Is new construction or buying a resale house the right choice for you?

In working with some new clients, I had the opportunity to go through the new home construction process which inspired this blog post. Prior to working with these clients I had never been through the process before. It was a great experience as Kate and I have talked about going down this path for our new home after our wedding, but had no previous experience to know if it is the right choice for us. In this post you will learn, as I did, some of the advantages and disadvantages of new construction compared to buying a resale home. At the end if you have any questions, please reach out and I can walk you through your options!


Designing your new home can be very exciting. With new construction you have the opportunity to customize the finishing touches, and with some custom builders you might be able to pick out the layout and floor plan of the house – although this is normally a more expensive option. But for the most part, from the floor plan to the color and style of the counter tops, you get to customize your new home. This might be the right choice for you but understand that it does come at a cost. Most builders we met with offer a base package which comes with the new construction, but for an additional cost you can upgrade to better finishes. Items such as like granite counter tops, upgraded tile/wood flooring and upgraded kitchen cabinets are going to cost you more money. Each item on its own might not be a huge cost, but add up all the upgrades and it can easily climb into the tens of thousands and depending on additional options, hundreds of thousands. Now this is different builder to builder and if you go with a custom home builder you are going to have more say in the final touches.

Lastly, make sure you pay attention to the houses that are already built and will be built in the neighborhood. Some of the new construction lots we looked at had the same style house for an entire block. Most new construction builders offer multiple styles and it is important to check if they force some sort of variety from house to house as to avoid a cookie cutter neighborhood.

Replacement costs for a resale house will also come at a cost. Everything in a new construction house is new ­– such as the furnace, water heater, air conditioning unit, appliances, doors, windows, roof and more. Also each of these items normally come with a warranty that could go as long as 10 years, and with new technology is more energy efficient. When purchasing a resale house you are buying a home that has been lived in for a while. Some of these items might need to be replaced and upgraded which will come at a cost. Beyond that, they might not be under warranty so you might have to shell out the entire cost.

Here are some typical capital improvements that you might need to consider in buying a resale house:

• Heating and Air Conditioning: The typical furnace has a 20 year life expectancy; the typical central air system 15 years. Replacing them could cost you $5,000 (air conditioning unit) and $4,000 and up for the furnace, depending upon the system you choose.

• Flooring/Carpeting/Tile/Hardwood Floor refinish: You’re virtually guaranteed to replace some carpeting in a resale home and you may need to upgrade other flooring or finishes. Costs can run anywhere from a few thousand dollars to well over $15,000, depending on your choices.

• Roof: the average shingled roof lasts about 25 years. Replacement costs can be anywhere from $5,000 up.

• Exterior Painting. With a new house, you get to select the color. With an existing house, there’s a good possibility you’ll want to repaint. Typical cost: $5,000 and up.

• Interior Painting: Again, with a new house, you choose the wall colors of the rooms as part of the package. With an existing house, you’re probably going to want to repaint some of the interior. Even if you do it yourself, it will cost money and time.

• Kitchen Remodel: think anywhere from $20,000 to $40,000.

• Master Bath Remodel: $15,000 and up.

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Location, location, location. It is one of the most popular real estate sayings and still stands true today. As a buyer you might want to live in a specific area and with buying a resale house you have more flexibility. That said you can move into an existing neighborhood, tear down the existing home and build new, however, be prepared to spend. The average tear down costs $8,000-$15,000 plus you need to buy the current house and land.  With new construction you are normally moving into a new neighborhood where an investor bought the land and subdivided it into lots. The lots you buy range anywhere from $0-$100k+ depending on the size, location of the lot and deal the builder will give you by building with them. If you go down this path it is important to look at the school district, future building plans for the area, bike/walking paths close by and many more options that can impact the resale value in the future.  

Bottom line either are great options, it just depends on what you are looking for. New construction is appealing because you can customize the house and the resale value over the first 10 years is great. Buyers are more prone to buy a 1-10 year house rather than a 25 year old. Resale homes are also appealing because you have more flexibility on location and you can get into a home at lower price and then do the upgrades on your own. Just spend a couple hours watching HGTV and you can see the benefit of going this route. Some people are walking away with $50-$90K in equity after fixing up an older home. If you want to walk through your options as a buyer, please call me at 651-247-4804.