Buying an existing house is standard for a reason, but for the most extreme of DIY-ers, building a home from the ground up can look like an attractive alternative.
Is building your own home cheaper? Is it smarter? Is it better for your health? Let’s run through the pros and cons.
Pro: Customizing Your Dream House
For those with a clear vision of their “dream home,” customization tends to be the first and last thing on their “pro” list. And there’s nothing wrong with that—who doesn’t want a chance to choose all their flooring and fixtures? Getting it out of the way upfront also means you won’t have to spend money on renovations for a very long time.
Con: Resale Value
Here’s the thing about customization: it’s, well, custom. To you. And by definition, that means it’s not custom for pretty much everyone else out there. This sounds great right now—who cares about the kind of people who don’t appreciate a good basement ball pit, right?—but it tends to present a problem when the time comes to sell the house.
The more tailored the house is to the needs of one family, the less likely it is to appeal to a wide variety of buyers. This is why realtors advise people not to turn their garages into in-law apartments or to pave over the side yard so the kids have a place to play basketball.
Of course, there’s a simple solution—make sure that ball pit is easy to remove, so when the time comes to sell, you can pretend it was a boring TV room all along.
Pro: No Nasty Surprises
Unless you’re buying in cash, your lender will require least one home inspection before you close, but inspectors aren’t perfect, and they can’t predict the future. So if they miss the beginnings of a tiny leak in your new attic, you’ll still be stuck with the damage next time a big storm rolls through.
By building new, you’re also pretty much guaranteed not to encounter health hazards like mold, lead paint, or asbestos. Of course, that doesn’t mean building a home is going to be free of any bumps in the road. Unexpected setback s like bad weather, ruined materials, or rising costs can be just as painful.
Con: Building out of Town
If you plan on living in a medium-sized town or larger, building new almost always means an empty lot on the edge of town, far from that cute downtown you liked so much. That’s because the older established neighborhoods are already built up around the town center, lowering your odds of finding an affordable empty lot.
Unless you get lucky, your only other option for landing a prime plot of land is to buy one with a home already on it and then tear it down. This may be economically feasible if you can find a foreclosure on the cheap, but that’s a big “if.”
Foreclosures may be budget-friendly, but they come with a notoriously laborious buying process that can really stretch your building timeline, and your options for location are limited by current stock. Otherwise, you’d better have deep pockets.
Pro: Energy Efficiency
This may not be near the top of your own personal “pro” list, but it should be. The median age of a house in the US is 35 years. 35 years ago, builders didn’t use energy-efficient windows and you can bet they had never seen a low-flush toilet. Over the years to come, you could save thousands on your energy bills, when compared to a similar sized older home without renovations.
As a bonus, all this is good for the environment, too. So you can go to sleep each night with a clean (and green) conscious.
Con: Time and Effort
If you’re seriously considering building a home instead of buying, then you probably already have a decent idea of the commitment involved. But if you’re not, here’s a hint: it takes a long time.
Depending on weather conditions, size, and your contractor, building a house can take anywhere from 3 months to a full year, not including the process of finding a lot, hiring an architect, planning the details, and finding a builder. Before you decide, make sure your whole family is on board for the long haul.
Pro and Con: The Cost
Is building cheaper? That’s the question everyone who’s thinking about making this decision really wants to know. Unfortunately, the answer is as unsatisfying as it gets: it depends. Houses are big, confusing, labor-intensive assets—there’s no way around that. Any desirable house is going to be expensive.
If you’re smart about buying the land and striking a deal with builders, it is possible to save a few thousand dollars. However, the more custom your touches, the more you’ll spend. Even if you end up taking on some of the workload yourself to save money, you risk losing the efficiency, connections, and bulk pricing of someone who does it for a living.
Ultimately, it may be a wash, but that doesn’t mean it’s not worth considering. Just get your own quotes and do your own math before making your final decision.
from Total Mortgage Underwritings Blog http://ift.tt/2b1uxZP
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