The first question that pops up in everyone’s mind is whether to buy an existing home or acquire land and build a custom house. Both have their pros and cons, but it is almost impossible to decide until you compare both options side-by-side.
There are many factors that can influence your decision such as the budget, aesthetics, overall covered area, the floor plan and much more. In this article, I’ll go over the most important points to consider in either of these situations. Keep reading to learn more.
Building A House
The first step to building a house is to envision it. What do you want the interior and exterior to look like? What materials do you want to use? Is there a theme you have in mind?
Understanding what the answers to these questions entail is key.
Advantages Of A Custom-built Home
Let’s have a look at some of the advantages of building your own house:
Being able to customize your house is an incredible feeling, and you get exactly what you once dreamt of. You can create a living space where everything is situated perfectly and in the right place.
Downsides Of A Custom-Built Home
On the flipside, here are the disadvantages:
Average Cost To Build A House
The average cost to build a new home costs around $287,466. This can increase and decrease based on many factors, such as the size of the home and even the location.
Prices can also increase depending on the quality or type of building material you choose from, the cabinets, built-ins, custom interior, and any exterior features you choose. As a fun and useful exercise, compare this number to a few houses on the market that you are interested in. Is it higher? Is it lower? This may help you make your decision.
Additional And Upfront Costs
Once you are done with the purchase of land, the first thing that you should be looking into are preparation fees.
Before the actual construction, the land must be prepared. This includes clearing away trees, plotting, fixing the drainage, placement of driveway, etc.
Secondly, the other cost that not many people think of is utilities. The empty lot doesn’t have access to electricity, gas and water that collectively can cost anywhere from $10,000 to $25,000. The cost can fluctuate drastically depending on the size and type of the property.
Closing costs can also range somewhere from 2.5% to 6% of the purchase price. In addition to all the other costs, you need to hire a lawyer after closing for all the legal documentation handling and management. Additionally, during this process, you have to seek mortgage approval. This brings added costs such as the commission to the mortgage specialist.
Buying An Existing House
Buying an existing home is a perfect option if you are looking to move in right away. The first step would be listing down the essential features and the areas in which you are willing to compromise.
Most importantly, you must acquire information on the properties with the help of a real estate agent. Get to know the seller's market in the neighborhood you are buying the house.
At the time of purchase, you may have a number of questions popping in your head.
Advantages Of Buying An Existing Home
Here are the advantages of buying an existing home:
Buying an old house has a few disadvantages as well. Read on for more information.
Disadvantages Of Buying An Existing Home
Let’s review the cons of buying a home that already exists:
Average Cost To Buy A House
The cost to buy an existing home varies from location to location, the covered area, the type of the house, the age of the building, the upgrades made before selling, and other various factors. On average, the cost to buy a single-family house is $333,000, according to the National Association of Realtors. Keep in mind, there are many tips to help you buy a house, including putting your finances first and knowing about the different loan types available.
Additional And Upfront Costs
Both upfront costs and additional costs depend on the property itself. If the old appliances aren’t as efficient and are faulty, you may be looking at an additional $25,000 depending on which brand you choose for the new appliances. At the time of closing, you should have a budget of at least 1.5% of the purchase price as the closing cost. To make your life easier, view the buying a house checklist to ensure you are ready.
Similar to a new construction, you will be looking for home insurance, lawyer fees, and mortgage approval. All the listed costs can fluctuate depending on the location and the property.
In conclusion, if you are building a house, you get the perfect number of rooms, beautiful architecture, high-quality building material and appliances, and low energy consumption. But at the same time, you have to be ready to face additional costs and the long wait to move in.
If you are thinking of buying an existing home, you can move in right away. You can also find schools, gyms, restaurants, and hospitals in closer proximity but keep in mind, an older house can result in high maintenance cost in the long term.
For some people, the pros of building a house outweigh the cons, whereas, others prefer buying an existing home based on their requirements. Either way, by the end of the process, you will be the owner of your dream home and in today’s world, owning a house is a privilege.
Make sure to consider the pros and cons of building vs buying before making a final decision.