Profile picture for spike1481

Build new or buy existing

My wife and I are in a predicament that I am sure many other people can relate to. We are trying to decide what is our best bet for our next house, building new or buying existing. We found a builder that we really like. He builds very good quality homes and only builds up to 10 houses a year. The builder has a smaller two story that we are interested in but the one we really want is out of our price range currently. Our goal is to build the big guy in about 5 years. Our question is would it be better to build the smaller house right now or just stick with an existing house? Obviously, we'd like to get the most bang for our buck when we do sell in approximately 5 years.
  • January 13 2011 - US
  • 0
    0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Be a Good Neighbor. Be respectful and on-topic. No spam or self-promotion! See our Good Neighbor Policy.

 
 

Answers (17)

This question has been answered many times already, but here is my .02 :)

In my area (Middle TN, or greater Nashville area), your dollar will go MUCH further right now by purchasing a distressed foreclosure or short sale.  Taking into consideration what it would cost to build vs what you could get for that same money by purchasing an existing home, you are going to come out much further ahead by buying an existing home.  If you want to "make it your own", find one that needs a bit more work, then do the work to your liking.  Paint, flooring, cabinets, etc can all be purchased for a fraction of building a new house, yet those are the things most people care about when wanting to make a house their "home".  :)

Katie
  • January 23 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Seems like most responses have a similar opinion here.  If you want it your way, you will want new and will have to pay the price since there is a premium for new with cars, homes, boats or anything valued highly.  If you want a good deal, builders are not likely the ones to look to since once they give you a great deal, they have many more customers to follow that want a great deal or even better deal.  As well, if they recently sold homes to others, but give you a great deal, they have some explaining to do to them. 

Explore the existing resale properties to know that nothing meets your needs and then go to look at new homes.  If you start with new, you will have a hard time getting excited about resales even though the price should be clearly a better deal.  No matter what you get, you will want to personalize as you go and so all homes are a work in progress.  Good luck to you.
  • January 19 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Even in San Diego, where property values are at a premium to most of the country, it's still far cheaper to buy existing than to build. There are simply too many bargains via distressed sales for building new to make any sense.  There might be specific cases where the land can be purchased via a "distressed" sale, or you can buy a foreclosure on a magnificent lot and "scrape" it to rebuild new; BUT you may still be faced with the task of ginding financing.
  • January 18 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Just like with cars, you pay a premium for new. You get more for your money on a resale. Even on a 5 year home, it is often a better deal. Think about it, even if you pay the same price as the home you want new with all the upgrades figured in, on the resale you get more landscaping done, some window treatments, more finished work in the house, decor, ect.
Only you can decide if a new car is worth it over a 2 year old, well maintained one, or a new house vs a resale.
GOOD LUCK
  • January 18 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Ed took the words right out of my mouth. I'm a former builder (maybe that's part of the problem!) but I've built the "perfect" home, only to find myself wanting to change stuff shortly after completion.
  • January 18 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for garymunson
As an owner/builder, My wife and I have abandoned that position since in the current market, building a house is a poor use of resources. Unless you have unlimited funds to draw on (which by your statement you don't), building, currently, is a way to get upside-down in a hurry. There is such a huge inventory of existing homes that you can buy far cheaper than you can build. The fire-sale prices of homes means you can re-model to your liking and still come out with much more house for the money. Anyone who can't find just what they want in the immense existing inventory is stupidly narcissistic, IMHO.
  • January 18 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Building a house is not what it use to be.
I work in the Mortgage Lending Sector and know first hand unless you are financing the project in full,it is better to find a home and not have to worry about going over budget and not having the money to complete. Banks are not lending until the house is built. If you have the cash money to finance the whole project then do what you want.If not Now you know!
Toni Harrington
Mortgage Specialist
  • January 17 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Go with the house you can get the best deal on!  In most real estate markets today, it is very tough for builders to compete with re-sale prices.  If you can find an existing home that fits your needs and you can get in it for less than a new construction home, than that would be your best route.  If you can not find something that is as nice as the new home, splurge for the new build! 
  • January 16 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for SoCal Engr
If you are 5 years out from building, you'd be best to sit tight and build up some serious cash. Realistically (depending on what you mean by "build new"), you're only a few years away from starting the process.

To explain my comment on "build new", I have heard it applied to...

 - Buying new construction where the builder lets you pick options.
 - Buying a lot from a builder and getting to pick from a selection of different plans for the actual house.
 - Buying a lot from a builder and working with the builder to design a house to build.
 - Buying a lot, getting an architect and developing plans, and then either bidding out the construction or acting as your own GC.

If you're really buying/designing/building, you're going to have some serious upfront costs to consider. We put 25% down on the land, another $30K (and could have easily been a lot more) for buildable plans and landscape plans (required by the HOA), and then there's the contingency cash you'll need during the construction when you have to make up any overruns out-of-pocket.

p.s. It's really a fun process, and I'd do it again if I could. It's just a bit more involved than it may initially appear.
  • January 14 2011
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Don't expect a bang in 5 years. Maybe never. Think of the fact that you are buying a home, not an investment vehicle. Wait, or consider living there longer.

Happy funding, Rudi
  • January 14 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for the_country_hick
Look at an amortization table. In 5 years in a flat market you have not paid enough off to cover the selling costs. It is cheaper to rent than to buy for 5 years.

Look at the blogs below to see more about the rent or buy decision.

This shows you how to look at your numbers to see if renting or buying makes the most economic sense for you.
"Does it make more sense to buy, or to rent? Here is the way to find out for sure."

This shows why sometimes buying cheaper is not the best or most economical choice.
"Why rent if you could buy for less money? Valid reasons inside."

What I think low interest rates really do for house prices. (it is bad)
"Do low interest rates really make it a good time to buy a house?"
  • January 14 2011
  • 1Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Buying an home that is already built can be nice to do small upgrades or change items.  As mentioned earlier this way you can get into a home with much less down.  Designing your own home would be great but I have found many people build their dream home only to make changes to it down the line anyway.

Hope this helps and good luck with your home.

  • January 14 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for connieinmon
It really depends on the area or neighborhood you are buying in. If you get an existing home that is in good condition with upgrades that count in an established neighborhood with good schools, you are not competing with new construction that is priced lower per SF than the home you live in. If you are only planning on staying there for 5 years, don't sink a lot of money in it then when you go to sell you should come out in pretty good shape to build your new home. Best of Luck with your plans!
  • January 13 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for ColleenPye
If you are planning on selling in a few years to build the big one.. buy a close out of a community, otherwise you will be competing with new homes in a few years. If you are buying an existing home.. look at the surrounding areas, consider schools.. and the status over time of those homes. Always consider location... watch out for buying at the end of a COMMUNITY.. make sure you are not backing up to the main road.. a  REALLY GOOD deal may not be the DEAL you are looking for. Always seek assistance of a Realtor when buying new construction. I have a rule.. can I sell this home in a year.. should you need to move? I am hoping that if I sell you a new home..that when you get ready to list, you will call me . I certainly do not want to tell you.. well this location is going to be a problem. I have seen it happen while I was selling a home.. they went and bought a new home, without the advice of a realtor... and I am going to have ISSUES with selling later..
  • January 13 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

It also depends on your area.  We have a lot of builders hanging around that would love to build a custom home and would give you a heck of a deal.  Building costs are down and labor.  It is more difficult to get a construction loan and does require more money down.

Buying an existing home, you could get as low as 3.5% down with a FHA Loan.  Plus you could take advantage of a great below market price foreclosure deal. 

This all starts with selecting a great agent.
  • January 13 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for spike1481
To answer your questions, we are looking around the 200 - 235K price range right now. In the next five years, it is kind of hard to tell but I would guess around the 300K mark.
  • January 13 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.

Profile picture for Ofe Polack
We know what the market is like today but truly nobody knows what it will be in 5 years.  One thing will be certain if you buy today, you will have to pay closing costs on what you sell and what you buy  and then again when you buy in 5 years the same thing.  Depending on the amount of your investment now and in 5 years you can do the numbers.  Fact:  Interest rates are the lowest they have been in many moons....will they be the same 5 years from now?  And finally all things being equal there are many good buys on the market at the moment, the higher the price the better they are.  We do not your present price range, nor do we know your price range in 5 years which makes our suggestions a bit tricky. Good luck!
  • January 13 2011
  • 0Yes

  • Report a Problem

    Please enter a valid email address.

    Content flagged

    We will review this content. Thanks for helping make the site more useful to everyone. To learn more, read Zillow's Good Neighbor Policy.

    We're sorry. This service is temporarily unavailable. Please come back later and try again.