So, you’ve recently decided to buy your first home. First of all—Congratulations! We know you’ve been working hard to pay your credit cards down, boost your credit score, and scrape together a modest down payment in the process. Things have been tough, but the fun has only just begun.
Buying your first home can be a time consuming, complicated process. With the right agent by your side, much of that stress can be mediated or avoided altogether. However, a good agent can only take you so far if your goals are not clear.
Take some time to determine the priorities of your dream home, from choosing the best neighborhood to the right number of bathrooms. As you do so, consider one important question that will guide the course of your home search: Should I buy a new construction home or renovate an existing (possibly older) home?
Let’s take a look at the pros and cons of each purchase:
New Construction Homes
PROS:
Move-in Ready – Obviously, newly built homes don’t require you to pull up old carpet or repaint the walls before you move in. If you’re looking for the quickest path to being settled in a home of your own, new homes are the best bet.
Floor Plan – If you invest in a custom-built home, you are sure to get a floor plan that matches your lifestyle—because you get to pick the design. If you work with the architect early in the construction, you may even be able to pick custom finishes.
Energy Efficiency – New homes are held to higher insulation and efficiency standards than older homes that are being resold. New homes also tend to have newer appliances. Quality windows and an efficient washer will equal significant savings over time.
Maintenance – In addition to needing less work (or no work) up front, new homes will require less maintenance over the first few years of your ownership. You’re less likely to run into unexpected expenses, like needing to replace septic tanks or damaged gutters.
Amenities – New homes in planned communities often include access to community amenities, like clubhouses, recreational facilities, community spaces, and trails.
CONS:
Additional Upfront Costs – All the best benefits of new homes (quality construction, new appliances, community pool, etc.) mean your purchase price will be more expensive. Consider HOA costs and property taxes while you’re looking for the right community.
Less-than-Ideal Location – Your community itself may be walkable, but that doesn’t necessarily mean you’ll be close to work, groceries, or other frequented locations. Factor in the cost of your commute to your projected monthly expenses.
The Cost of Land – Even if your construction costs are reasonable, don’t forget to consider the value of the land the home is on. Planned communities often have larger lot sizes, which can add up quickly.
Immature Landscaping – Will you have to invest in heavier curtains to deter nosey neighbors because there isn’t a single full-grown tree in the neighborhood? If outside atmosphere is just as important to you as indoor features, that may cost you extra.
The Wait – It can be fun to sit down with builders to pick out your ideal floor plan and molding style. But consider construction time (and possible delays) that come with a custom home. A six-month wait is normal.
Fixer-Upper Homes
PROS:
More House for the Money – All the space may not be immediately livable, but fixer-uppers have a lower price per square foot than newly built homes.
Charm and Location – Older homes tend to be in older neighborhoods or more urban settings. In addition to inside charms (like crown molding or original tiling), they could also offer a lot of neighborhood charm.
Shorter Commutes – Older neighborhoods and urban settings are also more likely to be closer to city centers. If you like to walk to restaurants, grocery stores, or even to work, this could be a cost-effective opportunity.
Property Tax Rates – Fixer-uppers in less affluent communities will not accrue increases in property taxes at the same rate as new homes in fancy neighborhoods. Even with the cost of significant renovations, this could keep your costs low over time.
Long-term Projects – Some people love homes that evolve as they do. If you don’t mind long-term renovations and want the opportunity to get really creative with your space, these are the homes for you.
CONS:
Outdated Features and Appliances – Will you have to replace all the knob-and-tube wiring and lead-based paint in your funky historic home? Will the home need to be checked for asbestos? How old is that refrigerator, anyway? Older homes require you to ask more questions up front to gauge renovations that go beyond pure aesthetics.
Unexpected Problems and “Invisible Repairs” – Older homes require more upkeep, even as you continue to renovate. Ask questions even about features that are currently in good shape, perhaps roofs and plumbing, to determine what will require work down the line and when.
Investments that Don’t Equal Increased Value – Some renovations add more to the resale value of your home than others. Be careful to weigh what needs done to make the home livable versus the fun (read: expensive) upgrades you can’t recoup when you move.
Long-term Construction Zone – Unless you’re a professional flipper, it can be hard to own a home that requires a lot of work. You may not have the opportunity to focus on your home full time. And who wants to live in a construction zone for possibly years?
Your Timing – Experts recommend that you should plan on living in homes that require extensive renovations for 7–10 years before you are able to recoup the costs.
So, What’s the Better Decision?
There are no easy answers to this question. As you saw above, your decision will be unique to your personal goals, your financial capabilities, your aptitude for renovation and design, and the activity of the particular community in which you want to live. Discuss your options with your real estate agent—he or she will be happy to help steer you toward the right purchase for you.
All real estate is local. In order to make confident real estate decisions, we believe it is important for you to have timely and neighborhood-specific information. If you would like more information about buying a home in NC, our experts at EXP Realty are here to help. Contact us today to speak with a EXP agent about buying homes or land in North Carolina.