Build a New Home or Buy Existing Part #5

When you buy a non-bank foreclosure home, the pricing is going to be much closer to that of new construction, especially when you take into consideration the deferred maintenance, energy costs and amenities you might add over the next few years.

Since most existing homes have been built at a time when lots, material and labor was much higher, normal sellers don't have as much flexibility to drop prices. The bank foreclosure market has been driving the real estate market over the last 18 months and primarily at a price point below 200K. When you get more into the suburban second time home buyer market, the foreclosure activity is much less and you are less likely to find what you want at a steal of a deal.

One last thing to think about is the financing. When you buy a new home, you have in essence amortized the future maintenance costs into the mortgage. If you buy a used home and place a mortgage on it, you will have to come up with cash out of pocket for the deferred maintenance costs and future improvements. This could put a strain on the finances when that time comes. If you decide to refinance, don't forget to consider the extra refinancing costs you wrap into the new mortgage.

Is it better to build a new home or buy existing? Answer - it depends.

The truth is, it is a very good time to buy new or used. From there you need to decide the priorities as a family. If a new home exactly the way you want it, with everything being absolutely new with no deferred maintenance appeals to you, you might pay a few dollars to go this route. If you buy from a competitive green builder like Amaris, I am not so sure!