Build vs. Buy - Is it Cheaper to Build a House or Buy an Existing House?

Is it cheaper to build a house or buy an existing house? Well, it depends.

We're going to talk about the pros and cons of both.

{YOU CAN WATCH THE VIDEO UP TOP, OR READ BELOW.}

Pros of Building

You get something that is brand new that no one else has ever lived in. It’s clean. You don’t have to repaint or redecorate or fix any decorating choices that may not be your style. You don’t have to repair things that are broken. You don’t have to modernize things or update a kitchen or bathroom. Another pro of building a house is that you can usually get the builder to kick in some incentives. They may agree to pay a portion of your closing costs, or throw in some appliances - like a refrigerator, a washer or dryer. Or maybe some additional bonuses if they are having trouble moving houses in a particular neighborhood. And lastly, they are building houses much more energy-efficient these days, so you could save a lot on utility bills. BONUS TIP: You don't have to go against a multiple offer situation.  (**As of 2021, builders are NOT offering incentives. Because of demand, their prices are going up quickly, and many have waiting lists.)

Check out our video, Before Making an Offer on a New Construction Home to know more about negotiating. 

Cons of Building

It’s usually a little more expensive up front to build a new house.  The materials, labor, and land costs are up. A second con is the time it takes. If you pick your lot and floor plan and start from scratch, you’re usually looking at a minimum of five months before you can close and move in. If you’re in a hurry and have to live with your in-laws for five months, that may not be very desirable. Now sometimes they have what they call inventory or spec homes that they’ve already started construction on and maybe they’re halfway done or completely ready to move in. You could buy one of those homes and move in faster, but you may not get to choose your cabinet color, your flooring or make any of the design choices. So there’s a trade-off.

Pros of Buying Existing or Pre-owned

First, it’s usually less expensive to buy. Secondly, things are already done. They’ve got window coverings, a mature, sodded yard. It’s typically in move-in condition right away. Third, it has mature landscaping. You usually don’t see any mature trees in a brand new neighborhood. 

Cons of Buying Existing or Pre-owned

Well, the obvious is when you have to deal with crazy paint colors or outdated wallpaper. The kitchen appliances may be dated. And the air conditioning units and roof may be as old as the house. Things need to be updated and repaired. And depending on the age of the house, the cost can really add up. If you could get the house at a big discount, and don’t mind doing all of the work, you could get the house exactly the way you want it. You just have to be careful not to over-improve the house for the neighborhood.  

Custom Home vs. Production Home

So, we’ve talked about some of the costs between building a production home or buying a pre-owned home. However, building a custom home with a builder is an entirely different animal. We'll go into more detail in another post.