Today’s Topic is Remodeling or Buying an Existing Home Versus Building a New Home. Remodeling Cost Versus Resale Value

Remodeling cost generally run from 2 to 3 times higher than new construction. This difference is generally due to demolishing the area to be remodeled, and upgrading to meet all local codes. So in saying that, it is best to think long and hard before you start a remodeling project. It is cheaper to stay where you are and remodel in most cases, due to total cost involved. There are several basic things to consider if you are only planning to be in the house for a short period of time, meaning 3 to 5 years. The number 1 rule is to not over build for your area. If the appraisals in your area will not allow you to recoup some of your investment costs, it would be wise for you to move. Then again if you plan to stay there for the rest of your life it may be worth it to meet your needs, regardless of the resale. The list below is the national average on cost versus value for remodeling.

Make sure you hire a reputable remodeling contractor and get references.

Buying An Existing Home Versus Building A New One

Location: The oft-recited real estate mantra of “location, location, location” is still relevant. Most older, established neighborhoods are in the town’s center, which can be good or bad depending on the vitality of your urban area. New subdivisions — and newer schools — are generally on the outskirts. But the expense of a daily commute is one factor that many buyers forget to consider.

Price: Existing homes are usually less expensive per square foot, in part because of escalating land costs in new subdivisions. But ownership costs are considered more predictable in a new home, especially considering the cost of a code upgrade or remodeling of a vintage home. Some builders will include closing costs as part of their price of a new home, although that builder has a set amount he must get from that home to make a profit. Price is more readily negotiable for an existing home. Also, a hidden cost in many new subdivisions is a homeowner’s association, with mandatory fees and other assessments as well as architectural controls that may surface at remodeling or expansion time.

Move-in complications, advantages: The resale is sitting there waiting for occupancy, warts and all. But the wait for a new home can seem interminable, though the buyer can check on quality control as it’s being built. If your finished house is among the first in a new subdivision, prepare to navigate through construction teams and precariously misplaced nails for months on end. And don’t forget that daytime hammer serenade.

Neighborhood: “People moving into new neighborhoods are more all have similar likes. “When a development goes up, it offers an opportunity for you to help create your own neighborhood lifestyle. If you want to move into a community where your children have lots of playmates, that may be for you.” In older communities, people have moved in and out over the years and you tend to get more diversity of neighbor backgrounds that include older people, singles, families and renters.

Living space and design: Lower building costs of the past mean more home for the money for the buyer of a resale. Resale basements may have been finished out nicely for additional living space. On the other hand, new-construction homes often employ more efficient, innovative uses of square footage and property. Also, newer “zero-lot-line” developments offer more living space per square foot than a same-size lot that surrounds a resale.

Customization: In a new house, you can pick your own color schemes, flooring, kitchen cabinets, appliances, custom wiring for TV’s, computers, phones and speakers, etc., as well as have more upgrade options. Modern features like media rooms, extra-large closets and extra-large bathrooms and tubs are also more attainable in ground-up construction. In a used home, you rely largely on the previous resident’s tastes and technological whims, unless you plan to farm thousands into a remodeling and rewiring.

Character: While many new homes are built in “contextual” style, which blends elements of the old and the new, it’s still hard to emulate a pre-Civil War house in New Orleans, a Victorian home in San Francisco or a brick Row House in Boston. Hardwood floors, vaulted windows, high ceilings, built-in cabinetry and other design nuances express certain individuality in older homes that’s nearly impossible to copy. Many new-home buyers believe they put the character in their own homes.

Safety: Builders have to follow very strict guidelines in new-homes and additions, especially in the West and Northwest, where earthquake safety standards must be observed. In general, new homes are usually more fire-safe and better accommodating of new security and garage-door systems.

Landscaping: Mature trees, robust shrubs, gardens, rose bushes and perennially well-watered lawns are some of the rewards of an older home, while most new homes are apt to yield small trees, fewer walkways and sparse vegetation. Landscaping is an expensive proposition today for the cost-conscious homebuilder.

Energy efficiency: Advantage: new construction. New-home designers can use new building materials such as glazed Energy Star windows, thicker insulation and other technology that will lower future energy costs for the owner. Most states now have minimum energy-efficiency requirements for new construction. Kitchens and laundry areas in new homes are designed to house more efficient energy-saving appliances. Older homes, unless they have undergone an energy retrofit, usually cost much more per square foot to air-condition and heat.

Amenities: Many new subdivisions offer neighborhood clubhouses, swimming pools, playgrounds, bike and jogging trails and picnic venues for residents. Older homes don’t, although many have better access to urban shopping venues and restaurants because they’re part of old, self-containing city-planning philosophies.

Maintenance: The charm of an older home often goes hand in hand with increased maintenance, especially if the previous owner(s) were not vigilant in upkeep. Building materials may be harder to replace or match in an expansion or remodeling. New homes generally come with at least a one-year warranty for the repair of some problems that develop as it settles into its foundation. But know what your warranty covers. Many are elusively written. Warrantees In Texas are 1-year craftsmanship, 2 years on all mechanicals and 10 years on the structure.

Taxes: Newer homes tend to spring up in less-developed, outlying municipalities, which may impose higher taxes on you because they’re subsidizing fewer inhabitants than the central metropolitan area. Your community will still need fire and police coverage, sidewalks, sewers and probably a new school. A more established home in a built-out area has a little more predictable tax structure.

When considering purchase of a new home, make certain you are dealing directly with a builder who has a good reputation and meets all requirements set by the state or area they build in. Make sure the purchase contract is contingent on financing.
Whether buying a new or resale home, it’s a good idea to hire a properly credentialed individual to inspect the premises before you settle. “Even some nationally known home inspection firms may send out an individual inspector who is minimally qualified to perform a good inspection.”
Because of the contract forms that many inspection firms use, the company typically has little financial risk for a poor inspection. If they miss a bad roof, all they have to do is refund you the $200 or $300 (fee). Anytime you are given a written contract to sign, you should read it carefully and make sure you understand what you are signing.
Potential buyers should also scope out any vacant fields in the area surrounding their planned purchase and check with the city or zoning board to determine how that land is zoned, experts say. Recent buyers into both new and established subdivisions across the country have been stunned to discover the long-fallow retail parcel down the block will soon give way to a big-box retail mega store.