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Now, you’re probably wondering, Is it better to build or buy a house? Maybe the price tag is worth it . . . And you may be right! Or building a house may be a terrible idea for you. Whether building or buying a house is better for you really depends on your situation.
Did you know you need a Real Estate agent to build?
Of course, it helps to weigh the pros and cons of building a house so you can decide if you want to go to all that effort or if you’d rather buy an existing home.
Pros of Building a House
To start off, let’s look at why building a house can be beneficial:
Customization – Building a house from the ground up lets you personalize it to suit your lifestyle and tastes—from the layout, cabinets and flooring to the sinks, lighting, and doorknobs! Even tract homes built within subdivisions allow for some customization in color choices, flooring and certain finishes.
Low to no competition – The 2022 real estate market is hot. In March, existing homes spent just 17 days on the market!5 With homes selling so quickly, you really have to compete to find the best existing home at the lowest price. But if you own land to build your home on, you obviously have zero competition!
Little maintenance – Since new homes must meet current building codes and have up-to-date technology, you probably won’t have to worry about big repairs or maintenance issues for the first few years—no leaky roofs or failing HVAC systems for you! Plus, you don’t have to worry about finding the last owner’s bad do-it-yourself repairs, because there wasn’t anyone before you.
Low energy costs – New homes often feature the latest energy-efficient systems and materials, which usually lead to lower energy bills—woo-hoo!
Newness – You get to start fresh as the first owner of your home and enjoy brand-spanking-new everything. That’s the dream, baby!
Cons of Building a House
Okay, we already know one disadvantage of building a house is that it costs more than buying an existing home. That isn’t so bad if you’re able to budget for it, but it can be a real showstopper for some people. Let’s consider the other cons of building a house too:
Long wait time – It takes an average of seven months to construct a new house—not counting the planning and approval stages.6 But closing on an existing house takes just 48 days.7 And keep in mind, you’ll have to pay to live someplace until your new home is ready—so if you’re building, you could get stuck paying your current rent or mortgage plus the construction costs for several months.
Hard to negotiate price – Most buyers go into a home purchase hoping to lower the price. While that’s super common in the resale market, usually there isn’t a lot of leeway on closing costs or purchase price with a newly built home—unless your real estate agent gets creative at the negotiating table. Still, you’ll probably get more bang for your buck with an existing home.
Noise and debris – If you build a house where other new homes are being built, you might have to deal with construction noise, traffic and glops of mud along your commute. Worse yet, you could end up with a roofing nail or a screw in your tire. Sure, things will eventually calm down as other homes get completed, but it’s something to think about if your tolerance for noise and messiness is on the low end.
Stress – When you build a house, you’ll have to purchase land, decide on a home design, and pick out flooring, fixtures, cabinets, countertops, interior trim, exterior trim, and on and on. You’ll have to do all of this and stay within your budget. Managing all the details that go into building a house takes time and effort. Don’t underestimate the stamina you’ll need to make sure it’s all done the right way.
Hidden costs – Those dollar signs you see on things like countertops, fixtures and appliances are just the tip of the price-berg. Upgrades and unforeseen problems can quickly drive up the price of your new home, and those costs may or may not be rolled into your contract price. Play it safe by budgeting to pay cash for those unexpected expenses. And don’t forget about post-move costs like landscaping and blinds—they’ll sneak up on you too.
Hopefully now you’re getting a better idea of whether you want to buy or build a house. Next up, we’ll talk about how to pay for it—no matter which way you decide to go!
Should I Buy or Build a House?
Maybe you’re still on the fence about whether to buy or build a house. We get it—that’s a big decision, and you want to get it right!
If you’re a first-time home buyer, it’s usually better to go the cheaper route and buy an existing house. You’ll save money and get some homeownership experience before you take on the challenge of building a new house. It’ll also give you time to build equity (your home’s value minus how much you owe on it). When you sell your first home, you can use that equity to help pay to build your next home.
If you’re an experienced home buyer, then building a house could be a fun adventure for you! That is, as long as you can stay within that 25% limit and still handle all the other homeownership costs like maintenance and utilities.
Whether you buy or build, owning a house you can afford is an incredible way to build wealth!
ArticleSource: ramseysolutions.com/real-estate/building-a-house
