The Pros and Cons of Buying a New vs Pre-Owned Home
Buying a home is a decision that can be exhilarating and scary at the same time. When researching the advantages or disadvantages of buying a new, versus a pre-owned, home, make sure you weigh your personal needs first. Some buyers have had several homes before settling on the one home that makes them happy for years to come. For those buying their first home, what factors into their decisions will vary—and rightly so, as everyone’s situation is a little different.
Here are a few of the pros and cons of buying new versus pre-owned homes.
Warranties all begin from the closing date of the home
Items such as appliances usually have a one-year builder’s warranty
Appliance manufacturers often offer additional extended warranties on their individual appliances
Most everything is covered for one, five or even 20 years for items such as structural or roofing systems
Warranties don’t usually cover wear and tear and improper use of home components
Why it Matters:
This can sometimes get to be a sticky topic if your carpet starts pulling up at the seams but the builder can prove your five dogs and four kids are the culprit.
The seller and buyer can negotiate an extended home warranty on some or all components of the home
Why it Matters:
From appliances to swimming pools to AC to heating systems, extended home warranties give you a piece of mind when purchasing a pre-owned home.
The “what if” factor—the possibility that, for example, the previous owner had a mold condition and covered it up cosmetically (though sellers are required to sign a pre-existing conditions disclosure stating they aren’t aware of any problems with the home they’re selling)
Developers often provide incentives to get you to sign on the dotted line—this might include major appliances, upgrades and “bonus cash” to be used toward closing costs or additional upgrades
Incentives for out-of-pocket expenses may not be as favorable in this recuperating housing market
Often major appliances, such as refrigerators, dishwashers and washers/dryers, have to be purchased by the homebuyer
Other possible out-of-pocket expenses could include window coverings, major appliances, lawn irrigation system and ceiling fans
Typically most everything fixed that the previous owner put into the home comes with the home
The home-seller may even throw in furniture and other amenities beyond major appliances and fixtures
You are more likely to expect a “move-in-ready” home
Some items that come with the home may not be in great condition—you could inherit appliances and home systems that may cost you money in updating or keeping in working condition
Why it Matters:
Make sure to hire a home inspector after the seller accepts your offer. A home inspection will unveil issues that are beyond cosmetic. It will also give the home-seller the opportunity to address any outstanding concerns/repairs with the home.
In a buyer-carried construction loan, the home price may be less expensive as the builder is not adding interest costs to the loan
The buyer has more control of the money being used for the build and can see how it’s being allocated
The median price of a new home is almost always higher than that of a pre-owned on in all markets
The unexpected costs of building a new home can include abiding by community and neighborhood standards, as well as energy policies and building codes
Additional governmental assistance and financing options for purchasing an existing home
Generally lower overall cost thanks to depreciation of the structure versus the full price of a brand-new construction (think buying a new car versus one that’s been driven off the lot)
You pay for what you get—there’s much less ability to customize to your individual needs, as it’s buying someone else’s construction decisions
Take your time, and weigh the pros and cons of buying a new versus pre-owned home. Your decision may change once you find your “dream” home but remember, at the end of the day, new or pre-owned, your home should make you feel comfortable for years to come.
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