Whether you are buying a new or old home, there are plenty of things to think about.
Pros and Cons of New Construction Homes and Older Homes
When searching for your home, keep in mind that you are in control of the transaction. You choose your real estate agent, home inspector, mortgage provider and of course, your home. All of these decisions can sometimes be overwhelming, and for some people, turn what should be an enjoyable experience into something they dread. However, with the guidance from a knowledgeable Coldwell Banker® agent, the purchase of your next home will be something you celebrate and enjoy for many years. Your lifestyle and how much you enjoy the ongoing maintenance and upkeep associated with homeownership are key considerations to finding the best home for you. Most people prefer new construction over existing homes. But older homes have some advantages that should not be overlooked, and may make an existing home the right choice for you. Let’s compare the pros and cons of each:
Buying a New Construction Home – The Pros
The vast majority of new homes are built in subdivisions with a unified style and restrictions in place to maintain the property values. The developers chose the location of the subdivision for one very important reason: it is where home buyers want to live. Developers factor in what people in the area can afford, amenities that most people want, and home features that are desirable to their targeted market. Simply put, they make the process as easy and enticing as possible for you. There are other advantages to opting for a newly constructed house:
During construction you can add the extras you have always dreamed of having in your home. A garden tub is an expensive modification in existing homes; not possible in some older homes.
New homes feature the latest styles like an open floor plan and large family rooms for entertaining guest.
Most new homes have low-maintenance exteriors such as vinyl-wrapped windows, trim, and railings. That means less time spent on routine maintenance. You are free to spend your off hours golfing, traveling, or just enjoying your home with a backyard cookout. Architects design new homes to maximize space. Engineers develop construction materials for optimal energy efficiency. Highly efficient HVAC systems, windows, and Energy Star appliances equate to lower utility bills.
New homes in Minnesota come with a one-year warranty on workmanship, two-year warranty on all mechanical systems (electrical, heating and ventilation) and ten-years on major structural elements all required by State of Minnesota Statute. Some builders include additional warranties on other elements as well.
Buying a New Construction Home – The Cons
There are often incentives and free upgrades if you use the builder’s recommended lender. But that may not be the best deal for you. A builder can require that you get qualified by their preferred lender, but they cannot mandate that you to use that company for your mortgage. They also cannot charge buyers who choose their own lender a higher price. But they can reduce the listed price as incentive for using their lender. While allowing the developer/builder to streamline the process is convenient, new constructions come with some drawbacks:
There is very little room for negotiation. Builders may work with you on some upgrades, but most stay firm on price. Some home buyers in large multi-phase developments, who have attempted to sell their home after a few years, sometimes find themselves competing against the builder for potential buyers. They also may end up selling for less than they originally paid for their home.
New constructions often lack mature landscaping and may have smaller lots than existing homes. The developer generally maximizes available land. The result is limited outdoor space and extremely close neighbors.
It could take many months or years for the development to build out and new construction to cease. That means heavy equipment stirring up dust, mounds of debris or large bins, and the noise of saws and nail guns year-round.
You will be limited on possible modifications to your home and what you can have in your yard by tight subdivision restrictions.
Buy an Older Home – The Pros
Large trees remind many potential buyers of their childhood home. The value of a spacious yard for pets and children to play in is difficult to quantify. There are no rigid homeowners associations or the costly dues that come along with them in most older neighborhoods. Typically, existing homes cost about 20 percent less per square foot than new construction in the same area. Some other advantages:
You have more styles to choose from. In your price range and selected area, you will find brick homes, single story homes, and many different floor plans.
Individual sellers are often more negotiable on price. They may be motivated by other life factors to sell fast. Neighborhoods are more established. The final determining factor for many home buyers is which place feels most like home. There is a sense of community in older neighborhoods that is missing in some new developments.
They tend to have more character. Part of the joy of owning them is you can upgrade them and fix them up to your own preferences.
Buy an Older Home – The Cons
If you are handy and want a home you can make your own, make sure you the home is a fixer-upper home worth investing in. If you are not particularly handy at home improvement projects or knowledgeable about the cost of home repairs, older homes can become large money pits. The seller’s disclosure may offer some protection. Any known issues must be revealed, and if there were major problems like foundation issues or leaky basements, it should surface in this documentation. Additionally, a home warranty can protect buyers from expensive appliance repairs. There are still some other cons to owning an older home that you should keep in mind:
Typically much less energy-efficient than new homes. If they do have things like thermal windows, they are less efficient than modern windows. Retrofitting new windows to older homes is quite a challenge.
May have small rooms that you are stuck with. Load bearing walls will prevent you from making significant changes to the existing floor plan. Some mirrors and bright colors may make the rooms look bigger, but they will always be the same size.
Generally require ongoing maintenance that will quickly turn into costly repairs if not done. Additionally, older homes have less useful life remaining for things like the furnace, roof, and appliances.
With a knowledgeable real estate professional on your side, you can make an informed decision about your purchase of any new or existing home. You should have any house you plan to buy inspected by a certified home inspector. Make your decision based on a logical assessment of your needs. Ideally, you should have a second and third choice in case you need to walk away from negotiations on your ideal home. People who make objective decisions about their home purchase based on lifestyle preference and aptitude for home improvements are more likely to feel good about it in the years ahead.