Should I Build a Custom Home or Buy a Pre-Owned Home?
If you’re searching for a new home, you’re probably wondering whether to purchase a pre-owned home or build one from the ground up. Investing in a new property represents an exciting milestone you should consider carefully. Fortunately, we’ve created a detailed guide to custom and pre-owned homes to help you make the best decision for your family, budget, and lifestyle. Remember – if you’re keen to explore the possibility of building a customized home, don’t hesitate to contact our home builders in Knoxville for expert advice.
What are the benefits and drawbacks of buying a pre-owned home?
According to the National Association of Realtors (NAR), the vast majority of buyers (88%) opted for pre-owned homes in 2022. If you’re wondering why, here are a few benefits:
You can move in as soon as you’ve signed on the dotted line and the previous owner has moved out. If you’re starting a new job or don’t fancy waiting for builders to craft your dream home, purchasing a pre-owned home may be the more practical option.
If you want to live in the center of a busy city or town, you’ll likely need to purchase a pre-owned home.
Older houses sometimes come with charming period features.
You can move into a well-integrated neighborhood and an established school district.
You may be able to add value to the home with cosmetic upgrades and renovations.
Despite these benefits, many homebuyers purchase pre-owned homes without considering the drawbacks, including:
You may end up spending weeks – or even months – trawling real estate listings without finding a home that suits your preferences.
Recently renovated properties may be more expensive compared to new builds.
Purchasing a pre-owned home is a competitive game. You may need to produce a very high offer if your desired home is popular with other prospective buyers.
The home may contain issues you failed to notice before the purchase. For example, problems with your roof or heating system could cost thousands in repairs.
The home’s design will not be personalized to your tastes and requirements.
Older homes tend to be less energy-efficient than new builds, meaning you’ll pay high utility bills.
Assessing your financial situation before making a decision
If you want to purchase a pre-owned home, you’ll need to assess your financial situation. Calculate your income, savings, and recurring debt to ascertain how much you can afford to borrow. Generally speaking, a debt-to-income ratio of 43% is considered acceptable for a mortgage loan. If you’re feeling financially secure, ask your lender for a pre-approval letter you can use when making an offer.
Researching local real estate markets to find the best deal
Finding a comfortable and attractive pre-owned home that suits your lifestyle is no small feat. It’s a good idea to enlist the help of a real estate agent to help you understand the market. However, you should also conduct research online by browsing real estate sites and assessing market performance reports by organizations such as NAR. Factors to consider before purchasing a home include:
Population and job prospects
Rental property trends
Quality of life rankings in your desired area
Average property prices in your desired area
Neighborhood quality and nearby amenities
Weighing the pros and cons of building a custom home
If you’re keen to purchase a modern home tailored to your needs, it’s well worth investing in a custom home. Here are just a few benefits to expect:
You can craft a floor plan around your needs. Whether you’re looking for a large, open-plan living space or smaller rooms for increased privacy, you can call the shots with a custom build.
You can have as much influence over your exterior and interior designs as you like. If you want lots of creative agency, your builders will work with you to select finishes, features, and fixtures. However, if you’re very busy or unsure about what will work, you’re free to leave certain decisions up to your contractors.
Your home will be fitted with the most energy-efficient appliances, structures, and fittings to lower your energy bills and reduce your carbon footprint.
The maintenance costs of new homes tend to be lower than pre-owned buildings. If you’re a first-time buyer, you’ll certainly appreciate having fewer repair bills.
You’ll likely have warranties on parts of the home, such as plumbing and electrical systems, appliances, and certain building materials.
You can install smart features, such as cutting-edge thermostats, locking systems, lighting arrangements, and more.
You can control the budget by tracking your spending closely. Plus, you won’t be outpriced by other buyers.
Of course, there are a few drawbacks associated with building a custom home, including:
You’ll need to pay higher upfront expenses than you would with a pre-owned home.
You’ll need to wait for your contractors to build the home before you can move in. Most homes take at least four months to complete.
You may have to compromise on location, as you’ll need to build on fresh land. As such, you may need to travel further to get to work or local amenities.
Getting creative with financing options for building your dream home
If you’re feeling excited about the prospect of building your dream home, there are a few things you can do to soften the initial financial burden, including:
Sell your existing home and move into temporary rented accommodation while building takes place.
Explore your financing options, including construction mortgages and self-build loans. You may need to do your homework before meeting a lender. Prepare to show them a construction timeline, carefully estimated costs, and details about the house.
Plan for things to go wrong by setting aside some emergency money. You never know when you might need it!
Seeking professional advice from trusted professionals in the field
Building a new home feels much less scary when you have seasoned professionals on your side. This is where Red Door Homes comes in. We offer customizable floor plans to make building a home in Knoxville easy and affordable. To find out more and get started, don’t hesitate to get in touch with us today. As one of the best custom home builders in Knoxville, TN, we’ve already helped people just like you move into their dream properties.
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What is the difference between a modular home and a stick-built home?
Modular homes are factory-built homes that are partially or entirely assembled in a factory and then brought onto the home site.
Stick-built homes are homes that have not been assembled in any way. These homes are constructed on-site around a stick frame and offer the option of complete customization. Many of our customers find our stick-build homes to be a quality, affordable alternative to modular homes in TN .
What is a construction loan?
A construction loan is the method of financing used when someone contracts to have a house built, as opposed to purchasing a completed home. Construction is financed in two loans: a construction loan for the period of construction, followed by a permanent loan, which pays off the construction loan.
Unlike mortgages, construction loans aren’t meant to be long term. Typically, a schedule is set up to enable funds to be withdrawn as needed to finance the various stages of construction. And, during the time your home is being built, you usually make interest-only payments on the loan.
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What's the next step?
Set up an appointment with a sales consultant to help you choose your new home and discuss options you’d like included. You will receive a comprehensive list with pricing of all items that you want in your home and an estimate of the costs to prepare your lot.