevity or fixing it up for the next person, buying might not be the option for you.
Buyer’s remorse. If you try too hard to accommodate your current budget or one specific need on your list, you can end up settling. You should expect compromises, but you might come to resent it if the entire purchase is a compromise. However, external pressure can make you feel like you have to buy, which leaves you with a house you can’t love. However, you’re stuck with it until you can financially handle a move again.
Building vs. Buying: Advantages of Building a Home
When you build a house from scratch, you have a home tailor-made to your wants and needs. New construction only forces you to compromise as far as your budget demands. So, you can choose specifications you might not have the option of otherwise.
Customization. A new home’s customizability is sometimes reason alone to sway some people. Since you’re the one financing the project, you can choose all the details that go into it. That means that as long as you can manage the cost, the location, layout, interior and exterior designs, and other features are up to you. Making those decisions come to life will improve your overall satisfaction and your emotional connection to the house.
Updated to fit building codes. These updates are not only economical but safer for you as well. Older homes have the potential to host dangerous materials like asbestos or mold. A newer home should not have these issues.
Energy efficiency. When you’re building your own home, you can create a more energy-efficient building. Features like green appliances that meet new standards for heating, ventilation, and more can not only improve your experience but save you money on your utility bill. You can also build the home with future updates in mind, like solar power.
Disadvantages of Building a Home
Shiny new features are nice, but they come at a cost. If you don’t secure a lump-sum (fixed price) contract with your builder, you may have to deal with extra expenses.
Building costs. One of the more stand-out reasons why building might not work for many is the cost. According to the National Association of Home Builders (NAHB), it’s typically cheaper to buy than building. On top of that, construction costs are currently increasing. The prices of important building materials have spiked since last year. The Producer Price Index reports that, as of February 2021, the cost of staples like softwood lumber and iron and steel scrap have spiked significantly, which bolsters the construction cost increase. Many factors can contribute to higher prices, too, like the customizations you want and hooking up utilities.
Waiting time. Building a house will take more time than just buying one. The U.S. Census Bureau found that it usually takes over six months to build a home from scratch. On the other hand, Ellie Mae’s 2019 Origination Insight Report claims that home purchases close within 53 days. Natural disasters or material shortages can lengthen that construction time, though. This can be hard for those who have to rent in the meantime or aren’t equipped to handle unforeseen costs.
Decisions. While some prefer the option to choose all of their house’s minute details, others may not. When building from the ground up, you have to decide the builder, layout, landscaping, etc., which can all be overwhelming. So, building can come with stressors that the average person might not want to have on their shoulders.
Unforeseen circumstances. Since there are more people and processes involved with building, there’s more room for error. Working with the wrong builder is just one instance where a decision can have long-lasting consequences. If the company you work with does not update you regularly or does not clearly lay out their timeline, you may have trouble on your hands.
Building vs. Buying: Which one is right for you?
If you want to figure out whether building vs. buying is suitable for you, there are three main points to consider. You have to ask yourself whether it fits into your long-term plans and if you can handle it financially and emotionally.
You may have to move frequently due to your job. Or, an upcoming personal situation might ask you to be flexible with your spending or location. In that case, you should probably avoid building a property. Considering the costs and time, it may not be worth it at this point in your life. However, if you are in a financially stable position with a steady income, then there is no valid reason you shouldn’t. Building a home incurs fewer maintenance costs and lets you accommodate the lifestyle you need.
Individuals who need to stick to a more limited budget are likely better off with a pre-existing structure. While it comes with some compromising, it saves time and energy. Also, you’ll generally have more luck getting into a highly sought-after neighborhood or community when you buy. That can make a world of difference if you want nearby entertainment or certain school districts.
So, building vs. buying: What’s best?
A home is more than just the natural “next step” in the American Dream. It’s a symbol of many people’s hard work and determination to have a place they can call their own. So, create a list of wants and needs for your future house. Depending on what is most important to you, the decision to build or buy a house may have an answer already.