New Construction or Existing Homes: The Pros and Cons of Both

Some people hate hand-me-downs; others like things with a history. When it comes to housing, new construction has a never-been-touched attraction, while existing homes have stories to tell. For every advantage of buying newly built and existing homes, there’s a flip side. For example, newly constructed homes tend to cost more than similar pre-owned homes, sometimes as much as 20 percent more. But they are initially less expensive in terms of maintenance and utilities.

As you weigh whether to buy shiny new construction or a charming pre-owned home, here are some other factors to consider.

Benefits of new construction

Floor plan: If you opt for a custom-built home, you’ll work with the contractor to create a traditional or modern layout that works for your life. If you’ve always dreamed of a formal dining room for family gatherings, it’s yours. If you’re buying pre-built new construction, chances are good the layout will lean to modern, with wide-open floor plans. Kitchens flow into family rooms so you can cook and oversee homework or watch the game. Rooms in new construction homes – especially bedrooms and bathrooms – tend to be larger and brighter, with lots of natural light.

Personalization: Even if you’re not opting for a custom home, you may be able to upgrade finishes from builder-grade materials if you connect with the builder before construction is completed. It may cost you a bit more, but adding your own personal touches may be worth it to you.

Efficiency: New appliances and home systems are more energy efficient. Plus more efficient insulation and windows create buttoned up homes that are less expensive to heat and cool than older models. All of that translates into lower utility bills.

Smart and healthy: “Smart” technology options allow you to automate internet, cable, speakers and even an alarm system. And new homes often use low- and zero-VOC (volatile organic compound) paints and building materials, improving indoor air quality.

Maintenance: A newly built home requires less maintenance since everything from appliances to the HVAC system and roof are brand new. This means you can better predict monthly homeownership costs, since you’ll likely spend less to maintain your home. Warranties can protect your new home for years before you need to undertake any major repairs.

Amenities: Buying new construction often means buying a lifestyle. Master or planned communities often include amenities like parks and community spaces that are close to schools and transit. The key is finding a builder who offers what you care about.

Timing: The median time to complete new construction – five months for single-family homes and six months for condos – lets you feel less rushed than scrambling with other buyers for an existing home.

The flip side

Location: New construction typically grows up in exurbia where land is plentiful but commutes can be longer. In cities, new construction tends to be high-rise condos or in-fill homes on smaller urban lots, with very little outdoor space.

Landscaping: Existing construction is often surrounded by mature trees that shade the home in summer, protect against wind in winter, and block out traffic noises at bedtime. Mature trees may be salvaged at new building sites but often the landscaping takes years to grow into itself.

Floor plan: Builders, especially in planned communities, tend to stick with exterior design styles and finishes that appeal to the broadest range of customers. You’ll have to count on post-purchase painting and decorating to stand out from your neighbors.

Waiting: If you’re looking at new homes that are already built, this isn’t a factor. But if you’re building a custom home, it could take several months longer than moving into an existing home. You can expect a custom home to take five to six months, but that varies by market and builder.

If you’re interested in new construction, read about the types of new homes, the steps to building a custom home, and tips for buying a brand new home.

Source: zillow.com

New Construction: Different Types for a Variety of Buyers

Shopping for a new-construction home? One of the first things to decide is what type to choose: a custom, spec or tract home. Ask yourself if you want to help design a home that’s a perfect fit or fit into one already built. As you begin your search, here are some pros and cons to help you make your decision.

Custom homes

Custom homes are built for and with you. You can buy the land and hire an architect builder to help create your unique vision; or you can enter into a contract with a developer or builder to create a home on land he owns. Either way, you collaborate with to build a home that fits your tastes and lifestyle.

Builders often have basic plans you can tweak for an additional cost. That might mean adding a laundry room on the main floor or including an in-law suite in the basement. With custom homes you can make rooms bigger or smaller, upgrade cabinets and pick bathroom tile that warms your feet and heart. The builder will give you a budget for each finish, and apply a credit if you go under and charge you more if you exceed the limit.

Pros: You have a big say in just about everything. You decide on the floor plan: Do you want a formal dining room and a breakfast nook? You pick upgrades according to your taste and budget: Think high-end appliances, heated bathroom floors and french doors. Your home reflects your style, and it doesn’t look like every other house on the block.

Cons: You’re responsible for all the decisions: floor plan, landscaping, flooring, finishes, paint colors, cabinets and more. Even if you work with an interior designer, you will still make the final choices. So if decision-making isn’t your strong suit, building a custom home could feel like an overwhelming chore rather than a creative opportunity.

Spec homes

That’s short for “speculative,” because builders or developers construct a single-family home, townhouse or condo before having a specific buyer. Consequently, spec homes come with features and finishes the builder thinks will appeal to the greatest number of potential buyers. You may be able to find a spec home under construction and pick some elements such as counters and cabinets. But typically spec homes are a completed package.

Pros: The work and decisions have been done for you. If you don’t have the time or inclination to make a million choices, this may be the best option. It’s usually move-in ready, and you can make changes like paint colors once you own the place.

Cons: Some spec builders go with “builder grade” or “contractor grade” materials, which are generally considered inexpensive products made from low-grade materials. This may mean you’ll get low- or mid-range appliances, flooring, counters and cabinets. While it’s a budget-friendly choice, you may be sorry in the long run.

Tract homes

Tract homes (called that because they’re developed on a large tract or parcel of land) are usually built in planned communities outside the city core. You may buy an available lot and pick a floor plan if the development is in-progress, or an already built home in the tract. Each developer provides design choices that establish a cohesive look and feel.

Pros: Many planned communities include perks like clubhouses, pools, tennis and sports courts. They often are built near transit hubs to make commutes easier. Price can be a compelling reason to buy in planned communities, where builders take advantage of volume buying to lower material costs.

Cons: Turning a profit depends on how quickly and cost-effectively the builder can construct the homes, so check the quality of both materials and construction methods.

Lots/land

Buying an undeveloped lot that’s not associated with a planned community gives you many options. You can build a home now, or wait until you have time and money. Even if you build nothing, land can be a smart investment, depending on the location. As Mark Twain said, “Buy land, they’re not making it anymore.”

Pros: Lots give you the opportunity to build your dream house on your own schedule. When you’re ready, you can select a custom builder and make the choices that fit your budget and lifestyle.

Cons: You’ll be paying property taxes even if you haven’t built on it, and you’ll need to maintain it (keeping grass cut, for example) if you want to stay on the good side of your future neighbors. Undeveloped lots may not be connected to electricity, sewer, water, or natural gas, which are expensive to bring to your property line when you decide to build. Also zoning may not allow you to develop the land the way you’d like. Research what your options are before you buy.

If you’re interested in newly build homes, we have more tips about how to buy a brand-new home and how to work with a contractor.

Source: zillow.com

New Construction: 10 Stages of Building a Custom House

In this article:

If you can’t find your dream home on the market or if you want to create a home that’s uniquely yours, you might consider building a house. Buyers who decided to build new homes were more likely to say that selecting the floor plan, having everything in the home be brand-new and customizing their home features were among their top reasons.* Before deciding if new construction is for you, you’ll want to learn about the different types of new-home construction and familiarize yourself with the process, from the initial land search all the way to selecting finishing touches. 

Typically, when someone says they’re planning to build their own home, they are referring to a fully custom build where they have a say in almost everything (short of items restricted by local laws and zoning regulations). But, in the realm of new construction, there are three different approaches buyers can take: 

Spec homes. With a spec home (short for speculative home), a home builder designs and constructs a single-family home without having one individual buyer in mind. Instead, they plan on selling the house to a buyer once it’s finished. Depending on how early in the process you are able to go under contract, you may be able to select some of the home’s final touches, like flooring, kitchen appliances and paint color. Sometimes these homes are listed for sale as “pre-construction.” 

Tract homes. With a tract home, a developer purchases a parcel of land and divides it into individual lots. Then, a home builder constructs all of the homes in that planned community. Tract homes can be condominiums, townhomes or single-family homes. Most homes in the community will look similar, and shared amenities are common. Similar to spec homes, you may be able to select some finishes in advance, depending on the timeline. 

Fully custom homes. With a fully custom home, you typically find the land on your own then hire a builder to build your dream home. You have total control over the floor plan, layout and finishes, but the process requires a lot of decision-making, attention to detail and disciplined budgeting — custom homes can be expensive. 

Since custom homes are the most complex new construction option out there, we’ll spend most of this article explaining the process.

Check your financing options

Once you’ve decided that building a custom home is the right choice for you, the next step is figuring out how you’ll pay for it — and a traditional 30-year, fixed-rate mortgage isn’t an option for custom home construction, at least not at first. 

Unless you can pay for the entire build with cash, you’ll likely be looking for a construction loan, which is also sometimes called a self-build loan or a construction mortgage. Getting a construction loan is often more difficult than getting a traditional mortgage, as you’re borrowing money for a concept and not a physical house. You’ll need to provide your lender with a timetable, budget, floor plans, materials needed and extensive details to be considered. Other things to know about construction loans:

  • They have variable rates that are often higher than typical mortgage rates.
  • A 20%-25% down payment is usually required.
  • The loan can include the land you’re purchasing or it can cover only the construction costs if you already own the land. 
  • There’s an opportunity to refinance into a traditional fixed-rate mortgage once construction is complete.

Locate the right lot

If you don’t already own the land you plan to build on, you’ll need to shop around for the right lot. A real estate agent can help you identify lots for sale in your area. 

As you narrow down lots you like, you’ll want to loop in your architect and builder to make sure the lot you select fits the needs of your home’s floor plan and design. They should be able to help you check zoning laws and restrictions and identify any attributes of the lot that might make it more expensive to build on — for example, a steeply graded lot may require more engineering, or a lot in a remote area may necessitate a septic tank.

Plan and design the home

Figuring out the size, layout and style of your home is a big task, and it can happen before or after the lot is selected, depending on your individual plans. When you’re building a custom home, the sky’s the limit, although you will need to keep in mind your budget and any limitations of your lot. And, if you don’t plan on living in the home forever, consider how design decisions will affect the home’s future resale value. 

The professionals on your team will be able to help you home in on the right style and layout, but it doesn’t hurt to get a feel for what you might want in advance. Drive around your area and identify homes you like. Look for interior design inspiration online or research the latest smart home features to see if you think they’re worth the added cost. 

Here are a few important design decisions that need to be made early on:

Number of bedrooms and bathrooms. How many people will be living in the house? Is your family growing, or are you downsizing? What about houseguests?

Single story vs. two story or more. Are there mobility issues that should be accommodated? Would a one-story home be easier for those with limited mobility living there? 

Outdoor space. How important is outdoor space and how much should you have? The bigger the yard, the more maintenance involved. 

Open concept or individual rooms. How open you want your house to be depends on your taste and lifestyle. Individual rooms give a more classic feel, while open concept homes are more modern. 

Home style. What aesthetic do you want your house’s exterior to have? Tudor, Cape Cod, craftsman, colonial?

Interior design. Are you partial to modern design, a more traditional look or something in between? If you plan on using the same furnishings you have now, will they match the look of the new home? 

Additional features. Think through other features that need to be decided on early in the process, like smart home compatibility, eco-friendly materials or solar panels. 

Future resale value. If you think you’ll sell the home at some point in the future, consider the home’s possible resale value. For example, if you add a pool or an upscale kitchen, will your home be priced too high for the neighborhood?

Hire professionals

Building a home isn’t an easy task, and it’s rare to take on the entire project yourself. So, you’ll need to have several different professionals by your side to ensure your home is structurally sound, follows local code and suits your needs.

Home builder

Hiring the right builder can make or break your custom home experience. Choose someone who is not only a licensed general contractor but also has a portfolio of custom homes and success stories in recent years. 

To find your builder, you can ask for a referral from friends and family, search online, or ask your real estate agent for recommendations. A good builder will help with:

  • Budget
  • Zoning laws, including acquiring permits
  • Infrastructure needs, like utilities and sewer

Architect

In most places, in order to even apply for permits, you’ll need architectural plans. Discuss the following details with your architect before they create your blueprints:

  • Square footage
  • Stories
  • Number of bedrooms and bathrooms
  • Layout
  • Functionality

Interior designer

You may also want to hire an interior designer who can help with the finishes once the framing and structural elements are in place. From flooring to bath tiles to fixtures, there are many design choices that need to be made, and it can get overwhelming for the average home buyer. If you do plan on making all the interior design choices on your own, don’t wait until installation time. Start researching finishes and fixtures early so you can set your budget.

Other professionals

In addition to these key players, there are other professionals involved in the custom-home-building process. Many of these people are hired by your home builder or general contractor:

  • Land clearing crew
  • Surveyor
  • Structural engineer
  • Inspector (from the city)
  • Plumbers
  • Electricians

Understand the process of building a house

After the designs and blueprints have been finalized and your permits have been approved, that’s when construction starts and your home begins to take shape, generally following these steps: 

1. Land prep
The first step in the construction process is getting the land ready. This includes clearing the area, digging trenches and making sure utilities are installed. 

2. Footings and foundation
Your foundation will be made of poured concrete reinforced with steel rods. Depending on the part of the country you’re building in and the design of your home, you may have a slab foundation, crawl space or a full basement. No matter what kind of foundation is poured, it will be sprayed with a waterproofing material and inspected by the city before framing begins. 

3. Framing
In the framing step, the bones of the home start to take shape. Framing includes the floor joists, subfloors, studs that form the walls and roof trusses. During this step, the crew will wrap the house to protect it from moisture. If construction is taking place during a rainy time of year, your builder may also install windows, roof shingles and siding during this step. 

4. Plumbing, electrical and HVAC
Once the home is “dried in,” subcontractors will start installing the home’s major systems, including plumbing pipes, electrical wiring and heating and cooling ducts. Each of these steps requires signoff from a local inspector. 

5. Insulation
Your home’s insulation needs will vary by climate, but in general, insulation will be applied to exterior walls, basements, crawl spaces and attics. Fiberglass, cellulose and foam insulation are all options. 

6. Drywall
Drywall panels are hung with screws, taped and mudded, and a spray texture is applied. Then the new walls are primed with paint.  

7. Interior finishes
In this step, most of the home’s interior features will be added. This includes doors, baseboards, casings, window sills, stair balusters, kitchen counters and cabinets, bathtubs, vanities, and hard-surfaced flooring. Interior painting and hardwood installation are sometimes done during this step, but they may be done later if there is risk of damage due to continuing construction. 

8. Exterior finishes
Driveways, walkways, patios and final grading to direct water away from home will all be completed. Landscaping and exterior decorating happen during this step too. 

9. Fixture installation
With the house close to completion, toilets, faucets, light switches, heat register covers, the hot water heater, the electrical panel and the HVAC systems are all installed. Many of these items require another round of inspection. Another task that happens in this step is the installation of glass fixtures like mirrors and shower doors. 

10. Flooring installation
Carpet and hardwood flooring are added in this late stage. Make sure to check with your builder on the status of your hardwood finishing process so you don’t accidentally damage them. 

11. Final inspection
Once construction is complete, a final inspection will be conducted by a local building official. Upon passing, you’ll receive a certificate of occupancy, which gives you the green light to move in. 

12. Final walkthrough
Before you move in, you’ll want to do a final walkthrough with your builder to identify punch list items that need to be repaired for the job to be considered complete. Common punch list items include electrical defects like nonfunctioning outlets, damage to drywall and paint, or missing fixtures.

Skip construction and buy renovated

Building a custom home is a complicated process, and it can take well over a year depending on your location, lot complications, house size, laws and the permit-approval process. Another option is to buy a home that has already been renovated — you get a fresh and updated feel without having to do the work yourself.

Shop Zillow-owned homes

Buyers of Zillow-owned homes can be confident that the homes they buy have been professionally renovated by local contractors. With Zillow-owned homes, you can avoid the stress of a custom build and make yourself at home.

*Zillow New Construction Consumer Housing Trends Report 2019

Source: zillow.com