Over the course of a lifetime, a home is often the single largest investment a person will make. Many people end up spending a lot of time and energy (and often stress) searching for the perfect existing house, or designing their ‘dream home’ and building new. Factors such as location, cost, market trends, property taxes, lifestyle and property condition all contribute to your house hunt process. Beyond that, every house hunter has a specific wish list that includes needs and wants — the must-have’s and the ‘nice to have’s.’
While buying an existing home involves making many choices, building a new custom home is reported to entail making upwards of 400,000 decisions. That means it’s important to thoroughly evaluate the advantages and disadvantages of both paths before you decide to dive in one way or the other.
Here’s a quick look at both sides of this important life decision.
BUYING AN EXISTING HOME
When considering buying an existing home, the two biggest advantages are convenience and cost. Whether you’re buying cash, converting assets or applying for a loan, it’s important to set your target budget and work with a qualified real estate agent who is an expert in the area you’re considering. They can help streamline the process by providing helpful information about the area based on what’s important to you, in addition to offering recommendations for key services you may need such as lenders, home warranty firms, home inspection companies, etc.
While buying an existing home involves a number of steps, the convenience of moving in relatively quickly is often compelling enough to trump getting every single feature on your wish list or being in the exact neighborhood you’re hoping for. That’s often even more true for families relocating for a career change whose children will be starting a new school.
In many cases, buying may prove more cost effective and predictable than building, but can still come with trade-offs. You may spend less and be able to manage your purchase to a very specific target budget, but you just might not get everything on your wish list.
CONVENIENCE VERSUS CUSTOMIZATION
Now consider the disadvantages of buying. The likelihood of you getting absolutely everything on your ‘hit list’ is probably low. Whether it’s the floor plan, the counter-tops, the number of bathrooms, the exact location, or something else, you’ll have to make some compromises.
Some issues may be fixable with added budget, while other issues may not be. Older homes may be lower cost, but will often require significant upgrades on remodeling, repairs, decorating and/or landscaping that will only add back to your overall cost. All of your savings just went right back out the proverbial window.
BUILDING A SEMI-CUSTOM, CUSTOM HOME OR LUXURY HOME
While building a new home does not offer the same kind of conveniences as buying an existing house, there are a host of other advantages to this approach. First, you will have the luxury of selecting your own lot in the development and geographical area of your choice. No compromising on neighborhood, views or anything else. If you play golf, determining a development area where you want to join the existing golf club may help you identify the right area, or at least narrow the choices, as you look for the right location and lot for your new custom home.
It’s no surprise that the biggest advantage to building a custom home versus buying an existing one is that you’ll get exactly what you want… that is, as long as you know what you want for the most part. Once you decide you’re ready to build, finding an expert realtor who specializes in lot sales may be the perfect way to begin. After all, the style, architecture, floorpan and orientation of your home will be highly influenced by your lot location.
You may also consider finding an architect or a custom homebuilder as your first step, either of which can help you hone in on the style, location and other details for your unique project. Understanding the land and the systems you’ll be on may also influence your decision process, such as what municipal water and sewage systems you would be on, as well as other utilities. Your builder can also help you understand what other types of environmental issues and permits that may be required to build in your desired location, all of which will play a factor.
Another great reason to build a custom home versus buy is that a new home will simply not come with any potential health concerns or toxic materials such as asbestos, lead paint or mold, which were used regularly in houses built within certain years. That means a new home may literally be ‘better’ for you and your family. New houses can also be tailored to your energy and technology preferences from the start, such as green materials and Energy Star appliances.
What is a Semi-Custom Versus a Custom Home?
Semi-custom homes are generally built by smaller home builders who may or may not re-use architectural plans and are willing to customize them. Depending on the builder, changes can be as extensive as resizing, adding or deleting rooms or as simple as selection of interior and exterior finishes.
Generally speaking, custom homes are a collaboration between some combination of architects, builders, and home buyers. Designs may be planned around lifestyle, to capture views or to enhance privacy. Interior and exterior finishes are selected to create a truly one of a kind home.
Even though the upfront costs of building can be higher and your timeline is longer than buying, you have all the control, and it may be easier to recoup your investment. Custom homes can often be marketed for a profit in years to come, of course depending on market conditions.
In addition, your custom builder should work with you to help you control if not reduce costs, or at a bare minimum, be very transparent in your costs by providing all the options and details of your entire project, and everything you’ve selected for your new home. For example, if you have a specific front door style you’re aiming for, your builder should be able to provide multiple options based on that style with different price points, so you can determine where you spend your budget dollars based on your choices.
Your builder should keep you well-informed on where your choices, including any changes you decide to make, will impact your budget and your timeline, either negatively or positively. Substituting different materials and fixtures can save thousands of dollars, so be sure to ask ahead of time if there’s a cheaper alternative if there are areas where you’re willing to compromise to conserve budget. Always know that unusual requests will simply cost more. Your building should be able to determine if your requests, such as custom colors or ornate shapes of materials, are considered ‘standard’ or ‘out of the ordinary.’
THE BOTTOM LINE
Even if you start off your home search set on finding the perfect existing property, you may ultimately end up deciding to custom build to get exactly what you want. Or, you may go into the project planning to build and stumble upon the perfect existing property for you and your family.
In either case, working with a qualified and experienced professional – whether that’s a real estate agent specializing in land sales or resale, a custom homebuilder or an architectural firm – will help ensure the process goes as smoothly as possible.