Whether you are hunting houses to purchase your ‘one’ or considering building one, you need to consider some important factors before making the final decision. Eventually, it all comes down to preference, finances, and convenience.
There are several pros and cons and other determining factors associated with buying and building houses. We discuss the risks, benefits, and ideal considerations of these two choices in this article.
Making the decision: Is it cheaper to build or buy a house?
Building a house may often seem much cheaper than purchasing a house and then renovating, remodeling, repairing, and refitting it according to your preferences and needs. However, reality may vary depending on your circumstances and requirements.
Cost Consideration
The costs associated with building or buying a house need to be the very first consideration. Since costs can vary significantly, you have to reach a balance within your capacity, requirements, and preferences.
Building a Home
If we only consider initial costs, building a new house is actually cheaper than buying an existing construct. If you take some measures to reduce construction expenses and avoid getting any customized finishes, even more so. Of course, customization does not always come with a premium price tag. Consider houses for sale in Chesapeake Va as a great example of affordable custom homes.
However, that is not absolute for all circumstances. Building a house is mostly a very costly process that requires obtaining a loan with a higher than usual interest rate and paying for expensive permits. The location of the new construct and your building preferences can make it way more expensive than buying a house.
Where you choose to build your house and the type of house you wish to build determine these expenses. If you consider the price of land, it’s usually really cheap in remote or rural areas and quite expensive in limited supply or prime locations.
Raw land and sites/lots differ in prices as well. Lots and sites mostly include all entitlements, utilities, access roads and might cost a lot more than raw land. Garages, driveway fencing, and some other convenience costs are also important considerations in terms of cost.
Apart from this, there are also utilities, property taxes, and other maintenance costs that need to be considered.
Buying a House
The cost of purchasing a house is quite straightforward. Whether you pay cash or by a mortgage, you pay for the house at a price listed by the seller. Even considering that, you might end up paying the price more than competitive market prices.
Following is a list of costs that purchasing a house might include:
- Down-payments
- Closing cost
- Homeowner and mortgage insurances
- Repair and upgrade expenses
- Property taxes etc.
Build a House or Buy One?
The following discussion will help you end up the debate between buying or building a house.
Pros of Building
- The liberty of customization when building a house is amazing. You don’t have to make any expensive upgrades to have the specifications you desire for your ideal home. You can simply build it according to your preference.
- When you build a house, there are no other competitors making offers for the same property. You can take as much time as you need to build your dream home.
- When your home is newly built, it’s ready to move in. There are no concerns about making any repairs or modifications.
- When you build a house, you ultimately invest in a permanent asset. When the time comes for you to sell, you have the ultimate competitive advantage.
Cons of Building
- Building a house is more time-consuming. It takes about seven months to construct a move-in-ready family home. You also want to consider the fact that you just might have to keep paying rent during that process, which is an additional cost.
- Building a house is like painting on a blank canvas. It involves continuous and extensive decision-making. It sometimes gets challenging to make so many complicated decisions.
- Miscommunications, delays, worst of all, misconstruction are challenges with contractors that need to be managed and kept to a minimum.
- Unplanned and unexpected expenses make building a house even more difficult cost-wise. You might have a fixed budget in mind while starting the process. But that might get overrun at any point.
Pros of Purchasing
- Buying an existing house means you get to move in much faster than building a house from scratch.
- Leveraging data to obtain an advantageous bargaining position is common practice in the real estate market.
- Finding a house to purchase is easier since you get more options to choose from than obtaining land and building on it.
- You can plan renovations over any convenient timeline when you purchase a house. You don’t have to invest resources on major projects that take months at a stretch.
Cons of Purchasing
- Depending on your preferred location or area, you might have next to zero or low bargaining power. In such competitive times for real estate, getting to your chosen house can get severely frustrating without intense competition.
- The house you are buying might be new for you, but it has been used. You might end up paying for repairs and higher insurance premiums for making your new purchase worthy of living and protecting it.
- What are the odds of actually finding your dream home? They are really unfavorable. You might end up compromising on the number of rooms, amenities, or other facilities to get your home within the budget.
Final Thoughts
While you make the considerations and calculations to determine if you should buy a house or build it, it’s important to remember that both involve high cost and stressful factors. Make the decision in a way that makes everything feel worth it.
If you’re buying your home, take enough time, consider multiple options, and make the best and most convenient purchase decision.
If you’re building, on the other hand, consider the best practices for building homes and slowly watch your dream take shape. Yours is the ultimate decision. We hope this discussion has been helpful and you are able to make a better-informed decision.
