What is the difference between Buying vs. Building?

Home ownership is a big deal. There are a number of really important decisions to be made including whether to buy an existing house or build. Both have their advantages and disadvantages. Here’s a look at Buying vs. Building.

Buying an Existing Home

Pros

• Convenience: You are usually able to move in within 30-60 days after closing.

• Familiarity: You know the area, neighborhood, property values and so on.

• Budget: You can take your time making upgrades allowing you to budget and complete projects over time.

• Opportunity to flip: There is money to be made when successfully flipping a house. Profits can go towards a newer and better home.

• Visualize: With a pre-existing home, you are able to see what you are getting.

Cons

• Remorse: Be sure you know all the ins and outs about the house that were not obvious.

• Upgrades: Remodeling, repairs, or landscaping are costs that should be factored into the overall price.

• Additional costs: Out with the old and in with the new. Changing the look by removing wallpaper, painting the bedrooms or replacing flooring can add up quickly.

• The layout is permanent: Completely changing a layout can be difficult or impossible.

• Higher home insurance. This is usually associated with pre-owned homes vs. a new home with new and up-to-date features.

Building a Home

Pros

• Discounts: Ask for a builder’s discount if you are working with suppliers. More times than not, buying in bulk can get you a better discount.

• Everything is new: There are no hidden costs because there is no need to re-paint or replace drafty windows. It’s all new.

• Dream home: Homebuyers have a wish list that consists of very specific selections. Building allows you to choose every single aspect.

• Savings: New homes are also more efficient with new HVAC, insulation and air filtration standards.

• Entertaining: Most new homes have open floor plans, whereas older homes have strange design and layout choices.

Cons

• Time: Obviously, building a home from scratch takes time in addition to finding and selecting your builder and deciding on details.

• Limitations: You may not be able to afford what you’re wanting. Changes and purchasing upgrades from the builder can add up quickly.

• Temporary housing: Paying rent for an apartment and storage unit can be part of the process.

• Construction loan and permits: You may be required to carry the construction loan on the building process if the builder doesn’t. Even if the builder handles the permits, it’s important to know what is needed to ensure everything is built up to code. Hiring your own inspector to make sure the job is done right is a good idea.

• Legal consideration: Always read documentation thoroughly, and consult an attorney, if necessary. The agreement with your builder may restrict your rights if there’s an issue in the process and you end up taking the builder to court.

Made up your mind? Check out these tips for getting pre-approved for a mortgage or home loan!