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Is It Better To Buy A Brand New House Or A Fixer Upper?
When house hunting, consider how buying a brand new house or an older property will impact your budget and lifestyle.
Especially for first-time homebuyers, it may be a bit of a reality check when you realize you’re on the hook for paying for all of the maintenance and repairs your home requires. With no landlord to come to the rescue, your finances are on the line to upkeep your home and handle potentially pricey repairs. So when you’re searching for a new home, it should be a priority to quality check your potential new residence so you have a clear idea of what to expect financially, at least for the foreseeable future. You’ll get much of this information by having a qualified professional complete a home inspection during escrow.
Similarly, you may have thought about what type of home you want. For example, you probably have some idea if you are looking for a Spanish-style hacienda, a classic craftsmen cottage, or a modern oasis with lots of windows. Each type of residence will require maintenance to a different extent in order to upkeep your property. However, something you may not have thought about is if you prefer a brand new, turn-key home or an older home. Your home's age and condition will determine the type of maintenance it requires and will impact when costly repairs are needed, as well as the asking price. Consider the following:
Pros & Cons Of New Homes:
When we talk about new homes, we are talking about turn-key properties that are newly built and have never been lived in before. Since you’ll be the first residents of the home, you’ll have a clean slate to make your residence exactly what you want. If you purchase the property before building is complete, you may also be able to provide input into certain features or design elements during the construction process. In addition, new homes are typically held to higher standards. For example, they are built to meet current codes, such as earthquake codes in California. They are also typically more efficient, green, or environmentally friendly than older properties.
Since the home and all of its appliances are brand new, you shouldn’t encounter any need for major repairs or replacements for many years. Things like the HVAC system and roof can be extremely expensive to repair or replace, but the window of time before you would need to shell out that cash is typically longer in a new home than an old home. You should also be given a builder’s warranty, which can last for up to 10 years and will cover structural defects and other quality issues with the home.
Although new homes may sound perfect on the surface, not all that glitters is gold. In addition to typically needing to pay more for a new turn-key property, you may also have to shell out even more dough to pay for your home’s completion if it’s still under construction. To illustrate, you may need to pay for things like landscaping, hardscaping, pool completion, and window coverings, all of which can cost quite a lot. Similarly, if you’ve purchased the home for its bones or layout but don’t like the current style, you may still have to pay renovation costs on top of the higher purchase price for a new home. And while the builder’s warranty is there to protect you, if something unexpected does go wrong it’s still a hassle to deal with and major repairs can uproot your life. This is something to consider if you are trying to move into a new home because it’s move-in ready and doesn’t require any work right away. Lastly, if you are in a new community, you may have to deal with construction noise for a while as other properties are built around you.
Pros & Cons Of Old Homes:
You’ve likely heard someone talk about an old house before and fondly say something along the lines of “they don’t make them like that anymore.” It’s true that some older homes were simply built better and still benefit from having good bones. In some newer communities, construction is a rushed process where the houses don’t get the same attention to detail and TLC as older builds.
Since the house is older, it may need to be updated or could be considered a fixer upper. Fixer uppers are not desirable to all buyers and the reduced competition will give you a greater chance of having your offer accepted, not to mention the price may also be less to account for the condition of the property. You can then put the money you saved on the purchase price of the house to renovating your home. Between the seller’s mandatory disclosures of any problems with the property and your home inspection, you should have a pretty clear idea of what you’ll be getting yourself into. You may also find your budget goes further on an older home, allowing you access to more land or a more desirable neighborhood.
The biggest con with older homes is that it may need more maintenance sooner. Unlike new homes, the time to replace big ticket items like water heaters and expensive appliances will likely come along fairly soon after moving in. If repairs or extensive remodels need to take place before you can move into the home, you will need to be prepared to spend a lot of money up front. In addition, you’ll need to find somewhere else to live or hold off on selling your current home until repairs are completed. In theory, you could negotiate a leaseback to allow you to stay in your former home until your new one is ready after it’s been sold if your buyer is willing.
The Key Takeaway:
Whether your home is brand new or has been lived in before shouldn’t be the determining factor for why you buy the house or not. However, it is something to consider because it can impact your home’s required maintenance and when you will need to put additional funds into your home’s upkeep. There are always exceptions to the pros and cons we talked about above. For example, location is very important. A fixer-upper located in a highly desirable neighborhood could end up costing you significantly more money than a newly built house in a less coveted area. Therefore, the quality of the houses you are interested in purchasing should be evaluated on an individual basis with the help of a qualified real estate professional. When you consider the big picture, you are sure to find the perfect house for you regardless of its age or history.
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