Building a new home vs. buying an existing, not-too-old one

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As a general rule, building a new home usually costs more than buying a similar existing one.

According to recent surveys by Trulia, Realtor.com, and the National Association of Home Builders, the increased costs varied from 21 to 52 percent.

Here are some reasons why:

  • building new often results in larger and more luxurious homes
  • rising costs of materials and labor, and builder profit margins
  • stricter building codes, which increase overall costs
  • an almost never-ending offering of upgrade options
  • cost of land in a high-demand area might be near the cost of an existing home (and that's before adding in blueprints, building costs, building permits, etc.)
  • finding the perfect home site can be time-consuming, costly and maybe even impossible
  • random incidentals, decorative items, cable hook-ups, additional electric outlets, special garage remotes, and smart house options

Topping the list (and in plain sight) are size of the home, type of the home, and location of the home. Partially hidden are the upgrade options (e.g., roof, exterior, elevations, paint, plumbing, interior layouts, extra rooms, floors, fireplaces, appliances, mechanicals, countertops, driveways, landscaping, custom sprinkler systems, fences and more).

One builder indicated that the choice of lot and upgrades, on the average, increased home costs by 30 percent; double that if you want to go more upscale (and he had a list 200-plus upgrades!).

A good way to start is to search existing homes for sale in your choice locations. When you find a few you really like, look for available lots where you might be able to build a similar home.

Visit some local builders and ask about building a new home similar to the existing re-sales that you like. Most builders will be able to provide you with a square foot cost of construction.

Add land and upgrades, and compare to the cost of those re-sales.

With so many options to consider, do your own research and run your own numbers to see whether building or buying works best, based upon your needs and wants.

When we moved here in 2006 (to Rose Hill Plantation), we had to decide whether to build or buy. Even with owning a lot in Rose Hill, to get what we really wanted (and the best value) we chose to buy an existing home. We never regretted that decision.

Larry Stoller is a broker and Realtor with Real Estate Five of the Lowcountry. Larry@RealEstateFive.com or www.RealEstateFive.com

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