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What is the better option: buying or building your own home?
Do you want to build your own home because finding what you want in a house seems more difficult than you anticipated or is it that you prefer to be off the grid with little to no neighbors? You may have heard through the grapevine that new home builds are undoubtedly cheaper. The sources that confirm this will vary based on where you choose to break ground and how intricate your structural design will be.
If the home buying process has led you to question whether or not you should invest in previously built real estate or start from the ground up, there is no right or wrong answer. Details such as square footage and layout cannot be easily altered on already built properties. However, you can be as selective as your pockets will allow when you choose to build your own home.
Many studies are not totally off base in disclosing that three of the most influential variables in real estate are location, cost, and time. Ask yourself: Is this property conveniently located for my lifestyle? In most states, the price of land usually increases when you build in proximity to bodies of water as this can affect homeowner’s insurance, property taxes, and choice of materials. Additionally, building from scratch in a highly-populated area may also raise the stakes for land and building costs.
How do the numbers look?
Land can sometimes bring a higher price tag than the build itself. If the cost of land is on the low-end, you may be able to compile your expenses and vision to a total purchase price below or equal to the market value versus purchasing a resale (existing) property that requires sweat equity at the same price.
Take time to investigate the cost of land in your area by utilizing a licensed real estate agent or a reputable website such as Zillow.
Jumping on a resale does not exactly mean you are taking the easy way out. Home inspection reports will not come with original blueprints or a raw examination of the home, especially if it is currently occupied. This should not create panic or negative influence. You could stumble upon a property customized beyond your expectations, leaving you to simply move in without a hitch!
Be mindful of your commitment to the home buying process before you initiate any contracts. Building a house may coincide with several time restraints relating to home building permits, code inspections, weather, and labor. This may not matter if there is some wiggle room with your moving deadline, but the possible hiccups can live up to the rumor that most residential builds take up to seven months to complete. The end result will absolutely carry its own rewards but the costs you accrue while waiting for your build to be ready could potentially break the bank. With extensive research and strategic budgeting, none of this should deter you from tackling your next real estate purchase head-on!
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A recipe for success
Your idea to build your own home partnered with an experienced builder who understands your design and is familiar with your area of choice is the perfect recipe towards bringing your brand new home to life. The only way to truly understand how much your dream home will cost you is to ask a general contractor or residential construction building company directly.
Where will you build your own home?
If you have not already acquired the land on which to build your own home, there is a possibility your builder will include the price of land in your estimate. Soak up the information provided from field experts and compare notes with your own research. Depending on the builder, there could be opportunities to save money by purchasing materials out-of-pocket or buying the land separately from the cost to build.
As uncomfortable as it can be to feel limited due to finances, it is just as significant to make them a priority. While determining if you are ready to put on a hard hat or just bring your toothbrush, see how average prices for your next real estate build measure up.
A comparative study explains that many builders present development costs on a varying spectrum. This will not be easily understood if not explained properly. For example, some buyers may receive an estimate and build his or her budget around that ballpark figure. Then, in the middle of construction, that buyer notices that certain features have not been completed only to realize that those minor details were not included in the original price. Your best bet to avoid this situation is to ask your builder for a full price list of base prices and add-ons. Base prices typically involve the simplest structural features and functional details. Add-ons will include customizations from granite countertops to quartz, wooden cabinet knobs to brushed nickel, laminate floors to tile, etc.
This is not to intimidate you but to prepare you to get ahead of the numbers instead of being buried by them.
Take a step back
What concerns you about buying an existing property? Do you want more privacy? Are you hesitant about the cost of upgrades down the line? None of the older construction layouts seem functional enough for you?
Many buyers struggling to find their dream home open themselves up to possibly tackling home improvement projects over time. If that doesn’t seem feasible, the buyer’s real estate agent can try to negotiate any potential repairs with the sellers. You would be surprised how many sellers will cover repair costs or potential upgrades in return for a smooth closing. I know what you are thinking and there is no catch. The seller may simply have a deadline and will not want to hold up the process. Some homeowners may not always be so generous but, if both the buyer and seller are flexible, negotiations are possible.
What are your dream features?
Design features can definitely make or break a home sale. Based on current real estate activity in your local market, how much would your ideal property with all of the trimmings cost you? Will your preferences save you any money in the future or increase resale value? You may not be considering this while you’re shopping around but if you are in a geographic location annually affected by a natural disaster then preventative measures can put money back into your pocket. For example, purchasing a home where hurricanes occur annually, that is sold with hurricane impact windows and doors, will not only help you cut costs with your home insurance company but would be appealing to a future buyer should you choose to sell down the line.
Figuring out where you want to be and how you envision your home will help you zero in on what option is more affordable. At the end of the day, buying an existing home does not equate to it being a fixer-upper or unable to be customized. Take into account that residential contractors have the skillset to assist with reconfiguring resale properties. You never know. Customizing existing construction may be more cost-effective than choosing to build your own home from scratch.
Decide what appeals the most to you
It is okay for you to know what you want even if you cannot put it into words. This home buying checklist can help you pinpoint your wants and needs so that you can make the best use of your time on your house hunt.
Consult with a realtor
Realtors acquire knowledge with the intention to share it with buyers like you, so if you have a great resource in a realtor, feel free to lean on him or her. An agent can refer you to builders, introduce you to new construction incentives and discounts, and negotiate with sellers to save you money at closing.
Find a builder
Trying to decide on a builder may not happen overnight because the company should be thoroughly vetted. Check out sources like Google and Yelp to see what reviews say about a company before you invest an hour of your time into a consultation.
About the Author
Licensed Florida Real Estate Agent
Debrah is a Licensed Real Estate Sales Associate and Certified REO & Short Sale Specialist with a growing team of successful agents. She educates future first-time homebuyers via her co-created e-course and local events. Her 90% referral business has allowed her to close over $13M in sales transactions.
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