Buy Or Build A House


Are you ready to move but can’t decide between buying and building?  This is an issue many people debate when they are ready for a new home.  Let’s look at some factors you should consider when deciding between buying a resale home that is already constructed or building a custom home, so you can decide on the best option that is right for you and your family.

There are a lot of important options and questions that you need to answer for your own situation.  The following are some of the most important issues you need to think about in order to form a quick and accurate decision.  

1. Total Cost

In order to make an informed decision about whether to buy or build a house, make sure that you are looking at the same things: ie. compare apples to apples.  The square footage, finish levels, material quality, and location should be similar between a house you are considering buying, versus one you are planning to build.

Generally speaking, the costs of building will be higher than buying a similar resale home. However, with a custom-built home, everything will be new.  Everything will be the latest technology available and will be under warranty.  Beyond just new appliances, this includes warranty on your foundation, mechanical and structural systems.  You rarely, if not ever, get a comprehensive warranty with a resale home.

2. Customization

Without a major renovation, when you buy a house, you get what you see.  The layout, location, and style of the home have already been decided.  It might be just what you were looking for, it might just need a few changes or it might not be right without major changes.

There are a lot of people that do not know what they want until they see it, but there are others who know exactly what they want. The upside of building a house is that YOU get to make the choices, so everything in your home will fit your preference, taste and lifestyle.

For more info about customization, make sure to download our FREE Home Building Planner Guide

3. Financing

Buying a house that will be your primary residence can often be purchased with an insured mortgage, with a very low percentage down.  This means you can often buy a resale home for much less out of pocket and you’ll only need to have a fraction of the final cost of the home.

Building a house will likely need more money upfront.  Depending on your builder and location, you might have to purchase the lot outright with cash, as most institutions will not finance bare land.  You will also need about 10-20% down to put down with your builder.   If you’re in a new subdivision, the builder might carry the lot and build costs but others may require something in between.  The financing situation for building may look quite different than buying a resale home.

4. Location

There are way more lots available in new subdivisions, but the problem is that they are exactly that, NEW.  There will be a lack of landscaping features like established trees, there will be construction happening throughout for years and there will be very little in the way of community or nearby amenities.  You might have a long commute to work and have to wait years for nice trees, schools, and shopping in your area.

Buying a lot in an established neighborhood generally means you will be better located.  You will be more likely to have more developed landscaping and big trees.  You will be closer to community centers, parks, schools, and shopping as well.

A vacant lot or a location where you can demolish and do an infill build can get you into a community that is already well established.  You can be centrally located in an older neighborhood with high demand and low turnover.

5. The Great Unknown

Building a house, with a builder you trust, means you don’t have much to worry about.  You’ll get a new home with warranties.  All your systems will be clean and modern with the latest technology.  Everything will be up to code and you’ll have strong structural and mechanical systems.

Buy a house has a lot more potential issues that might be hiding, even from a home inspector.  You won’t always know what you’re buying.  For example, an inspector can’t see behind the walls of a finished basement to locate issues with the foundation or weeping tiles.  Is that roof leaking or just getting close to needing replacement? Is there mold, mildew, or asbestos hiding in the walls?  Did the previous owners try their own plumbing or electrical repairs?

6. Timeline

You will need to figure out your available TIMELINE.  ALMOST nothing else matters until you figure that out. This is probably the number one consideration that can help you decide between building and buying a new home.   A build can take a minimum of seven months and can take as long as two years for a large, custom, luxury home.  If you have a strict timeline, you might not be able to wait that long before moving.

If you have to get into a home right now, you can buy an existing home while you build. However, if you can’t hold two mortgages, you could also rent someplace while your new home is being built.  Either option may mean moving twice in a short period of time; however, if building a home is where your heart is, you might have to deal with that inconvenience.