New, Resale, or Custom Home?

For some, this choice is pre-determined before they ever start looking. Some like the smell of new paint and the possibility of picking all the color-style schemes (flooring, paint, cabinets, etc.) that a new home allows; others prefer that “lived-in” feel in an established community that only a resale home allows. Still others have a preset idea of the “perfect” floor plan that only a custom home (have an architect draw the plans and pick your own lot to build on) allows. Whatever your choice, a good REALTOR can help you make that determination.

Sometimes factors beyond your control will dictate you only purchasing a resale home, factors such as: new homes not being built within certain areas, wrong location, only want certain school(s), larger/smaller lot size, more/less trees, community pool/playground facilities, etc. But with the diversity of new home Builders ($100,000-$600,000 price range) and custom home Builders ($600,000-5,000,000 price range) in the Austin metro area, my suggestion is to have an open mind, be flexible, and willing to make concessions within your search parameters to allow all options be explored.

There are several points to consider (pros and cons) when making this decision, and I’ve listed some of these below. This list is a generalization only, and not meant to be an “absolute set of rules” when speaking about a resale or a newly constructed home, as there are exceptions to every rule (ex. a home may only be two years old and have all the amenities of a new home, but it is still a resale).

PRICING

Although both new and resale homes “listed price for sale” reflect the current market value, resale homes sometimes have more room for negotiating a lesser price than a new home because of the owners equity; new home Builders will often offer “Buyer discounts”, financing options, or “free upgrades” to offset this.

COMMUNITY AMENITIES

Most of the newer developments are being required to include park and/or pool areas, sometimes including tennis courts, hike-and-bike trails, basketball courts, etc., that several of the older communities do not have.

VARIETY OF FLOOR PLANS

In most new communities there are several Builders competing, with each having from 6-20 floor plans to pick and choose from. To find that “perfect” resale floor plan you may have to look for weeks and still not find it! Also, if you have your home built, you may have the opportunity of adding/deleting rooms (depends on the Builder) and customizing the home as opposed to purchasing a resale and doing these things as additions.

CHOICE OF HOMESITE

With a new home you sometimes have your choice of lots to build on – lots with   more trees, a view, a golf course location, etc.

CHOICE OF STYLES/AMENITIES

The newer plans today are more “open” than a lot of the older plans; larger family rooms, kitchens overlooking these rooms, more closet space, larger secondary bedrooms, and you can choose some of the interior features such as tile/wood flooring, paint colors, cabinet styles, etc.; also, the newer homes’ exterior styles can include such items as low maintenance siding with a 50/yr. warranty, 9/12-pitch roofs instead of 6/12-pitch, wide variety of brick and stone, etc.

WARRANTIES

Most new home Builders offer a one to two year Builder warranty, and a ten-year structural warranty on the home, in addition to the manufacturer warranties on all the appliances. You also don’t have to worry about termites on a new home as you do on resale homes.

ENERGY EFFICIENCY

A new home built today has much stricter building and energy codes to adhere to than those in the past, including more efficient A/C and heating systems, attic insulation, exterior insulating materials, etc., than those with older homes.

LANDSCAPING

Resale homes often have the advantage when it comes to landscaping, as the grass, shrubs, trees, etc. are mature and growing. Unless you are fortunate to buy in a neighborhood with mature trees and able to choose a home with these in place, you will generally only get grass planted in the front yard, 2-3 small trees, and 10-20 shrubs as part of the Builder landscape package.

TAXES AND INSURANCE

The tax appraisal districts will initially set taxes on a new home based on the full selling price. Older homes sometimes have the advantage of a lesser tax base simply because the district has not re-established their records based on the current market increases. Insurance coverage will vary and is based on several variables – contact a local insurance representative for details. Tax rates vary by community, and some have additional taxing authorities called “MUD Districts” – contact me for additional information on taxes in a particular area you are interested in.  

TIMING

If you need to move into your new home in 30 days or less, often your only choice is a resale. Certainly not always the case, but unless you can find an inventory/completed new home ready for move-in, you will have to wait for the new one to be finished. If you have the time and want to choose a lot and have a home built, your wait time can be anywhere from 4-6 months on a “production home” ($100k-$400k – to give you an idea of the new home construction process follow this link), 6-8 months on a “customized home” (a production Builder that will modify or “customize” a floor plan in the $400k-$600k), and often 8-14 months on a “custom home” ($600k-$5,000,000+).