Should I Stay and Fix Up an Older House or Sell and Buy a New House?
The decision to either move to a new house or fix up your current one can be complicated by emotional attachments to your home. It’s easy to tell when you need an upgrade – you’re cramped, hampered and unhappy. The difficulty lies in determining which option will yield the most profit and personal satisfaction. Go into the decision with knowledge and confidence to ensure your family has years of good living ahead of them in the best space possible.
In years past, homeowners could place their homes on the market quite confident they would see a profit. However, in today’s downturned real estate market, homeowners may not even receive close to what feel their home is really worth. Often, they will not be left with enough funds to buy another home. As such, many homeowners decide to stay where they are and fix up their current home, which may result in added value to the property. In fact, homeowner improvement spending is on the rise.
Disadvantages of Relocating
One of the biggest drawbacks to relocating is the high costs associated with selling a home and buying a new one. The fees include real estate agent commissions, mortgage fees, appraisal fees, title search fees, title insurance, recording fees, and attorney’s fees. In addition, moving can be stressful. You have to pack up your home, sort through your belongings, pack them up, and transport them to your new location. Moving can be time-consuming, expensive, and hazardous your belongings – which may become damaged during the move.
Advantages of Remodeling
When you fix up your home, you have the power to do it however you like. Additionally, in today’s market, people are finding that the cost of remodeling their home is generally less than purchasing a comparable home, according to PBS.org. Assuming you make smart remodeling decisions, you may also see a high percentage return on the dollars spent, making the decision to remodel even more cost-efficient. Staying put also means stability. Remodeling allows the family to remain in the same neighbors and schools.
Don’t Forget About Location…
Location is and will always be the biggest value driver
And new construction might be in less desirable areas
Or in the outskirts of urban areas
So take that into consideration as a trade-off
Let’s face it; the old saying that location is everything in real estate is true. It’s always been true, and always will be true. That is, if you want to see your property actually go up in value.
And guess what. Brand new homes aren’t being built in the best locations. When it comes down to it, there’s no space for a new development in an established or central location.
Sure, you might see a new condo development, but new homes most likely won’t be that central. They’ll be on the outskirts of town, or in a “trendy” or “upcoming” area.
In other words, there’s going to be a commute if you buy new, and the location might be questionable at best in terms of value.
There might even be multiple new developments surrounding yours, with tractors and hammering construction workers doing what they do all day long.
With an existing or used home, you can buy in the heart of the city, or in an area you know well that is insulated by a lack of available space and construction.
That buffer means the property should hold up well in terms of value, even during a downturn, assuming the area isn’t subject to obsolescence. A used home might also give you the ability to walk to work, or to restaurants, bars, shops, and so on.
At the same time, a used home doesn’t necessarily have to be old inside. If you shop around, you might be able to find an old home that has already been remodeled to your liking.
And even if it hasn’t, that shouldn’t stop you from buying it and making renovations if it’s got good bones.
New Homes Are 20% More Expensive
You pay a premium for a new home
Apparently 20% more on average
So while costs might be lower for maintenance and renovation
Consider the upfront cost
Back in May, Trulia determined that new homes (built in 2013-2014) cost roughly 20% more than similar existing homes.
They also found that two in five Americans would prefer to buy a new home, compared to just 21% opting for an existing home and 38% declaring no preference.
But when it came to that 20% markup, only 17% would actually pay the premium to get the new house.
So to get this straight, you might have to pay 20% for a new home AND you won’t be in a central location. You’ll be in an untested location that might wind up being a ghost neighborhood in a decade if things don’t work out as planned.
During the most recent housing crisis, a lot of new homes were hit the hardest, whereas existing homes saw their values decline but prop back up over time.
Of course, if you opt for new you’ll probably have all the latest technology and no major issues. If you go with an older home, you might have major bills on your hands when the roof gives out, or you discover serious plumbing issues.
So you’ll need to do your due diligence when buying an old home to ensure the property is in adequate shape. Then again, I’ve heard really negative stuff about new homes too, with many claiming workmanship has gone to you know what these days.
In other words, you’re not out of woods if you buy new either, though there might be some kind of warranty in place for a while.
At the end of the day, it’s probably okay to consider both new and used homes when looking for a property. As long as you take the time to inspect the property and the neighborhood, negotiate the right place, and make sure you can afford the place, you should be okay.
Lastly, you should make sure you actually want to own as opposed to rent because owning comes with many more responsibilities, whether you buy new or used.
Disadvantages to Buying a New Home
More expensive than buying used
Location probably isn’t ideal
Despite being new, workmanship might be questionable
Could be subject to costly HOAs, even if it’s a house
Neighborhood dynamic is unknown
Property values might be more volatile
Construction nearby (eyesore and noisy)
More cookie-cutter, less unique
Advantages to Buying an Existing Home
Better, more central location
Can buy in an established school district
Can own in a more reputable and recognized neighborhood
Old house might have new upgrades
You can always renovate if need be
Older houses tend to have more character, custom design
Could actually be built better than a new home