Pros and Cons of Buying vs. Building Your Home

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How to Decide to Buy or Build Your New Home

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Moving to a new home comes with a lot of big decisions, but one of the most important choices to make is to decide if you want to buy your new home or build a house from scratch. This is a decision you have to make pretty early in the moving process, since you can't really move somewhere if you have nowhere you can move in to. Here are some pros and cons of buying versus building.

Buying your new home

Buying a new home is the most common way to move in to a new home. There are plenty of existing houses on the market in most areas that vary in size, age, outdoor space, and amenities.

Pros:

  • Buying a home is almost always cheaper than building a home from scratch. Constructing a home is an extremely expensive undertaking while there are real deals to be had in the housing market for buyers. Economically, buying makes more sense.
  • Furniture and appliances are often included. A pre-existing home is usually going to come with some pre-existing furniture and appliances. A lot of time and money is saved on buying these items when you buy a home.
  • You can get a good deal. Buying a house means that there is a seller, and sometimes that seller can be goaded into selling a house for cheaper than it is worth. If you build a home, you will only pay for what it is actually worth.
  • Sellers could pay for closing costs or other specified costs of moving in.
Cons:
  • Not everything will be exactly as you like it. Your home can be renovated at a cost, but it will not be built for you from the start. Chances are that you will find something unsatisfactory with the construction of even the best house you buy on the market.
  • You could get ripped off. Just as the negotiation between buyer and seller can prove advantageous when buying a home, it can also be costly. A seller could sell you a home at an inflated price as opposed to you paying for the actual price of the building if you built your home. The price may be less than paying for construction, but relative to actual value, you are far more likely to get a bad deal with a bought home.

Building your new home

Building your new home is another matter altogether. There are two types of homes you can build from scratch: a tract home and a custom home. Custom homes are how they sound: a home that is built as you see fit with no restrictions. Tract homes are built to comply with a specific development or community, so they are more limited in their customization, but also substantially cheaper.

Pros:
  • You can make your home however you want it to be, especially when building a true custom home. Tract homes have more restrictions, but you still call the shots on most interior matters.
  • Your home is going to be new. That means it is likely as durable and energy efficient (especially if you choose to build a green home) as possible. Electric and heating bills should be less costly than they would be if you bought an older home.
  • You will pay for its actual value. You don't need to worry about a seller trying to get you to bit on an inflated price. Just beware of initial construction estimates as they do tend to go up.
Cons:
  • Building a home from scratch is very expensive. Not only do you need to cover the construction costs, but you also need to buy the land where the house will be built.
  • You will need to buy all new appliances and and furniture which obviously will cost a lot more money than buying a home with some of these items included.
  • If you build a tract house with extensive restrictions, you may not be able to customize your house as much as you want, which defeats the main purpose behind building your own house.
  • Building a home takes a lot of time so you will not be able to move into your new home right away It can take months, or even years if things go badly, to build a new home.
  • You can't get a deal. Buying a home has a high probability of getting you a house for less than its worth. you will pay for every last cent of your new home's value. You are not likely to make a profit if you sell the home you built.
For the most part, you should choose to buy a home if you are a typical homeowner looking to move somewhere else, and you should choose to build a home if you are in a good financial position and someone who wants a personalized home (and is willing to spend some time and money for it). Be sure to choose the right answer for yourself before you move.

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on July 14, 2014

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