A New Home Versus A Resale Home: The Pros And Cons
One of the most common problems people face when buying a home is whether to buy a brand-new home or a resale home. There are advantages and disadvantages to each option – for example, a new construction home will usually look more modern and have fewer maintenance costs associated with it, whereas a resale home may have a more unique character, as well as a lower price point.
Naturally, the right choice can be highly personal, so we’ve put together this handy guide to help you weigh up the pros and cons of each option so you can make the best choice for your family. Let’s take a look!
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This is one of the first things people tend to consider when looking for a home, especially in times when the economy is looking less stable. The price of a home doesn’t just affect your current finances (finding a down payment, for example), but will affect your budget for many years into the future (EG. your monthly mortgage payment, or the cost of future repairs.)
Pros: While a new construction home can have a higher up-front purchase price, this can also lead to much higher savings down the road. Your home will be less likely to need repairs or renovations, many repairs may be covered by a warranty, and you’ll likely enjoy a higher resale value should you decide to move later on.
Cons: As stated above, the main drawback to a newly-built home will most likely be the upfront cost. You’ll have to come up with at least 5% for a down payment, and ideally, you’ll want to raise at least 20% if you want to avoid paying for mortgage insurance. This in turn means higher mortgage payments each month.
Pros: A resale home will often cost less up front, and because you’ll be buying from a private seller instead of a construction company you might be able to negotiate on the cost of the home purchase.
Cons: Depending on how old the resale home is (and the condition the previous owner left it in), you may find that the money you saved on the purchase price is soon used up on repairs and bringing the place up to modern standards. You won’t get a warranty with a resale home, so if you do discover any costly repairs after you move in, you’re on your own.
Another major factor when looking for a new or resale home is the available features. It’s natural to want all the latest conveniences, but these can also come with a heftier price tag.
Pros: A newly-built home will usually come with all the modern conveniences such as energy-efficient appliances (water heater, HVAC, furnace, etc.) and may even come with extras such as smart door locks, security cameras, or automated smart lighting.
Cons: Updated appliances will usually cost more money, so you’ll want to pay close attention to what’s included in the sale of the home, and what’s part of an upgrade package. If you have your heart set on that quartz countertop you saw in the showhome, you need to make room in your budget to make sure it’s included.
Pros: Sellers looking to make a profit or sell their homes quickly will often include new upgrades or features to attract buyers. This isn’t guaranteed, however, so be sure to hunt around to make sure you’re getting the best deal at the best price.
Cons: More often than not, a resale home will come with features and appliances that are somewhat outdated, and the older the home is, the more pronounced this problem can be. Even if the home features are still working well, they might not be the most efficient models, which could lead to higher heating or electricity bills later on.
If you’re looking for a custom home, or a brand-new home that’s in a neighbourhood which has just started development, you may have to wait for your new home to finish construction. The amount of time it takes to build a new home from scratch can vary, but as a general rule of thumb, it can take between nine to twelve months before it’ll be ready to move in.
Pros: If you’re building a new home from scratch, unfortunately, there’s no way around the wait times. However, if you’re willing to sacrifice a few customization options you can get all the benefits of a new home with none of the waiting by purchasing a Quick Possession Home.
Cons: As stated above, if you want a brand-new home from scratch with all the customization options, you’ll likely have to wait several months for completion. During this time you’ll need to arrange an alternative place to live, and may even have to carry two mortgages at once. Be sure to budget for this if you’re planning a custom build.
Pros: The main advantage of a resale home in this regard is that construction is long finished, so you won’t have to wait to move in, and what you see is exactly what you’re going to get.
Cons: By sacrificing the wait, you’ll get far fewer options. If the floor plan is outdated or awkward, there’s not much you do to change it aside from doing major renovations (if that is even possible or permitted – it may depend on the home and how old it is.)
Moving can be a stressful enough process at the best of times, so the last thing you want after you move into your new home is to have to deal with costly or time-consuming repairs while you’re trying to get settled in.
Pros: One of the biggest advantages of buying a new home is the lack of maintenance required. New homes are built precisely to modern standards, using all-new materials, and usually come with a warranty to protect against any mishaps that might come up.
The use of modern, efficient materials and techniques also means you’ll probably have lower utility bills as well.
Cons: You won’t be entirely free of maintenance in a new home, however. You’ll still need to keep up with yard work, shovelling snow, and mowing the lawn!
Pros: If the previous owner has included updated features and finishes, you might find a fairly maintenance-free home for a good price. This entirely depends on your luck, however.
Cons: With a resale home, it can be difficult to know exactly what you’re getting into. Some maintenance issues might not be immediately visible, and while a home inspection can lower the risk somewhat they’re not 100% guaranteed to find every potential issue.
Other maintenance problems might not be apparent at the time of purchase, but could pop up a year or so after you start living there. Since resale homes usually don’t come with any sort of warranty, if this happens you’ll be on the hook for any unexpected maintenance costs.
In the event that something does go wrong with your home, you can save yourself a lot of money and trouble if you’re covered by a New Home Warranty. These generally will cover you for up to ten years, depending on the area of the home.
Pros: New homes in Alberta will be covered by a mandatory warranty, which will cover you for the following:
- One year for labour and materials
- Two years for delivery and distribution systems (electrical, heating, plumbing etc.)
- Five years for the building envelope (IE. the outer shell of the home)
- Ten years for major structural elements (roof, foundation etc.)
This means that while your warranty is active, you won’t need to worry about fixing anything that might happen to your home so you can focus on the important things, such as enjoying your brand-new space and making it your own!
Cons: While a warranty on a new home is pretty extensive, there may still be certain things that aren’t covered. Be sure to check the terms of your warranty before you finalize the sale.
Pros: There aren’t really any ‘pros’ in this regard when it comes to resale homes, as they generally don’t come with any warranty. This is one of the major selling points of a brand-new home.
Cons: As you might expect, the major ‘cons’ with a resale home is the lack of warranty. Be sure to check as much as you can for damage and get a thorough home inspection because if you discover any major flaws or defects in a resale home after you move in, you’ll have to deal with it on your own.
Ideally, you’ll want to stay in your new home for a long time. Situations change, however, and you could find yourself wanting a bigger home if your family grows. If that happens, you’ll want your home to retain as much value as possible to ensure that you get the best deal for buying your next home.
Pros: New homes are much better at retaining their value than resale homes, due to having newer features and materials, as well as more energy-efficient building techniques and materials. New homes are also often built in newer neighbourhoods, which tend to appreciate in value over time as new amenities are added and the community becomes more developed.
Cons: To get the biggest return on your investment in the long term, this could mean paying more for a new home than you originally planned for. You’ll want to make sure your home has the latest features and upgrades so that it’s as appealing as possible to future buyers.
Pros: There are plenty of recently-updated resale homes that go up for sale and they have many of the benefits of a newer home but at a much lower price point. Finding one that checks all the boxes could be difficult to find, however, and will probably sell fast so expect to move quickly and potentially offer more than the list price to secure it.
Cons: Even if you do manage to find an updated resale home, you probably won’t be able to get as high of a price when you come to sell it as you would with a brand-new home. Resale home values depend largely on the location and the value of the land it’s sitting on, whereas the value of new homes continues to increase as more amenities are added and the community is completed.
When buying a home, people tend to focus on the house itself, but the neighbourhood you live in can be just as important. If you commute a lot, want to be close to relatives, or need to be nearer to your kid’s school, the location of your home can make all the difference.
Pros: New home builders know that a great neighbourhood with access to all the latest amenities is crucial to selling a home, so they make a point of building in the best up-and-coming developments. If you buy a brand-new home, not only will you get access to a great new community, but you’ll also be able to pick exactly which home you want.
Cons: Because many of these brand-new neighbourhoods are still in development, you will have to deal with some construction noise for the first couple of years you’re living there and you may have to wait to get full access to all the planned amenities.
Pros: You’ll often be able to find a resale home in an established area where you might not be able to find brand-new construction homes. If you want to be close to work or school that’s in an older part of town, a resale home could be your best option. You also won’t have to worry about living in a construction zone or waiting for amenities to be built.
Cons: You probably won’t be able to choose the exact home you want in the exact location you want, as your selection will only be available to what’s available at the time. You may have to sacrifice one choice for the other.
When it comes to buying a house, there are many factors to consider and ultimately it’s up to you to determine the best overall choice for your family. Be sure to carefully consider your needs, the location you want to live in, your budget, and how much time and money you’re willing to spend on repairs and renovations.
Originally published Mar 8, 2020, updated Feb 9, 2023
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