Buying or Building?

By: Nick Deonas

You are correct if you think we are in a depressed Real Estate market, but you should be thinking of investing now. The Real Estate market is down and flooded with homes for sale and the builders are selling pencils on the street corners and applying for food stamps, so why would I be thinking of building or buying right now?

When market is flooded with homes for sale it means this is one of the largest “buyers markets” in many decades. Because there are so many homes on the market the building side of the industry is down also, if new construction is down then so goes the cost of building materials, which means it cost less for you to build then it did two years ago, a lot less.

So which is the best route to go, building or buying? I think first there a re a couple of questions that need to be answered, do you own property in an area you would like to live? If the answer is yes then you should start looking at plans and talking with a few builders. You may be surprised at what you can build for the price today, a new home with new appliances and designed the way you want, a dream come true.

If you don’t own property for building your considerations now become a little more difficult because of all the homes that are available and the choices you have. There are builders with large inventories who are offering tremendous savings just to unload. So what are we to do in this type of market? My answer is simple, take advantage of it while it is a buyers market and things are lower then they have been in years.

There are advantages of buying an existing home:

  • You can move right in whenever you close on the property, the process for closing usually takes four to six weeks.
  • The home is in a neighborhood that you really like and you know there will be no new homes being built around you.
  • You may be in a position to take advantage of upgrades that the previous owner made to the property that you might not afford to make in a new home.

There are disadvantages to buying an existing home:

  • The previous owner may have made upgrades that were pleasing to them but may not be to you, you may be looking at doing a lot of “re-upgrading” after the closing.
  • The home has some age on it and you may be faced with fix ups, A/C heating, electrical and plumbing not to mention roof. It is highly recommended that you pay for a professional home inspection prior to locking yourself into the purchase.

What are the advantages to building a dream home?

  • You have the opportunity to choose the exact type of home you want, perhaps a two story, one, two or three car garage. How many square feet you want, it’s your home and you are the designer from start to finish.
  • You home is brand new and comes with warranties not only on the home itself but factory warranties on all of the appliances. There are no “fix-up” costs involved or worries that this or that does not work.
  • The first people to live in the house will be you, nothing hidden to find out about after moving in.

Building also had its disadvantages:

  • In most cases it could take anywhere from six months to eighteen months in some cases for a true custom built home to be completed. There are questions you will want to ask your builder, never enter into a building contract without discussing every aspect of the project with the builder, remember you will be see a lot of each other for a long time.
  • Although you get to pick everything in a custom built home sometimes the cost just exceeds a budget, this is a situation many find themselves in as a custom home is nearing completion, you need to stay on top of the cost and make sure you are not over building causing the bottom line to be a shock.
  • If you are building in a “new community” it is just that, a new community and you have no idea of what will be built in the future. If a new developer comes along and buys land around you and decides to build low income housing this could have an adverse affect on the value of your home and perhaps difficulty in selling it down the road.

There are options to consider today if you are thinking of moving into a different home, building vs buying is certainly a big consideration. One thing is for sure, there are many great buys on the market today, both in resales and in building.