How do you decide between purchasing your home or building your home? It is up to each family to weigh the factors of each option and decide which will be the best for their situation. This blog has been written to give you a clear understanding of some of the pros and cons of each options, as well as some tips to make either process move smoother.
Buying a Home
- Purchasing a home is quicker. Typically once an offer is accepted by the seller a closing can be scheduled within 2 months.
- You can see and touch the home. Walking through a home is much different than looking at plans.
- Landscaping is mature. The lawn is ready for the swing set. The shrubs along the front of the home or edge of the road are full.
- The bargain. Buyers can usually find a great deal, especially in the current market.
- Sellers don’t always disclose the full reason they are moving, such as the 2 am train knocks the glasses of the shelves or the neighbors throw wild parties with fireworks every weekend.
- Older homes are not as efficient as newer homes. They are not as well insulated and tend to be harder to heat.
- When you buy a 10 year old home, you are also buying 10 year old systems and fixtures. Appliances, boilers, fixtures and some building materials have an expected lifetime. Replacement costs can add up quickly and start much sooner than the homebuyer may anticipate.
- Many of the homes currently on the market are foreclosed properties. These properties are not always properly maintained during and after the foreclosure process. Homes do not withstand neglect well, especially in upper New England. One winters worth of no maintenance, possibly no heat or electricity, is a lot of wear and tear.
Tips for a smoother buying process:
- Higher a reputable home inspector. This person is worth their weight in gold, if they can inform you of issues before the closing.
- Ask your realtor lots of questions about the home you consider. Age of appliances, systems & fixtures. How long has the home been empty if it is a foreclosed property.
- Require that all systems be operating during the home inspection.
Building a Home
- It’s your home. Your plan, your design choices.
- All systems, fixtures, materials & appliances are new. They meet all current safety and energy standards, and should carry the full warranty.
- Lower energy and maintenance cost. Even if you aren’t building a home specifically designed for high energy efficiency, new homes continue to become more and more efficient as new products and materials become available.
- The majority of new homes are being built in developments, this means you may be building with a community of new homes. Many developments have strict guidelines about the types of homes allowed and what maintenance is expected. This ensures the homes around you will be of similar value and well maintained helping to keep home values steady.
- Not being able to see and touch the home during the sales process can be difficult for some prospective homebuyers.
- Cost overruns. Building material prices fluctuate, this can cause the cost of your home to rise during the building process. There is also the risk that not all materials are accurately reflected during the sales process. For instance, homebuyers may think they are getting a beautiful dining room light, but the builder put the cost of the dome fixture into the cost.
- Delays. The building process spans over several months with multiple contractors involved. Without a clear plan, delays are inevitable.
Tips for a smoother building process:
- Higher a reputable general contractor to oversee the entire building process. Having one company responsible for all aspects of the construction from excavation to interior paint, will make the process smoother and eliminate stress on the homeowner.
- Ask questions during the sales process! Visit construction sites, talk with previous customers.
- Always get written quotes, never agree to build anything based on an estimate. Discuss with potential builders what their policy is on cost overruns and construction delays. Without a clear policy, the cost and completion date of the project will never be met
- Read the building contract. The contract should clearly define who is responsible for all aspects of the building process.
Hopefully this information will help you make the right decision for your family. For more information check out these links:
Buying vs. Building by AskMen
The Financial Considerations of Building vs. Buying by Investopedia
Building a Home vs. Buying a Pre-Existing Home by GoBankingRates.com
As a final thought, I will leave you with this: Everyone has heard the old adage “Live and Learn” meaning as you live your life, you learn from your experiences… Now let’s briefly consider homeownership options. Approximately twice as many first homebuyers buy their home as those that build. However, with each change in homeownership this ratio decreases with more homeowners choosing to build their second or third homes… Retirees are now one of the largest demographic building their homes. Food for thought.