Should I Buy or Build? Five Questions to Help You Decide

Trying to decide whether to build or buy? Five helpful things to ask yourself. | www.mattminordurham.com

Deciding whether to build a new house or buy an existing house is one of the first questions to answer when you first start thinking about a new home. Ultimately your decision will depend on what you value most in a home as there are benefits and drawbacks to each approach. To help you think through the pros and cons, here are some questions to ask yourself.

1. What can you afford upfront and what can you afford down the road?

Building a new house generally has more upfront costs. According to the National Association of Realtors the median sale price for new construction as of November 2014 was $280,900 while the median price for an existing home was $206,200.

After adding up the cost of the house and land, you will need to factor in other items that are often included when you buy an existing home: window coverings, landscaping, fencing, appliances, and so on. If you run into delays you may have to pay for temporary housing if you have already sold your previous house. However, you are likely to have fewer unforeseen down-the-road expenses because everything is brand new and customized according to your taste. In addition, new construction homes are typically more energy efficient than older homes, so you can expect to spend less on your utility bills over time. And if you are handy, you might be able to save some money (both on labor and mark ups on materials) by doing some of the work yourself.

If you buy an existing home, you can spend a lot less money upfront. However, an existing home is much more likely to need upgrades or repairs: you may inherit ugly 90s wallpaper, an ancient dishwasher that leaks, or a roof that will need replaced in the next few years. Your upfront costs may be lower, but you will need to consider both the anticipated and unforeseen expenses that often come with a home someone else has lived in already. Many of these expenses can be spread out over time and dealt with as you can afford them (you can live with pink tile in the bathroom if you have to), but you should still factor them in when deciding what you are comfortable spending on your new home.

2. What’s your timeline and how flexible are you?

The process of shopping for an existing home can certainly take a while, depending on the market you’re in and how narrow your search criteria are, but once you make an offer and it’s accepted, you will usually be able to move in within a month or two. Building a home almost always takes longer than buying an existing home, particularly if you are building a completely custom home instead of a tract house where the customization options are more limited. Count on at least three to four months before you get to closing, and sometimes much longer. Any construction project has the potential to take longer than initially planned, and the more pieces to the project the more opportunities for delay. You might be slowed down by a week of rain, excavation might uncover rocks that take extra time to remove, obtaining permits and inspections can take time – you need to be flexible, particularly if you are trying to sell your current home at the same time. Would you be comfortable finding temporary housing if you had to close on your old house before your new one was ready for you to move in? Are there outside deadlines you need to consider, such as starting a new job or school? The anticipation of watching your new home be built can be exciting, but be prepared for the frustration of delays and altered timelines.

3. Do you want an established neighborhood or a brand new development?

Although it may be possible to find a lot to build on in an existing neighborhood (or a house that can be torn down), or to find a lot out on its own in a rural setting, you will likely have more luck obtaining a lot in a new development. What kind of community have you always envisioned for your family? Are you comfortable with the degree of uncertainty that comes with a new neighborhood (where many of the neighbors might not have moved in yet) or would you prefer to move into a neighborhood that already feels like a community where people know each other? Every neighborhood, new or old, develops its own character over time, but it will probably be easier to get a feel for this in a neighborhood that’s been around a while than in a neighborhood that’s still being built. Are there other factors that play into your choice of location? If you have children that will be attending the local schools, be sure to research the district and schools that a new development will feed into.

4. What kind of yard and garden do you want?

New homes are usually built on empty lots, so you are starting from scratch and designing the yard and garden of your dreams – it just might take a few years for the plantings and trees to fill in and actually resemble that dream yard. But in the meantime you can build a custom deck, start off with a weed-less sod lawn, and plant anything you like. Existing homes, on the other hand, have big trees and mature shrubs and gardens – but it may cost you some money (or a lot of hard work) if some of those trees need to be removed or the shrubs need to be dug out. If you want a shady yard right away and you dream of building your kids a tree house and enjoying the privacy of a tall hedge, shopping for an existing home may be a better bet. If you’d rather start from scratch and have your yard custom-designed exactly how you want it, without having to remedy someone else’s bad landscaping choices, then new construction may offer what you want.

5. Have you always dreamed about having a brand new house that you designed yourself?

This is arguably the biggest benefit of building your own home, and it’s the one that’s hardest to put a dollar value on. A new house is just that – it’s brand new, and nobody has lived in it before. It’s laid out exactly how you want, with all the features you want, and as your creation it’s yours in a way an existing home isn’t. If you can’t seem to shake the idea that you want a brand new home, then go for it!

Similarly, if you’ve always been attracted to the character and charm of an older home and love the idea that a house has seen people come and go over the years, the benefits of building are probably never going to outweigh that intangible something you would find in an older home. At the end of the day, you need to feel good about your decision and be happy in your home, whether you build or buy. Take the time to be aware of what each option entails; go into either building or buying fully informed and knowing what to expect. Get pre-approved for a mortgage, find a realtor you trust, and make your dream home a reality.

Here are some more helpful articles on building a home versus buying a home:

For more tips on buying a home, follow my How to Buy a House  board on Pinterest!


About the author: My name is Matt Minor and I’m a real estate agent with Hunter Rowe Real Estate in the Raleigh-Durham area of North Carolina. I’d love to help you buy or sell a home in the Triangle. Give me a call at 919-450-5999, or email me at matt.minor@hunterrowe.com if you’re thinking about buying or selling a home in Raleigh, Durham, Chapel Hill, Cary, Apex, Carrboro, Clayton, Fuquay-Varina, Garner, Holly Springs, Knightdale, Mebane, Morrisville, Sanford, Smithfield or Wake Forest.

(photo credits: Dave Sawyer and www.armchairbuilder.com via Flickr’s CCL)


 

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