“The February 2015 median home price in the U.S. was $203,500 for a pre-existing home and $293,000 for a new home.”
As a Realtor in Sanpete County, I’ve noticed that most clients I speak with are interested in purchasing an existing home. However, a recent Trulia report says 2 out of 5 Americans would prefer a newly built home over an existing one, if they were the same price.
Price is a huge factor in a home purchase. A new custom home costs, on average, almost 50% more than an existing home. But there are other factors to consider as well. Today I would like to break down some of the pros and cons of building a new home vs. buying an existing home.
The Pros and Cons of Building a Custom Home
Building a new home comes with many advantages:
- Code and Safety Standards: In a new home, everything will be built to current building safety standards.
- Location and Neighborhood: You will have more control over determining the location of your new home.
- Builder Savings: Working directly with a builder gives you the possibility to negotiate thousands of dollars worth of savings.
- New Home Systems: New systems can save money on service plans that you would normally purchase on an existing home, like heating and air conditioning maintenance packages or home warranties.
- Artistic License: Depending on the builder you choose, you can design an original floor plan or tweak existing floor plans to make them your own.
- Upgrades: They are all included up front during the build, so no added expenses should be expected after build completion.
- No Hidden Flaws: A new home is built to the exact specs. If the laundry room is too small, you can make changes before building starts.
- Entertaining: If you like having company, you can design your home to be better for entertaining. Open floor plans are great for accommodating guests, and with a newly built home, you will be ready to entertain as soon as you move in.
- Style: Your new custom home will be a clean slate to decorate how you wish. You won’t have to deal with leftover styles from the previous owner or take on a huge remodeling project to make the home your own.
- Floor Plan: You design or pick the floor plan. An existing home can have a structural design that prevents easy renovation.
- Less Maintenance: New homes are less likely to have maintenance problems with major systems.
- First Owner: You get the added benefit of being the first owner and knowing everything that has happened to the property.
Building a new home has its drawbacks:
- Time: It can take, on average, 4 to 6 months to build a home, with some projects taking even longer. This is a long time and often life events can upset your build. In most existing home sales, the buyer can move into their new home right after closing.
- Constraints: The style of home you want may eclipse your budget, whereas an existing home in that style may fall right in line. Builder add-ons can add up quickly and may be more expensive than estimates.
- Financing: Depending on your builder, you may need to carry a construction loan for the building process. Note: Make sure you understand permitting in your area to make sure everything is built to code and all the paper work is kosher. Some builders may handle everything for you, but you should take an active role in checking it yourself.
- Dealing With Builders: Builders have very well written contracts to protect themselves in the case of a legal issue. Make sure to evaluate any contracts ahead of time in detail.
- Housing: Where will you live during construction? The added cost of a construction loan and temporary housing is often too much to handle.
- Upgrades: You can delay upgrades to an existing home until your budget accommodates them instead of having to pay all at once for the building of a new home.
- Neighborhood History: With an existing home, you can see the neighborhood trends and who your neighbors will be. New custom homes tend to be in evolving neighborhoods that take several years to establish.
- Landscaping: A new home doesn’t have established landscaping. Aside from the cost of landscaping, make sure you can deal with waiting several years for trees and landscaping to grow to preferred sizes.
- Decorating: In an existing home, you can physically visualize the placement of furniture and decorations, whereas in a new custom built home it may be difficult to ensure you will like the final product.
- Management: Building a home is a large undertaking. Problems will arise, people will need to be managed. If your time is tight, it may be hard to live your normal life and manage the building of your new home.
- Utilities: A new home may not be connected to the city power and water grids. In fact, you may need to pay for the drilling of a well and installation of a septic system. Make sure to find this out before you build.
- Architects: You will need an architect to design your home and make it structurally sound. This process can be drawn out with revisions and become costly. Sometimes it’s easier to see what you want in a pre-existing house than to envision it on a drawing.
- No History: A new home doesn’t have the same historical character as an existing home.
Whether you decide to buy an existing home or build a custom home in Sanpete County, take a step back and evaluate your needs and wants first. Make a list of the features most important to you, and know what you are willing to give up to get them.
If you have any questions about real estate or land for sale in Sanpete County, or if you have any comments, let me know below.