To build or not to build. How do we figure this out by the end of this video, you will know exactly how to decide whether you want to build or buy an existing home and how to decide which one’s right for you. And it starts right now. What’s up, guys, I’m Jonathan, and this is the lovely Rachel Beasley, my wife and partner. We are local real estate brokers here in Hampton Roads and your insider’s into the world of custom building. We’ve helped literally hundreds of people build a home on their own, and it’s a subject that we are entirely passionate about. So one quick note, if this is your first time on our channel, please don’t feel pressured to subscribe just yet.
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We’ve had clients that have bounced back and forth on this idea for literally years on this debate, so we’re going to try and break it down for you. We’ll take you through some of the most important concepts that you need to think about in order to accurately form a decision and ultimately make a faster decision because really wasting time just ends up being a heartache, and it probably will cost you money as well. So you’re not just wasting time, you’re wasting money and stressing yourself out about perhaps something that you don’t need to be stressing about.
So we’ll start with some of the big factors that you need to think about, and then we’ll give you the biggest determining factor between buying and building. Which brings us to number one, Rachel, what’s number one? Number one would be cost numero uno.
Cost: Building vs. Buying
The most important thing when dealing with costs is that you find a way to compare apples to apples. Basically, we’re talking about four things apples to apples. Remember square footage, the actual finished product, the material quality that’s going in the home, and then, of course, location. Generally speaking, the cost to build a home will be much higher versus a resale home because you’re getting essentially everything brand new. Almost everything will have a home warranty, including your foundation, the mechanicals, the structural systems, virtually your entire home and finishes are going to be under a warranty.
You rarely get a warranty with resale home, and even if you do, they’re extremely limited in coverage. If you’re someone who needs an absolute peace of mind for warranty. You’re definitely going to want to consider new construction. Yeah, for sure. And there’s nothing wrong with that. We love new construction, but I love resale.
Customization: Building vs. Buying
The second thing to think about is customization. When you’re buying a resale home, you are getting what you get and you don’t throw a fit. As Rachel’s mom would say, you’re purchasing the layout as it is. You’re purchasing the location and the style of the home. It may be perfect, it may be slightly off or it may not be really entirely right at all.
So that’s up to you. You know, there’s a lot of things that you can change after purchase, but there is a lot of things that you can’t change after purchase. So we have thoroughly enjoyed renovating various homes throughout our career and personal homes as well. But if you don’t have the time or the cash or the expertise to renovate your own home, then you may want to think about new construction. Now the upside to building is that you get to choose everything your way right away. Thank you, Burger King and all custom builders. The first go around, so it is what you want. It is what you want upfront. There’s a lot of people that don’t know what they want until they see it, and that’s not necessarily a bad thing.
As a matter of fact, I tend to be that way. Rachel isn’t. She can totally look at a set of blueprints. Imagine what will be. I personally have to see it, touch it and smell it and walk through it. That’s probably why I’ve lean more towards existing homes over the years, and Rachel has lean more towards new construction. Matter of fact, she has really kind of pushed us to build the homes that we have, so I’m thankful for that. But if it were me on my own, I probably would have renovated homes over the years. So for those of you that know exactly what you want and how your home needs to fit you and your lifestyle and your family’s lifestyle, you might lean more towards building. If you are the type of person that needs to see it and you are a little more regimented, you might want to think about resale.
Financing: Building vs. Buying
But before we go too far into this, let’s get into financing, because that really is a big hinge point in this whole thing. As we mentioned before, all things being relatively equal, it’s going to cost you more to build, especially in the post-COVID economy. You can likely purchase a resale home for a fraction of the cost it is to build the same size home, and this is quite attractive to some, this is you!
I’m some. He would much rather buy a resale home than pay top dollar for a new construction. In terms of financing, you can get into existing home for like 5% down, sometimes depending on your loan. 0% down with building a new home that is simply just not the case.
Basically, you’re going to have to put down a minimum of 10%, some cases 20% down with the builder. So yeah, there are a few exceptions. Like if you’re building in a new subdivision, you may be able to get the builder to carry the lot and the build costs himself, in which case you would essentially wait till the home is complete and then purchase it at the end with financing similar to a resale. Even in those cases, a lot of times builders are going to require you to put a larger, earnest money deposit down. They want you to have some skin in the game, essentially.
Is what they’re going to be doing is building this home with your colors and your selections, and they want to know that you’re committed to the process and not just going to ditch on them at the end if something comes up and you just don’t feel like closing. So needless to say, in almost all cases, there is going to be more upfront cash and probably again, apples to apples. If you’re building 3000 square foot four bed, two and a half bath and you’re comparing that to a similar resale, that’s 3000 square foot four bed two and a half baths. You’re still going to be paying more money to build it just the way it is.
Location: Building vs. Buying
That also brings us to location, right? So it’s kind of obvious that there are distinctions in new subdivisions versus already established neighborhoods. All you have to do is drive through them and you’ll see the difference. The problem with like new developments is exactly that. They’re new. Oftentimes, there aren’t trees. There’s construction happening virtually all the time. There’s not much of a discernable culture or sense of community and neighborhood until the developer finishes it out.
And the homes are all there and the people move in and there’s amenities and children playing in the streets. So you’re going to miss that community feel for quite a while. However, by buying in an already established neighborhood, you’re generally better located within the city. With regard to shopping, dining and those sorts of things. You’ll likely have more trees, which as trees are a must have for us. Yeah, community center schools and shopping nearby. It gives you that instant gratification that you don’t have to wait for and really think about it.
Depending on location, you may have to wait like five to ten years before you have like trees and mature foliage to look at in the front of your house. So that’s really something to think about. So now another thought is if you want new construction and you want to avoid that issue by finding a vacant lot or a tear down home and do what’s called an infilled bill and we have a lot of clients that are doing this right now, infill new construction in an already established neighborhood see a lot of people doing it, and it basically makes that whole conversation that we just talked about a totally moot point. You’ll find these areas centrally located generally in older neighborhoods with high demand and low turnover. So they’re nicer areas, generally speaking, and they just have older homes like 30 to 50 year old homes there. So then there’s the thought of buying a resale home and doing a renovation, which I am a big advocate of.
And if that’s of interest to you, ideally you want to find a neighborhood that was built out maybe 20 to 30 years ago, where the systems in the house need to be replaced or even better. Maybe some of the systems have already been replaced like HVAC, siding, roof, that kind of stuff, and the style is just stuck in the original outdated vintage. And then you can go in and up that to your liking. The next thing that people don’t necessarily think about enough is the emotional burden that it actually takes on you to build a new home. Take it from us. We’ve done it a couple times, and each time it took an emotional toll on us. So unless you’re building in a cookie cutter neighborhood where there’s two or three house options and minimal selections, the build process is extremely varied and this is a legitimate thing to consider.
Timeline: Building vs. Buying
And it’s a challenge for people that like to operate with exact precision and exact timelines. Custom building is, by nature, not exact. You’re building a home that’s never been built before. You’re going to find challenges that people haven’t faced before on that piece of dirt, because that’s what it is. Now, it certainly helps if you pick the right builder. And even more importantly, if you can build trust with that builder and a working relationship with their staff and their company processes. In those instances, you’ll have a lot less to worry about.
And that’s probably a good idea for a video is like how to pick a builder. So we’ll make a video about that, too, which actually would be really helpful. But for now, I definitely want you to think about the fact that custom building will have its bumps and bruises, its curves, its twists, its turns. They’ll be calling audibles and you’re going to feel like you’re holding on to a locomotive and you’re totally out of control. But for those of you that can hang on, it’s totally worth it if you prefer not to put yourself in that kind of a situation like that.
Seriously, think a resale is probably the better option for you? But if you’re really excited about embracing that journey and the budget that you can afford, you really want new construction. There’s a lot to consider there. You’re getting a new home, you have warranties, you have clean systems. Modern technology. No one’s ever lived there. You have a brand new vapor barrier. You have new floors, you have a strong structure and water management systems. You know, your home basically is not going to flood because it’s built to today’s standards.
But buying an older resale home can be tough. There is a lot of unknown. You’re taking a home course you’re going to have a home inspection done. Basically, the home inspector can’t see everything, so you’re going to have to take his word for it and know that there may be some things that could come along the way. In the words of our favorite home inspector, the last perfect home that was built was built by Jesus, and we hear he’s not building them anymore. Good one. So if you’re stuck and just cannot decide, build or buy resale, the easiest factor in terms of figuring this out is your timeline. If you have a strict timeline, almost nothing matters until you figure that out. Because a build can easily take eight to nine months from breaking ground, it can take up to 18 months for either larger custom builds and projects that have heavier land development.
So if you have to get in the home right away, and you cannot hold two mortgages than buying an existing home is almost definitely your best option. Either that or renting while you build. We did this and frankly, it was not ideal. If I had to do it over again, I’d probably build our home first, then list and sell our existing home and then move once. Although we help people move for a living, we’re extremely empathetic and aware that moving is a stressful situation, moving twice as willful torture.
And it was a huge disruption to our family and our life, so we recommend avoiding moving twice, if at all possible. So there you have it. The pros and cons of building versus buying the two most important considerations are do you have the time and do you have the upfront money to build and the overall budget that should help you answer the question? So there you have it now you don’t have to be stuck anymore. And if you ever have specific questions, definitely comment below. We will be happy to advise and consult with you on anything that you might be thinking about.
We are Jonathan and Rachel Beasley. We are that fit team professionals in real estate and passionate about people. Talk to you soon.
