Photo by Francesca Tosolini
The difference between a new home and resale home can’t really be compared to other major purchases. A new car isn’t that different from a used car. It’s just a bit more shiny. But buying new vs. resale can make a world of difference in your home buying investment. Whether you’re tired of paying rent or just need a space that better fits your lifestyle, you have plenty of choices.
Once you’ve narrowed down the approximate location, the next choice is deciding which home is right for you. You could buy an existing one but opting for a new construction home presents a lot of benefis. Why buy a new home instead of a resale?
Price versus cost
If you look at the price-per-square-foot, a new construction home might come in higher, but there’s so much more to consider than the purchase price. The total cost of ownership factors in the price you pay for your home, along with other expenses, like utilities, homeowner’s insurance, property tax, HOA fees, maintenance, repairs, and remodeling.
Let’s say you find a resale home that is priced about $20,000 lower than a new home of approximately the same size. It’s tempting, right? Look at how much you save!
But let’s look at where your “savings” go.
To begin with, you’re going to replace most of the appliances. Maybe they’ve just outrun their life, or they’re not energy-efficient or to your liking. How much will new appliances cost you?
Next, you need your “new” home to be brought up to date with today’s technology. Check the wiring to see what will be supported. If you’re planning to run many devices, stream movies, and play video games, you’ll need more bandwidth, which means you might need to upgrade the wiring of an older home—and USB outlets would be nice, too, right?
When you looked at this resale home, you probably balked at a few things you’d really like to change. For example, the flooring has to go. How many thousands of dollars will you take from your savings to cover the new flooring?
How about the kitchen and bathrooms? Will they need updating? From painting the cabinets and replacing a sink to a complete remodel, you’re looking at more expenses beyond the purchase price of a resale home.
The other repair and replacement issues you need to consider are the roof, water heater, furnace, and air conditioning system. Any of these starts at a few thousand dollars. Replacing your roof, depending on the square footage, could run about $15,000.
Finally, there are cosmetic changes. Repaint the walls and trim. Swap out the lighting or plumbing fixtures. Retile the shower. A few hundred dollars here, a few thousand there, and suddenly that $20,000 you saved on the purchase price of the resale home has been wiped away.
Completely move-in ready
While you’ll certainly have at least some cosmetic changes when you buy an existing home, your new construction home is built and finished to your choices. Every color, fixture, and detail is the result of your personal design selections. From room to room, you have the satisfaction and comfort of seeing yourself reflected in the home. When you decide on a resale, you’re choosing someone else’s choices, not yours. And you might end up “just living with” some of the ones that aren’t to your taste.
Energy savings
Eco-friendly building practices and materials are constantly evolving. Homes built today adhere to a stronger building code than older homes. In addition, new homes are equipped with systems—heating, cooling, plumbing, electrical—that are designed to be more energy-efficient. Insulation throughout the home, from the foundation to the roof, keeps new homes virtually airtight, so you’re not paying for energy that’s sneaking out. Today’s windows also contribute to greater energy savings, as well as filtering out UV rays that can fade furniture, carpet, and window treatments.
A home built this year is considered 30% more energy efficient than older homes, according to the U.S. Department of Energy’s Home Energy Rating System (HERS). How much would you gain from 30% savings on your energy bills? Be sure to calculate that figure into your total cost of ownership.
Builders like Insight Homes in Delaware make energy efficiency a top priority in their homes. A Department of Energy Zero Energy Ready Homes (ZERH) partner, they are in the top 1% of home builders in terms of energy efficiency. Another DOE ZERH partner, Tim O’Brien Homes builds new homes in Wisconsin with an average HERS rating of 45. This translates to up to $790 per year in saved energy costs compared to a home built in 1989.
Custom building
One way to make the most of a new home is to build custom. The advantages of buying new are maximized when you work with a custom home builder. A builder like Blue Heron Signature Homes builds high-end, true custom homes in Raleigh, North Carolina. The possibilities are endless if you have the budget for it.
Custom homes can also be surprisingly affordable, depending on the niche of the builder. Authentic Custom Homes builds many custom homes in the mid $200K range, proving that going the custom route isn’t necessarily a pie in the sky dream for many buyers.
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