There are pros and cons to both building new or deciding to buy an existing home. Even if you start off your home search set on finding the perfect existing property you may end up deciding to build to get closer to what you want. On the other hand, you may plan on building and later decide an existing home is the best choice. Knowing some of the pros and cons of each scenario can help make your decision easier. Here are the top advantages and disadvantages I think all buyers should consider.
Buying An Existing Home
In my opinion there several advantages to buying an existing home. When buyers have limited time, such as those who are relocating for work or have children starting a new school, an advantage to purchasing an existing home is the quicker closing and possession times. Once pre-approved by your lender, you can view homes for sale, chose one you like and make an offer. Realtors help in this process by identifying properties, negotiating the purchase price, helping set up home inspections and completing all necessary paperwork. Buyers of existing homes are often able to move in within a month or two. Additionally, existing homes will typically have mature landscaping, fences and decks built, with construction (and its accompanying noise) completed. Older neighborhoods are typically more established, have schools built and businesses already servicing the area as well. An existing community will have a record of sales performance that can be tracked through historical data by a realtor which can accurately determine the value of the area you are considering buying in. Resale homes are also exempt from HST/GST taxes which can be a significant cost savings to the buyer. The ease and convenience of buying an existing home combined with the above advantages are often enough for buyers to choose this option over a new build.
However, when you buy an existing home you may not get the floorplan you desire and the finishes may be outdated with expensive options for renovating. Unless you find an existing home that has exactly what you want and is in perfect condition, you will have to budget for repairs, decorating, upgrading and renovating. These additional expenses should be factored into the overall price prior to making a decision between buying an existing property or building new.
Building A New Home
One of the biggest advantages to building a new home is you are more likely to get exactly what you want and this factor alone is enough to choose building over buying. In addition to choosing the floor plan you also have the ability to select finishes such as quartz counters, high end cabinetry, and updated flooring options. And who can forget that everything is new, and never been used – including the bathrooms! There is certainly no replacing the feeling of walking into a new home where you do not have to deal with odors, wear and tear or outdated finishes. Another advantage is the heating system, air conditioning unit, windows and appliances should all be more efficient in a newer home due to updated energy codes and building standards. Maintenance costs should be lower and you are less likely to have serious issues, such as, severe plumbing problems, issues with the foundation, outdated electrical or, Polybutylene piping, or (Poly-B). You will also have a warranty with a new home, so even if something does go wrong you may still be covered. New building codes also ensure builders use materials that are not hazardous to the health of home owners. Older homes sometimes have some presence of lead, asbestos, radon and mold that can be hazardous and big concerns for buyers. (See my previous article on choosing a qualified inspector to identify these areas of concerns if buying used).
Although there are many positives, new neighbourhoods will be under construction for some time, access roads can open and close (depending on the phase) and services may be limited and timelines extended. Buyers also have to factor in the time to find an architect/builder, interview references and choose every element of their home which can take a considerable amount of time before the building even starts. Many buyers also fall in love with the builder’s show home and forget everything they see is an upgrade. Upgrades can be very profitable for builders who can charge significantly more than their value. In addition, when you sign the purchase agreement for your new place, many of the closing costs are estimates. Make sure you discuss with the builder all of the upfront costs involved as well as additional costs, such as HST/GST, and get it in writing so costs don’t escalate as you approach your possession date. Also, many new home decisions are based solely on brochures or artist renditions. The builder has the discretion to change an image or lay out without consulting the buyer. Make sure you ask for a breakdown of room sizes and get every detail important to you in writing to ensure there isn’t a substantial difference between what you are sold and what you get. Work with a reputable builder, have a good contract in place and maintain good communication with your builder to ensure costs don’t creep up and surprises are kept to a minimum. Finally, it’s important to understand when building a new home, it’s generally difficult to recuperate the costs of building the home, as well as, landscaping, building fences, decks, sheds etc. without living in it for a long period of time.
The Bottom Line
Whether you decide to buy and existing home or build a new one through a reputable builder, working with a realtor can help ensure the process goes as smoothly as possible. Although most buyers know it is in their best interest to use a realtor when purchasing an existing home many new home buyers are unaware that realtors can also represent them in their new home purchase. It’s almost a guarantee you will have many questions throughout the process, so it’s extremely important you have great representation so you don’t end up with substitutions, exclusions or inclusions that could detract from your homes future value. As an independent third party your realtor can represent you and offer unbiased advice throughout the new home buying process. This includes access to the MLS system to compare price points and see community listings to ensure you are making the best financial decision. If you have any questions or comments on this article please contact me at 403-999-1397.