To Build or to Buy? That Is the Question. Here's Every Factor You Need to Consider

By Shelley Frost

September 06, 2024

When you're ready to move, you have several options, from fixer-uppers with charming potential to custom-built new construction. No matter which option you choose, buying a new house is a major investment and one you should consider fully. Look at all the factors involved with building a house vs. buying a house to help you decide.

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What Are the Pros and Cons of Building a House?

First up is building a house. This exciting option lets you put your personal touch on every part of the home, but there are some cons. Explore both the good and bad of building a house.

Pros of Building a House

Here are some pros of building a house vs. buying a house:

Customization

You choose the floor plan, building materials, colors and finishes for your custom-built home. With so many customization options, you get exactly what you want, with your personal style infused into the finished result.

Fewer Repairs

Since the home is brand-new, you don't have to worry about repairs. The warranty should cover most issues.

Energy Efficiency

Newly built homes are typically more energy-efficient, and you can add energy-saving features.

Less Competition

Building a house vs. buying a house means you get to skip the bidding wars that often happen in real estate. You're not competing with anyone to get the house of your dreams.

Cons of Building a House

On the other hand, there are some drawbacks to building a house:

Delayed Move

When you build from scratch, you may have to wait several months before you can move. The building process length can vary, so you'll have to wait to change your address.

Complex Financing

Building a home requires a short-term construction loan before you convert to a traditional loan. Construction loans often have more stringent requirements.

Potential For a High Price Tag

You have some control over the cost based on the size, finishes and features you choose. However, you'll often pay more for a custom home than an existing home. It's also easy for the price to get out of control with extras.

More Work

Building requires you to make several decisions and ensure all contractors are getting the work done. You're much more involved in the process than you are when you buy.

Limited Locations

You're limited to locations with empty lots, which often means newer neighborhoods in the suburbs or the outskirts of town.

What Are the Pros and Cons of Buying an Existing House?

You can also buy an existing home, whether it's new construction that's ready for you to move into or an older home. Consider the following pros and cons of this option.

Pros of Buying a House

The following benefits could persuade you to buy an existing home instead of building:

Faster Move-in Date

Unless the home needs a complete overhaul before you move in, buying an existing home means you can move much faster than building.

Wider Price Range

Existing homes are available in a wide range of prices, including some options that are significantly cheaper than a brand-new, custom-built home.

More Location Options

You can find existing homes in every neighborhood of your desired city, so you're not confined to newer neighborhoods.

Easier Financing

The financing terms and rates are typically better for existing homes. You can also skip the different types of loans and can often finance with a smaller down payment.

Potential For Negotiations

Depending on the current state of the real estate market, you could potentially negotiate on the price, move-in date, furnishings you want to keep and repairs you want the owner to complete.

Cons of Buying a House

It's also helpful to look at the cons of buying an existing home, which include:

No Customization Options

You get the home as-is when you buy vs. build. That means you might have to compromise on the layout, design and features of the home. Unless you buy a fixer-upper or want to make renovations, that is. In that case, the only limit is your budget.

Competition

The competition can be stiff for existing homes. You may have to offer more than the asking price or skip contingencies to have your offer accepted.

Potential Need For Repairs and Updates

Older homes may need repairs, or you might want to renovate the home to make it more your style. This adds to the cost and could lead to unexpected expenses.

Limited Based on Current Supply

Buying a home limits you to what's on the market at the time. You may have to wait for a home that offers what you want to go on the market.

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So, Which Is Better: Building or Buying?

The answer is different for every homebuyer. Look at the cons of each option to see if any of them are deal-breakers. For instance, if you don't want the stress of complex financing or dealing with contractors, you might lean toward buying a house. Consider your budget and preferences to decide. It can also help to look at both options and see what's available in your area.

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