When considering a new home purchase, one of the first decisions you should make is whether to have a home built, or buy a resale (previously occupied) home. Your decision will depend on several factors including how quickly you need a home, your personal taste, and other factors. Here are some pros and cons of both.
Pros of Building a New Home
One of the best things about a brand new home is that it is under warranty from the builder. If (almost) anything goes wrong while the home is under warranty, you won’t be charged to have it fixed. Assuming you are building from scratch (not buying a builder spec home), you will get to choose your own décor like carpet, tile, cabinets and counters. This helps to personalize the home to your tastes and to give it some of your own soul. You also have the ability to customize to an extent, depending on what types of changes the builder allows.
Also, you will usually qualify for better insurance rates because the home will be built to current building codes.
Cons of Building a New Home
One of the cons of building a new home is that you typically have to wait for the home to be built, unless the builder has the style of home you want in his inventory (commonly referred to as “spec” homes or “quick move-in” homes). If you are on a tight schedule, or you do not want to find a temporary place to live while your home is under construction, you might want to pass on building a new home.
Also, builders are typically not negotiable on their prices, mainly because when they price their homes they use a set profit margin and hate to stray from that figure. Your best shot at getting any wiggle room on the price is with negotiating option prices. Builders usually have huge markups of 50-100% or more on options and extras not normally included in their “standard” houses.
Keep in mind that some builders are willing to negotiate on the overall price of the house, and that it also depends on the market. If they have a lot of homes in inventory (buyer’s market), they may be more likely to negotiate with you than if they don’t have very many homes available (seller’s market).
Another important factor to consider is that building a new home can be an overwhelming and nerve-wracking process. Seeing little day-to-day progress can be exasperating and many people feel the urge to micromanage the builder when there is usually no need to do that. If you are predisposed to being a micromanager, skip the headaches and buy a home that’s already built.
Pros of Resale Homes
One pro of buying a resale home is that unless you have plans to do some remodeling before you move in, the home is ready to be occupied, and you know exactly what you’re getting. You get to avoid the roller coaster of emotions involved in building a new home.
Most home sellers are open to negotiation on price. Again, this depends on the market, and in some cases why the seller is selling. Helping you negotiate is where your real estate agent comes in handy.
Cons of Resale Homes
With a resale home you are not able to choose your décor such as tile and carpet, cabinets and countertops, or make any customization or personalization until after the purchase and, even then, not without a remodeling budget. It is what it is. Someone else has chosen the colors and materials, and their tastes may differ from your own. Something else to consider is that, depending on the age and construction of the home, your insurance may cost more.
Additionally, if you want the protection of a home warranty, it must be purchased separately at your expense, unless the seller provides one. Also, don’t forget you’ll need a home inspection.
Should you Rent?
Another possibility for you to consider is renting a home for a year or two while you acclimate yourself to your new area. This can be helpful for a someone who isn’t sure they want to retire in a certain place, or live in a certain neighborhood, or type of home. You can try it out, and when your lease is up, you can decide what to do from there.
Most experts agree that in most cases buying is better than renting. Not so much because of future appreciation that can take several years to realize, but for the tax benefits of owning, like deducting mortgage interest and real estate taxes. But in a situation where you are the least bit unsure of your decision, renting may be the answer. It would do you very little good to plunk down tons of money on a new home, only to decide you hate the area, and in six months or a year later pick up and find a new home in a new area.
There are other problems with renting as opposed to buying, including the difficulty of finding something that suits your tastes and housing needs. There’s no such thing as a custom built rental. Plus, if you do find a place, since you don’t own the home you’ll be restricted in making any changes to its appearance.
Single Family Homes
The most basic and most popular type of home is the single family home. It’s what most people think of when someone says “house”. A standalone structure, a single family home sits on its own piece of land, be it the size of a credit card or several acres. Single family homes offer their owners the most sense of space. Even if your neighbor’s home is only five feet away, as will be the case in some communities, you still have a feeling of separation and distance from them. When standing in your living room, you really can’t tell if the neighbor’s house is five feet or 50 feet away.
Single family homes typically offer the most flexibility when you wish to make changes, such as adding an addition, changing the exterior color, or putting in a pool.
If you buy a single family home in a subdivision governed by a Homeowners’ Association (HOA), you will not have as much flexibility with what you can do to your home. The Architecture Review Board or ARB must typically approve most changes, especially those affecting the exterior appearance of the home. However the upside is that your neighbors will have to conform to the same standards when they wish to make changes. Be sure to read the HOA restrictions before purchasing to make sure they’re rules you are willing to follow.
As an owner of a single family home, you will be responsible for the home’s maintenance. You will be responsible for cutting the grass, trimming the shrubs and bushes, painting, pressure cleaning, and any other exterior maintenance as needed.
For someone who has better things to do than to spend Saturday on yard work, however, the new trend in some communities is for single-family homes to be maintained on the outside, just like a townhouse or condo. These are called “maintenance-free communities” or “maintenance-free lifestyle communities.” Just as in a townhouse or condo, the owner is assessed a fee to pay for certain services such as lawn care, periodic painting, and pressure washing.
Condominiums
Condominiums, or condos, are popular all over most retirement states, but even more so in coastal areas. Condominiums are buildings comprised of several separate units. Theoretically, the price of the land that the condo is built on is spread across the units, with units on higher floors typically commanding higher prices and yielding better views. For example, someone who wants to live on the ocean and may not be able to afford the several million-dollar price tags for a home may opt instead for a condo at a lower price. Even so, some condos run into the millions of dollars depending on location and features.
Condominiums are communities unto themselves. The beauty of condo living is that most of the upkeep of a regular single family home is eliminated. There is no lawn to cut, no shrubs to trim, and you won’t ever be asked to paint the building in your spare time on the weekend. Amenities range from the bare bones with a swimming pool and fitness room, to total luxury with full-time concierge, doorman and valet, room service, spas, and restaurants.
Townhouses
Townhouses can be considered sort of a happy medium between a single family home and a condo. Townhouses are two-story structures that are similar to single family homes in that they sit on their own piece of land.
They are also like a condominium in that they are attached to one or more other homes. They commonly include either a one or two-car garage and also a front or back patio for lounging outside.
The outside of the home is typically taken care of for you, you don’t have anyone living directly above you, and there is frequently a small piece of the yard for you to call your own in which you can plant annuals or a rose bush, etc. (often subject to community restrictions). These benefits account for the rise in popularity of townhouse living in Florida.
In most communities, townhouse owners are assessed for the maintenance of the common areas (parts of the community owned equally by the home owners), as well as any amenities provided such as swimming pools, tennis courts, and pavilions.
These assessments can occur monthly, bi-monthly, quarterly or yearly. Most likely these fees will not be figured into your mortgage, so you will have to make a separate payment when it is due. Again, you should review the budget and the association rules before you make a purchase.
Attached “Villas”
Available in some communities, attached villas are very similar to townhouses in that they are attached to another unit. However, they are only one story and therefore have no stairs, which some people find to be an attractive feature.
Manufactured Homes
Close your eyes and step into a modern manufactured home. Now open them. Are you sure that you’re really in a manufactured home? You see drywall, crown molding, tile, hardwood floors, a fireplace, decorative niches, and archways. Then look at the floorplan and layout, it seems that this can’t be a manufactured home!
Manufactured homes have come a long way from the long and narrow tin cans on wheels of the 50s, 60s, and 70s and have evolved into a logical, economical, and safe choice for many would-be homeowners. Affordability is one of the main factors driving the increase in manufactured home ownership. Manufactured homes cost considerably less than their site-built counterparts, sometimes 25-50 percent less, in fact.
Money is one thing you say, but are they safe? Today’s manufactured homes are built in quality and environmentally controlled factories and adhere to current federal building codes. This, combined with the fact that they are anchored to the foundation on which they sit, a process that is overseen by local building inspectors, means a safe and secure home that can withstand the elements. Manufactured home builders’ websites are often filled with testimonials of how their homes have been able to withstand hurricane force winds just as well and sometimes better than some site-built homes.
Before you jump in though, some caveats to consider: Though they may be built to withstand winds over 100 mph and are up to federal codes, manufactured homes are still feared by many insurers. It can be tough to find insurance on your manufactured home at a reasonable rate. Also, when hurricanes threaten Southeastern states, especially near the coast, manufactured home communities are almost always under mandatory evacuation orders, even if site-built home communities surrounding them are only under voluntary evacuation orders. That might be something to think about if you don’t want to have to pick up and go every time the wind blows.
Manufactured Home Communities
Most folks entertaining the purchase of a manufactured home will be considering manufactured home communities that offer a full array of amenities like golf, tennis, swimming pools, clubhouses, and restaurants and bars. It’s not just the home, it’s the lifestyle that people are after, and many developers have realized this and are offering it to the manufactured home buyer.
However, in many (though not all) manufactured home communities, you do not own the land your home sits on, the developer does. One of the main factors in a home’s ability to appreciate is its location and land value, something that in this arrangement you have almost no stake in. This is often times a thorn in the side of residents, but it is what it is. If you really want to live there, it’s simply something you’ll have to deal with.
Also, the developer will pay the taxes and provide the services outlined in the developer agreement such as grounds maintenance, lawn care, security, and the like, and in turn will charge you a fee, commonly referred to as “lot rent.” This is a source of revenue for the developer. The developer is providing you certain services, and you are paying him for providing them. Likewise, when he has an increase in costs or taxes, these increases will be passed on to the homeowners.
One of the best ways to find out more about what owning and living in a manufactured home might be like is to talk with people who live in a manufactured home. If you are curious, when visiting an area spend some time driving around a manufactured home community and talk with some residents if possible. Most will be glad to share their experiences with you, whether they are good or bad.
Photo credit: Sam Beebe / Ecotrust on flickr
{ 1 trackback }
{ 0 comments… add one now }