Tips to Find Out If You Should Buy a New Home or an Existing Home

The focus of this article is to find out if a new house or an old home is a better deal in today's market. The truth is there are real pros and cons of both but you should know what those are. Sometimes it makes more sense to buy an existing home, in our current market, than a new one.

There are currently a good percentage of the homes out there on the market that are priced the same as they were 2 and 3 and 5 years ago. A builder can't match those kinds of prices. What they can do is give upgrades; granite has become a really popular thing with a lot of builders now, but that's all they can do to offset the price war situation out there is to provide upgrades.

The benefits of buying a new home are obvious: the fact that you get to pick out your own floor plan, you get to pick out your own colors, and so forth but everything else is extra. I always say, "You want lettuce with that hamburger? Well, that's going to be extra."

When we walk into that model home we kind of make an assumption that this is what my home is going to look like at a lower price, but it's not going to happen that way.

There are a couple of risks when buying a new home.

There are big risks that people don't understand. So many times with a new development, homes are priced very competitively to get activity in the development; to get things kicked off. But what happens next, especially in this kind of economy, is that the development never completes and so that developer goes out of business and they sell off to someone else.

Then the next builder comes in offering a different price range than the first builder had offered. All of a sudden the whole neighborhood turns into only one-side brick homes, or a side entry garage turns into any kind of garage. And a 2,000 square foot home turns into an 1,800 square foot home; those kinds of reductions cause the value of your initial purchase to decrease instead of increase.

It's a law that every builder has to provide a one year warranty regardless of who the builder is. And I don't want anybody to think I'm against new construction. There are some great builders out there. There are also some I wouldn't recommend.

A question people ask me a lot is, "Can I have the same type of warranty?" And the answer is yes, they can. A lot of people don't realize that you can get a one year warranty for about $450 with a $50 deductible and pretty much everything in your home is covered. A lot of people think that if they buy new, that's the only way they're going to get that warranty, but that's not true.

Just so you know, personally I would have to lean towards the existing homes out there. I think the best neighborhoods are already built out. And that brings out another point on the construction. If you are buying in on the front end of a development and you decide to sell, you will be competing with new construction if they are still building new homes in the neighborhood. You don't want to find yourself in that situation. I personally would go with an existing home. I think that's the best value. I think you can always see what you're getting and you can always get that warranty if that's a concern.