To Build or Not to Build? Red Flag Experts Help You Make the Right Decision
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As a Home Inspection business, Red Flag often gets asked by our clients whether they should buy a new home or an existing home. This important question requires careful consideration. The choice ultimately depends on the buyer’s individual circumstances, preferences, and priorities. In this article, we will provide an overview of the advantages and disadvantages of buying a New Home versus buying an Existing Home. Armed with this information, we hope to help our clients make informed decisions about which type of home is best suited to their needs and goals.
Buying an Existing Home
- Lower Cost – One of the biggest advantages of buying an existing home is the cost. In general, existing homes tend to be less expensive than new homes, especially when you factor in the cost of land, construction, and permits. When looking through the MLS, you will notice that homes with pools often reflect a 5% added value compared to those with no pool. This could be $15,000 for a $300,000 home, but the costs to install a similar pool would likely run $35,000 or more. Buying a home with the features you need would save considerable money, if you are able to find what you want.
- Established Neighborhoods – Another advantage of buying an existing home is that you get to live in an established neighborhood. This means that there are likely to be more amenities such as parks, schools, and shops nearby, and the area may have a stronger sense of community. Building a new home comes with an element of risk. If you are not building within a Master Planned community, your value is tied to the unknown fact of what the other landowners do in the future. There may not be deed restrictions or rules about the size/shape/color of future homes. You may soon find yourself next to a Pepto-Bismol-colored house, which you may be surprised to find could be detrimental to property value. In existing homes, you can research the crime rates, talk to neighbors, drive around and look for signs of improper maintenance.
- More Character – Existing homes also tend to have more character than new builds. They often have unique architectural features such as stained glass windows, ornate moldings, and hardwood floors. These can add a sense of charm and character to a home.
- Shorter Wait Time – When you buy an existing home, you can move in right away. This is a significant advantage compared to having a new home built, which tends to take six to twelve months to complete.
- Failures are More Obvious – When you buy an existing home, the outward signs of failure for your Home Inspector become more obvious with passing time. Your Home Inspector’s job gets much easier when outward signs of failure are present. A knowledgeable inspector may have the opportunity to catch more subtle (initial) signs of failure, but inspectors catch defects more regularly when the outward signs are more visual and obvious. Having an older and more established building means that the failures had more time to develop outward signs, to aid in detection by your inspector.
- Repairs and Maintenance – One of the biggest disadvantages of buying an existing home is that it may require repairs and maintenance. Older homes may have outdated systems, such as plumbing or electrical, which could prove expensive to fix. Additionally, regular maintenance such as painting, roof repairs, and HVAC maintenance can add up over time. The requirement for repair and maintenance gets temporarily delayed for New Builds that have a Builder’s Warranty, in that they will be required to fix or repair any defective items. This disadvantage can be neutralized with a strong Home Inspection report. If defects are found, read Parts 1, 2 and 3 of our Tackling Defect articles to assist.
- Less Customization – When you buy an existing home, you are limited to the layout and features already present within the home. You may have to compromise on your wish list or renovate to get the home you want.
- Hidden Issues – Another disadvantage of buying an existing home is that there may be hidden issues that you are not aware of. These can include issues such as mold, foundation problems, or pest infestations. A home inspection can help identify these issues, but there may be other issues that are difficult to detect.
- Less Energy Efficient – Older homes tend to be less energy-efficient than new builds. This means that they may have higher utility bills, and you may need to make upgrades to improve energy efficiency. The way we construct buildings has changed in the last 30 years. Nowadays, buildings are more “tight” with less air passing in/out of the envelope or perimeter of the home. The term “tight” is in reference to how we seal the various doors and windows much better than we had in the past. In the end, buildings being more “tight” means better energy efficiency.
Having a New Home Built
- Customization – One of the biggest advantages of having a new home built is the ability to customize it to your exact specifications. You can work with a builder to design the layout, choose the finishes, and select the features that you want in your home. In the planning phases, you can add or remove walls, make rooms and spaces larger or smaller. For some, this provides amazing flexibility. For others, this may be numerous questions they do not know the answers to.
- Modern Amenities – New homes are built with modern amenities and systems. This means that you are less likely to have issues with plumbing, electrical, or HVAC systems. You may benefit from energy-efficient features such as solar panels or efficient appliances. For instance, heating, ventilation and air-conditioning (HVAC) systems installed after January 1, 2023 must have a 13.4 SEER rating. Getting a home with a 12 SEER rating in 1997 was considered top of the line (absolute best available).
- Warranty Protection – When you have a new home built, you typically get a warranty from the builder. This can provide protection for one or more years, which can give you peace of mind and protect you from unexpected repairs or maintenance costs.
- Move-In Ready – When your new home is completed, it will be move-in ready *. You won’t have to worry about making repairs or updates before moving in, which can be a significant advantage. (* We note that they are typically not, but Red Flag is there to ensure they fix what was not move-in ready)
- Higher Cost – One of the biggest disadvantages of having a new home built is the cost. New homes tend to be more expensive than existing homes, and you also have to factor in the cost of land, permits, and construction. The cost of customization can also add up quickly, which can make a new home unaffordable for some buyers. Labor and material cost increases can further compound this, as we saw in recent years.
- Construction Delays – Building a new home can be a time-consuming process, and there is always the risk of construction delays due to weather, materials, or labor issues. This can delay your move-in date and can be frustrating for buyers who are eager to move into their new home. If you cannot afford the uncertainty of completion, consider adding language to the contract requiring delivery by a certain date.
- Unknown Neighborhood – When you have a new home built, it may be in a neighborhood that is still being developed. This means that there may be fewer amenities nearby, and it may take time for the community to develop a sense of identity. Your home may be the only one constructed for several years or more.
- Limited Character – New homes tend to lack the character and charm of older homes. They often have a more generic look and feel, which can make them less appealing to some buyers.
To conclude, both buying an existing home and having a new home built have their own set of advantages and disadvantages. As a Home Inspection business, we recommend that our clients carefully weigh these factors and consider their individual circumstances before making a decision. No matter which type of home you choose, our team is here to provide thorough home inspections to ensure you have peace of mind when purchasing your dream home. Ultimately, our goal is to help our clients find a home that meets their needs and provides them with a safe and comfortable living space for years to come.