Build or Buy? | A Head-To-Head Comparison Between Building a New House and Buying an Existing Home
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- čas přidán 17. 01. 2023
- #newconstruction #homebuyers #realestate
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Should you build a brand new house or just buy an existing one? I’ve done both, so today I’m comparing the 2 options head to head.
Customization: One of the main advantages of building a house is the ability to customize the design to meet your specific needs and taste. This includes things that would be hard or impossible to change on an existing home like the layout, the number of bedrooms and bathrooms, and the architectural style of the house. Not to say that you can’t renovate an existing home to get CLOSER to your ideal design, but it’s way easier to customize a house that you’re building from scratch.
Timeframe: An existing home is already built, so you can move in right away. The timeframe for completing a new build is unpredictable and hard to plan around. It can take years to complete a new property and you got to remember that you’re going to have to pay to live somewhere else during the course of construction. Also keep in mind that new builds almost always have some unforeseen delays and unexpected expenses.
Energy-efficiency: New construction houses are built according to the most current building codes which call for higher standards of energy efficiency. This means that they will have more energy efficient materials, especially when it comes to the insulation and windows, and they’ll also have more efficient mechanical systems like HVAC and sometimes solar, as well as more energy efficient appliances. All of these things in combination will lead to lower utility bills for you over time.
Location: So in general, Existing houses are more likely to be located in more desirable neighborhoods with established communities and businesses. Whereas most new builds are located in newer developments where there never seem to be any trees. If you want to live in a specific neighborhood because of its great schools, its shopping or entertainment options or its public transportation, then buying an existing home in that neighborhood is the most straightforward way to provide you with those benefits. Now, it is possible to build a new home in an established neighborhood IF you’re able to find a vacant lot that you’re allowed to build on, but keep in mind it’s probably going to be pretty expensive just to buy the land.
Repairs and renovations: This one clearly goes to the new build since all the materials and mechanical systems are brand new and shouldn’t need to be replaced for at least 5 to 10 years. But it’s not like all existing houses out there are just falling apart and need renovations immediately after you buy them, but repairs are going to come up more often just because everything in the house is older.
Financing Options: There are many straightforward financing options available for buying an existing home. There are countless lenders offering traditional mortgages with standard terms that are based on common requirements for income and credit. Financing for new construction however, is definitely more difficult and complicated to get, and there are far fewer lenders willing to finance new builds because they’re considered more risky. New construction lenders will typically need to see architectural plans, a detailed budget, and a signed contract with a licensed builder before approving a loan. Also ,the terms on new construction loans are typically less favorable than for an existing home. The interest rate is usually higher and most construction loans also require you to pay interest during the entire construction process and that interest does not go towards any loan repayment.
Safety: Again, new houses are built to the latest building codes which typically means that they are safer than older existing homes. So for instance the structure of a new build is more likely to hold up in areas with a high snow load or frequent earthquakes. And New builds located in areas with a high risk of wildfires are typically required to have fire resistance exterior siding materials and interior sprinkler systems while new builds in hurricane prone areas will require windows that can withstand high winds.
The Cost: It’s highly dependent on several factors including your local real estate market, your labor market, and your ability to plan, budget, and negotiate with contractors. I would say that in general, it takes less effort to find a good deal on an existing property because there are simply more available options, HOWEVER, if you put in the time in doing your research and you negotiate well with contractors to stay on a strict budget, it’s definitely possible to build a good quality new house for less than the cost of buying an existing one. - Jak na to + styl
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New builds quality definitely depend if you are hiring a company yourself vs getting a new build from a development company that is building an entire neighborhood, those new development houses are built like straw houses and tend to fall apart after 2 years
Very true. I had custom built homes in mind when I made this video as opposed to tract homes.
My ideal house 1st floor no inner walls huge open space kitchen , island , 1 guest restroom , 2nd floor same exact as living room huge open space with 1 restroom. Done 👏 we build we repair we do everything ourselves.
👍 That's the way to do it if you have the resources to be an owner builder.
I disagree with what you said about existing homes wining when it comes to financing options. I just went under contract for a new build and used their preferred lender to get 20k in cash for closing costs and upgrades. I also got qualified for a higher amount at better rates using the builder's preferred lender. Moreover, the builder's preferred lender is more likely to be timely with documents and communicating with the seller/builder so that you can close on time. I love my loan officer, who is the preferred builder's lender, and the builder owns the lending company. Considering that 20k in cash savings can now be used to do a rate buy down or make a higher down payment or invest in something else, I'd say new build wins by a long shot for financing options if you use their preferred lender.
Congrats on your new build! You are the exception on the financing front, not the norm.
@@brandon-built THANK YOU and GOD BLESS! It definitely depends where someone is buying. In my area, I haven't seen home builders not offer at least 10k in incentives right now (Spring 2023), but I know some markets are not as good as where I just purchased. What's important to note is that sometimes the incentives aren't advertised online, since they may come and go on a week-to-week basis. So people shouldn't assume that they won't get a massive incentive with a new builder. I'm a glass-half-full kinda gal, and it's been working for me for 30 years :)
@@brandon-builtat this point in time, builders are throwing in everything... lots of incentives, buy downs, appliances etc😊
Oh wow the interest rate is definitely not higher.. builders are suffering. The interest rate is much lower with them.
@@SelahreeYeah, I'm not sure he had contacted a builder himself. Oh well. When I closed on my home in October, my interest rate was 2.5-3% lower than the national average on any given day.
Looking at building my 1600 sf of just what I need. No one - absolutely no one - designs houses for single adults, post-menopause with no children/grandkids, who have collected a lifetime of interests, such as music, art, and/or crafts. I don't need 3 bedrooms. I do need a 40-foot studio with actual natural light. So, designed my own 1600 sf, 1BD, 1BA in such a way as to be easily converted to a very nice 3BD if ever need to sell. 2024 is the year it will happen. And, yes, it will have a 40-foot studio with ample natural light, stained cement floors, and a topcoat of Anti-Graffiti Clear. Some things I WANT to do myself - paint, grout and sealer, finishing/shelving closets, some interior trim. Found the lot already - under $7K, in an established but not crowded neighborhood, almost half an acre - plenty. Should have lots of yard left over for a garden in my golden years. And I've found the contractor - stellar reputation and quality, plus very easy to communicate with. He was very impressed with what design could be roughed out by a layperson using Microsoft Excel (LOL). I saw no point in buying what will not work for me and saving the build for a retirement only 10 years away. If I have to move within a year, then it is time now. Wish me luck.
You know exactly what you want and how to get it. That's awesome. I'd love to hear how it turns out.
Absolutely right
just took a look at some new builds and the closing costs were Double the costs of an existkng home, ridiculous.
What were the additional fees if I may ask?
@@brandon-built from what i understand from someone i know in that industry, the builder tacks on some of their fees on there without your consent.
@@newkirk7591 depending on the level of demand I guess they are getting away with those shenanigans. If there is a lot of supply then I would call them out on that BS to get the fees removed.
I personally bought a new construction (builder building new neighborhood), semi-detached, for the price of 15-25yo semi-detached homes in the area. Fully detached homes at that price range were either miniscule,
12 to 18 months to built a house lol. At most 9 months! Come on now.
Building a custom house in California is a year minimum starting from scratch with an architect. Design takes time. Engineering. Closing on a construction loan. Permits alone take a couple months before you can even start construction.
My boyfriends mom has been in the process of trying to build for over a year now they haven’t even broken ground yet
Took us 3 years in Seattle