New Construction or Existing Property

by c21commonweath_ldowling 15. January 2020 10:48

Buying a home is exciting, but you face hundreds of decisions, both big and small. One of the most important choices you will make is whether to purchase an existing property or a new home built from the ground up. In some locations, land for new construction isn’t available, but if you have a choice, you'll need to be careful to make the right decision for you.

Pros and Cons

There are definite advantages to new construction. For example, you can customize your floor plan, finishes, and appliances right from the start. However, you will probably pay a premium for this flexibility.

Existing properties are available in many more locations, so you have a better chance of buying wherever you want to. Unfortunately, an existing property may come with many hidden costs. Here are some other money matters to consider when choosing between buying an existing property or building something new:

1) New Construction Costs More

According to the National Association of Home Builders, the average cost to construct a new home is around $300,000, on top of the cost of the land. The average cost of an existing property, on the other hand, is just $200,000. This difference alone can make the choice for many homebuyers.

2) Repairs and Renovations

When you purchase an existing property, it may need some repairs, or you might want to make some renovations. These costs can quickly escalate even for minor projects. If you’re leaning toward buying an extant property, get a home inspection first—you may change your mind if the repair estimate is too steep.

3) Utilities

Don’t forget about ongoing energy costs. Developers often build new homes with energy efficiency in mind, but an existing property may need a lot of work to catch up. Modern building codes are more likely to require better insulation, energy-efficient windows, and other upgrades. In addition, if you're considering solar energy, adding a system to new construction is much easier and less expensive.

Choosing a home to purchase is one of the biggest decisions you will ever make. If you have a choice between new construction and an existing property, think carefully about the benefits and drawbacks to both.