New Homes vs. Resale Homes Part Two
Welcome back to New Homes vs. Resale Homes Part Two!
Advantages of Buying a Resale Home
The major advantages of buying a resale home are that you are moving into an established neighbourhood and this area has a history behind it. Your lawn is green, your shrubs are growing, your driveway is paved and your trees are well enough established to give our street a feeling of permanence. Often, most extras are already present, such as appliances, curtains, drapes, central vacuum, humidifiers, decks, fencing, electric garage door openers, a finished basement, walkways, outdoor lighting, indoor light fixtures, trees, shrubs, gardens and landscaping, swimming pool, air conditioning, etc.
In terms of investment, a resale home will often give you far more value than a brand new home. Many owners put tens of thousands of dollars into home improvements ranging from small items (such as landscaping) to major projects (such as a finished basement or any of the previously mentioned items). Although these improvements will make the home more attractive to potential buyers, they may not increase the market value of the home. A $35,000 swimming pool or a $15,000 finished basement or even $5000 worth of landscaping may make the home very attractive. However, these additional costs incurred may not necessarily increase the market value of a home, especially if you have to sell it at a time of year where these major items add little or no perceived value. The buyer gets the home at its real fair market value, which is based on comparable homes for sale or sold in the neighbourhood. All those expensive extras may be included in the home with benefit to the buyer at little or no extra cost. This can be a substantial savings for buyers over buying a new home.
With a resale, the seller’s asking price is almost always negotiable, unlike the builder’s list price which is usually firm. Any extras or changes are added to the list price of a new home and add up quickly.
Disadvantages of Buying A Resale Home
A small percentage of homes in the marketplace are not considered to be in move-in condition. If a buyer doesn’t have time or money for renovations, a move-in condition home is by far the best alternative. If the property is being sold under power of sale, or if the property has been tenanted for many years, the home may require a lot of work. Additionally, as a home gets on in age, certain systems such as heating, cooling roofing and /or windows need to be upgraded.
Although some perceive the preceding paragraph as a disadvantage, some consider it an advantage to a buyer. Usually, a house that needs work can be purchased below the going market value, while at the same time providing an opportunity to have the home decorated to suit the buyer’s specific tastes.
More Questions and Items to Consider:
Location! Are new homes being built in the area you like? Do you know the surrounding zoning and what will be constructed in the area? How far away are services (schools, stores, hospitals, doctor, etc.) that you need? How long is your commute to work?
Risk! Is the new home builder or developer financially stable? Is the builder a large well-known company with a good reputation? Is the builder asking for significant down payments or advance payments? Are there complaints lodged against the builder for shoddy work or not making repairs? Has the builder been delivering home when promised? Check with your Better Business Bureau, the town or the city and talk to homeowners who have purchased a home from the builder.
In summary, a resale home can cost less, be more conveniently located, have a neighbourhood you can easily familiarize yourself with, and have less risk involved. A new home can be constructed to have the exact style and features you want, but usually with much higher costs, limited locations, and more risk.