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Buying property: Old vs. new


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Blog by Randy Miller | July 15th, 2014


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Buying a home is an emotional and personal decision. The price of course plays a major role too. Here are some advantages and disadvantages to consider when trying to decide whether you should buy a newer home or an older home.

PROS of New Construction

  • Some flexibility on design during construction phase: Many homebuilders allow buyers to help design the property. New-home buyers, for example, can often decide where their bathroom might go, choose their favorite flooring or pick the exterior paint color. Buyers moving into a subdivision can sometimes pick the lot they like best.
  • Contemporary style
  • Cheaper to operate - energy-efficient: Newly constructed homes use energy more efficiently. They tend to have higher-efficiency insulation, doors and windows  that helps prevent conditioned air — cool air in the summer, warm air in the winter — from escaping.  The more energy-efficient appliances of the house also help reduce utility bills for new-home buyers. New homes often have appliances — such as high-efficiency stoves, refrigerators, washing machines, water heaters, furnaces or air conditioning units — that homes built years ago might not.
  • Cheaper to maintain, Fewer repairs: When people buy a new home in today’s market, it really is new. At the same time, today’s new homes are engineered specifically to minimize maintenance requirements. For example, some companies use composite products for a home’s exterior trim instead of wood, which could rot or need repainting.
  • Extended warranties: In addition, builders often agree to take care of the necessary repair work in a new home for at least the first year. So if your roof starts leaking or the heater breaks during the warranty period, your builder will pick up the tab for the repairs.
  • Fire safety: New homes often include fire-safety features that may not be in properties built years ago.
  • Financing: New-home buyers can take advantage of mortgage-financing perks available through their builder. New-home builders — in many cases, the larger ones — have their own mortgage companies, or they will offer paying points or closing costs and buy down certain rates for you. The seller of a resale home is generally not going to do that for the buyer.
  • Frequently have a homeowners association which helps to protect resale value.
  • It's brand-new!

 

CONS of New Construction

  • Frequently less character, or homogenous design: Unless you are looking at a custom-built house on an individual lot, most new homes are built in developments with a unified style. These developments can be as small as a cul-de-sac, or as massive as a former farm field filled with dozens, if not hundreds of homes. All homes in your neighbourhood might have similar floor plans. They might be identical to each other and have no individuality.
  • Limited negotiating room on price: New houses are often more expensive than resale homes of a similar size.
  • Can put limits on how you use your property.
  • Immature vegetation: It can take years for trees to grow.
  • House settling: New houses settle. It happens everywhere, regardless of the type of soil. Settling causes cracks in foundations, walls and door frames.
  • Longer commuting distances to downtown. If you want to be where the action is in a metropolitan downtown area or avoid the drive to work in rush-hour city traffic, the distance from downtown might make a difference to you.
  • Neighbourhood: There are also risks in buying a new home. The plans may be impressive, but you don't know who your neighbours will be, which could lead to a financial risk down the road. You can always update your house but not the neighbourhood.
  • If it is a home in a new subdivision, no infrastructure is in place – including schools, parks, public transportation and shopping malls.
  • You will also pay GST on a new home, which will add to your costs.
  • Problems with the builder: Check the builder's track record. What else has the company built? Were previous projects completed on time, on budget and without bad blood between the builder and buyers? If you live nearby and previous stages of the development are occupied, ask the residents if the builder did quality work and lived up to contractual commitments.
  • Extra costs for Extras: You can certainly have the granite counters, surround-sound home theater and jetted tub you saw in the model home, but they're not included in the base price. You will pay extra for them.

Bring your own agent. If the builder has a real estate agent on site, the agent will be more than happy to help you. But, on-site agents work for the builders who hire them. Their best interests will be for the builder, not you.

 

PROS of Resale Homes

  • Old world construction: While older homes may need updating, they have withstood the test of time which is not the case with new homes. Older homes have stood for decades, some centuries, and weathered many storms. Some were built by hand by genuine craftsman, with meticulous attention to detail.
  • Larger yard. Years ago, when land was cheaper, builders built on larger lot sizes, leaving room to accommodate garages on alleys.
  • More charm and character.
  • Longer-term neighbors. Many people are drawn to developed neighborhoods for the sense of community that has been established. Some older homes are passed down through generations. Many neighbors know each other.
  • Established neighborhood. Zoning changes are unlikely to occur in older areas.
  • Mature trees and vegetation. The mature landscaping and developed trees are often a considering factor. It's not uncommon to see 100-year trees providing canopies in yards and boulevards.
  • Location: Closer to downtown entertainment and restaurants. Existing homes are often found in older, more convenient metro core areas rather than outlying suburbs. Not only do older areas tend to be located closer to downtown areas, but often residents can walk to local coffeehouses and antique stores.
  • Availability: More choices, more styles to choose from
  • Home improvement. If you enjoy small repairs and home improvement projects around the house, then an existing home would be your cup of tea. You have the opportunity to remodel. In some cases buyers may prefer an older home in a particular location which can be modernized or expanded. In effect, use the existing home as a base to build a unique property.
  • Existing features. When you buy an existing home, you typically don't have to worry about buying the extras, such as blinds for the window, a security system, or a landscaped back yard.
  • Price: In general terms, existing homes tend to be less expensive than new properties. As well, existing homes are likely to come complete with items which may represent new home extras—blinds, landscaping, built-ins, etc. The price may also be more negotiable.
  • Track record. When you purchase an existing home, you know how much the property has appreciated over the years -- in effect, you have an index of sorts which measures the community's marketplace appeal.

Of course, there are cons with existing homes, too.  Generally speaking, resale homes tend to be more available and less expensive than new homes, but they are also full of surprises.

 

CONS of Resale Homes

The big disadvantage of buying an older home is that it may need refurbishing. Although an older home may cost you less than a new home initially, it may end up costing you much more when the expense of updating is taken into account. Things tend to go wrong periodically, and there’s always something to fix. Be honest with yourself. If major repairs are required, you'll either have to do them yourself or bring in the professionals. Some people can handle the disruption; others can't.

If you're considering an existing home, be sure you have a good handle on the working status of all major systems. Hire a professional home inspector to check out the house. As appliances and systems age they naturally require repair and replacement, something which may be reflected in a purchase price.

To evaluate the true cost of buying an older home, find out the age of the roof, appliances and major systems like plumbing, heating/cooling and electrical. Ask your home inspector to estimate how long each of these items is likely to last. Then get replacement estimates from licensed contractors.

Ask sellers for documentation on any major work they've done to the property. This will be useful when it comes time for you to sell. If the roof was replaced recently, find out if the roofer will extend any remaining warranty to you. Also find out how much the utility bills are in an average summer and winter month.Owners of existing homes can always buy higher-efficiency appliances, but doing so can be expensive.

 

In the final analysis, costs are only one consideration – because buying a home, old or new, is a personal and emotional decision. Find a house you like, consider its pros and cons — objectively, as well as emotionally — and think about the compromises you're willing to make. The more logically you approach buying the house, the more you're going to love living in it.

 

If a move is in your future, let’s sit down and talk about your plans. I will listen, understand  your needs and create a plan that will achieve your goals. Buyers in any price range will benefit from my experience and my knowledge of local market conditions, specific neighbourhoods and housing styles. My goal is to get you the best home possible, without compromise at a fair price.

To help me find your desired property, please tell me your desired move in date, the location you want to move to ie: Whitby, Brooklin, or other areas within Durham Region, whether you are looking for a condo, townhouse or house (semi-detached, detached, bungalow or 2-storey home) and the number of bedrooms and washrooms required.

Let’s find your perfect Property Match – Right Now!

Randy Miller
Sales Representative
Re/Max Rouge River Realty Ltd., Brokerage
905-668-1800 or 905-427-1400
randy@randymiller.ca