Buying Old Homes vs New Construction

Quick, picture the home you’d like to live in. Chances are it bears a passing resemblance to the one you grew up in. A traditional Leave It to Beaver colonial, perhaps, or a brownstone townhouse straight out of The Cosby Show. Or maybe something with a yard or a garden or a swing set out back.

Then again, maybe not. Maybe you’d prefer something newer, something with contemporary style, the latest amenities, and a lot less maintenance. (Or maybe you’re not ready for that whole "three bedrooms, two bathrooms, and 1.5 kids" thing at all, and a condominium or co-op fits the bill.) When it comes to home buying, one size does not fit all.

Let’s say, though, that you’ve decided you really want a traditional home -- what real-estate types call a "single-family detached house" (with or without the swing set). The big issue now is to decide whether you want a brand-new home that no one else has lived in or an existing home with some history and, perhaps, a bit of character. Both have their pros and cons, and understanding how they differ is crucial to finding the one that completes the picture for your particular lifestyle.

They Said It

"We wanted to live in one of those cool, funky neighborhoods, but we didn’t want to have to renovate. It just made more sense to get into a new place." – Jeff W.
 

New House, New You?

New cars have that new-car smell; newly built homes, the suggestion of new beginnings. These days, most new homes are built in developments with a unified style, with tot lots or other communal areas, and anywhere from a handful to hundreds of homes. Built to the latest codes and standards, they tend to be contemporary styled, energy efficient, and more expensive than resale homes of a similar size.

The question is, are the nicer amenities worth the added cost? Specific details vary, of course, but consider the pros and cons.

The Pros and Cons of New Construction

PROS

• Contemporary style
• Some flexibility on design during construction phase
• Cheaper to maintain (new appliances = fewer repairs)
• Cheaper to operate (energy-efficient construction)
• Extended warranties
• A cohesive neighborhood (consistent layout, common areas)
• The smell of fresh paint
• Frequently have a homeowners association (helps protect resale value)

CONS

• Cookie-cutter design
• Higher price (upscale amenities, current construction costs)
• Limited negotiating room on price
• Generally smaller yard
• Potential for monthly homeowner dues
• Risk of shoddy construction
• Frequently less character, or homogenous design
• Frequently have a homeowners association (can put limits on how you use your property)

Of course, one homebuyer’s pro ( "No one has lived in it before us, so we won’t inherit any problems...") can be another’s con ( "No one has lived in it before us, so we have no way of knowing about any problems..."). Fortunately, there are ways to make sure the house you’re buying is really the house you want:

• Check the builder’s track record. What else has he or she built? Were previous projects completed on time, on budget, and without bad blood between the builder and buyers?

• Walk the streets. If you live nearby and previous stages of the development are occupied, ask the residents if the builder did quality work and lived up to his or her contractual commitments.

• Picture your home, not the model home. You can certainly have the granite counters, surround-sound home theater, and gold-fixture jetted tub you saw in the model home, but they’re not included. You will pay extra for them.

• Bring your own agent. If the builder has a real estate agent on site, the agent will be more than happy to help you. After all, on-site agents work for the builders who hire them. Guess whose best interest they have in mind?

Finally, consider the intangibles. Similarly styled homes attract like-minded buyers, and most developments are built with families in mind. Depending on your point of view, the consistency, conformity, and kids playing in the street can be a blessing or a curse.

Existing Construction/Resale Homes

They Said It

"We liked the charm factor of an older home -- even if it meant living in a construction zone for months during our renovation." - Leslie C. 

Old=Charm?

With new development springing up seemingly overnight, it’s obvious that new construction is popular. And yet, most people buy a resale home; i.e., a home that someone else has lived in but is now on the market again. Call them used if you must -- existing construction sounds better -- but they’re the kind of houses that many people would like to call home.

Of course, there are pros and cons with existing construction, too. (That darling farmhouse with the big windows? It can be mighty drafty come winter.)  Generally speaking, resale homes are more available, less expensive — as much as 20 percent less than comparable new homes -- and full of surprises.

The Pros and Cons of Resale Homes

Pros

• Availability: More choices, more styles to choose from
• Lower price: It’s not new anymore
• Price may be more negotiable
• Track record: Many repairs already made
• Established neighborhood

Cons

• More maintenance: Things break or wear out
• Less energy-efficient: More costly to operate
• Dated design, older appliances and amenities.
• Generally smaller bedrooms, bathrooms, and windows
• It’s been lived in!

As with new construction, there are ways to make buying a resale home less scary:

• Have the home inspected. You do not want to find out the foundation is rotten or the roof needs to be replaced after you move in.
• Consider a counter-offer. If the inspection reveals fixable flaws, propose the seller do the repairs or lower the price.
• Expect the unexpected. Pipes leak, foundations crack, and furnaces fail -- get used to it.
• Be honest with yourself. If major repairs are required, you’ll either have to do them yourself or bring in the professionals. Some people can handle the disruption; others can't.

Put it all together and the bottom line on resale homes is this: Don’t buy someone else’s problems unless you can tackle the solutions. Find a house you like, consider its pros and cons -- objectively, as well as emotionally -- and think about the compromises you’re willing to make. The more logically you approach buying the house, the more you’re going to love living in it.

Next article: Buyers' Real Estate Wish List

Previous article: Choosing Your Home Type

Related Links

• Choosing Your Home Type
• Falling in Love With a Home
• Buying Foreclosures and Fixer-Uppers