What Are the Benefits of Building a Custom Home Versus Buying an Existing Property?

Most people think of buying an existing home as the ‘easier’ way to purchase a home. Faster, less complicated and move in ready. But is it the best option for you?

When deciding whether to build or buy a home, there are likely several considerations which may or may not be apparent. These would undoubtedly include costs and construction time, but may also relate to lifestyle factors.

Complete Design Control

A custom home offers the advantage of being exactly what you want for versus the compromise you make with an existing home’s design. While an existing home has a pre-established footprint and character, a custom home can be tailored to suit many features of how you live. In addition to choosing a floor plan, you can select floor and wall treatments, trim profiles, and even the wood species used throughout the home. You can also design unique details of the interior architectural elements such as built-ins, casework, and ceiling details. For example, you may need a home office with special lighting, unusual outlet locations, or a mudroom with deeper shelving to accommodate items such as skates, backpacks, and sports equipment.

All home renovations start from the perspective of the home and lot that you did not design. Challenges to designing the best renovation that previous owners worked around to build their home. Some of these challenges can be mitigated with expensive and destructive renovation approaches, however, most are insurmountable. Recognizing this early in the design process will save you from pursuing designs that are doomed from the start. For example, moving a kitchen island from one side of a column to the other requires significant changes to wiring, plumbing and wall construction.

Are you willing to compromise on must-haves?

True Cost Comparison

While an existing home may have the initial benefit of being less expensive to the seller, it generally doesn’t offer the long term value to the buyer.

I mentioned before that there are always surprises when you buy an old home. Why does you 5 year old HVAC system blow up? Even though it is only 20 years old and that is 1/3 of its life expectancy. Why does your 40 year old electrical panel have to be upgraded. Why does your 50 year old roof need to be replaced. Even though all the felts look good, there may be other problems. Why does your 10 year old septic system fail. Even though it has only been 10 years, the house is only 20 years old, so the system is only 50% of its life expectancy. Home inspectors can find some of these things, but they are not perfect. It is surprising just how little time you have to look at a house when compared to the amount of time you will then spend living there. I have spent three hours looking at my house before I purchased it and yet it has been my home for twelve years.

Home maintenance can throw some surprises your way. Did you know on average homeowners will spend $2,000 in repairs in the first five years of homeownership. But that’s not all you can expect to shell out for in repairs and maintenance in your home. It’s not just the things you need to fix that will cost you money – it’s the things you want to improve as well. Maybe you’re looking to gut and renovate your kitchen, add a double sink to your bathroom, or replace your outdated flooring. The cost of these upgrades will likely occur in the early years of homeownership as well.

We start our remodels as custom construction projects from scratch, so unlike a used home, you know exactly what you are getting and receive warranties on all systems,Even though you picked all the materials and probably scrutinized every detail of construction, you know who to call when a rare unforeseen occurrence does happen. And you’ll know exactly what will be covered under warranty.

While there are budget considerations when building a custom home, there are many factors working in your favor. The cost of building products can fluctuate in the marketplace and any change orders are usually costly to implement. Also, the weather can be unpredictable, possibly adding days on the end of construction while you pay to have a partially completed home sitting on a finished lot. Having a custom home builder in Blount County TN experienced with custom homes will help you work through the variables, but there are no guarantees that everything will come together perfectly.

Financing Complexity

There is often some surprise when an individual discovers that construction loans are different from traditional mortgages. Not only typically do they have different terms and features, they may require a larger down payment and have a variable interest rate for the construction phase.

Most people are familiar with how real estate transactions work: someone buys an existing house using an ordinary mortgage. However, for the real estate investor, the game is different. In today’s competitive real estate market, you may be in up against other buyers for the same property. Sometimes the sale price ends up being far above the listing price, or even above the true value of the property. That’s where fixer-uppers can come in handy. By using a fix and flip loan, you can purchase the distressed property with the intention of repairing and quickly reselling it for a profit. But how do these special loans work, and what can you expect as a borrower?

Timeline Expectations

Our listed homes are selling very quickly! Established homes are selling in a matter of weeks and our sellers are keen to complete and move on. You could be moving in within six weeks! That’s before the leaves have fallen!

There is no quick fix to having a custom home. First you must find a lot and have it approved by the appropriate government agency. After that it will take several months for the various phases of construction to take place. Foundation, framing, electrical, plumbing, HVAC, finishes and final inspections. On average this process can take anywhere from 8 months but can be longer depending on weather, the permit office, and other unforeseen issues that may hold up the process.

You have to consider the value of your desired speed. When people are trying to rush to buy their dream home they usually end up buying in a less than ideal neighborhood. Or sometimes they end up buying a fixer upper and then spending years living in a building that is under construction. Months of custom building your dream home translates into years of happiness.

Market Position and Investment Value

Resalable homes, on the other hand, ride market fluctuations. You purchase the home at today’s price and then you wait until the price goes up based on a variety of market related factors which may or may not be within your control. You might anticipate the local schools improving or the neighborhood expanding. Could be anticipating a tremendous increase in the local economy. The best part of resalable homes is you get to ride the fluctuations in the market.

When compared to typical investment homes, custom homes operate under different capitalization dynamics. You pour money into the home’s design and the investment begins to pay off immediately as the homeowner repays your initial investment in the form of today’s valued materials and labor to construct the home. As a custom home investor, you recognize the dwindling supplies of developable land in most real estate markets and capitalize on that by creating a highly valuable intrinsic commodity.

When most buyers think about the resale value of a house, they’re not necessarily thinking of the various factors that go into that final sale price. For example, the generic builder-grade finishes commonly found in existing homes can often carry a penalty in resale value. On the other hand, custom homes by their very nature have less to lose in terms of value over time due to the high-quality materials and thoughtful details that go into every aspect of the design and build process.

Decision Fatigue and Control

The process of building custom can be intimidating with the multitude of decisions building your home requires – from the flooring to fixtures to the palette of paint colors, to cabinet hardware, outlets, and lighting fixtures. Many of these selections come with an added cost for upgraded finishes, requiring the homebuyer to weigh these extra expenses with the overall function of the space.

It was nice that I could go as slow or as fast as I wanted, because it might be too time consuming for some people.

One of the challenges of buying an existing house is that you have to live with the prior owner’s decisions. Or you can pay to fix them. We really like the fireplace in the dining room, for example. This room could have had a new ceiling and undergone a full gut remodel, but we like it just the way it is.

Making the Right Choice

Leasing and buying both have their list of advantages and disadvantages not experienced by all individuals. Your situation should be a determining factor when deciding which option is best for you.

Custom building is for those with unique needs that an existing home may not cater to.It suits people who want the assurance of long-term satisfaction, even if they sacrifice some immediate comfort in other areas.It’s for those who can sleep at night worrying about all the complexities of building a house. And for those who can’t. Speed to completion is paramount to some, acceptable with reasonable compromises to others for the comfort of knowing the final transaction and result.

Choose the best course of action for YOU and YOUR PRIORITY(S)! Owning a home in both scenarios can be awesome if you choose the rounte that is most suited for you. If you want to be done paying a mortgage, you can choose to save up for a house first and own a home in the end. Or, you can choose to pay off your student loans and other debts first and rent while saving up for a down payment on a house