The Decision to Buy a New Home or an Old Home: The Pros and Cons of Both

Buying a house is a big deal; it's a financial and emotional investment in your future. When deciding whether to buy a home that is older or to buy a new home, or even to have a home built for you, there are many factors to consider.

No one answer will fit everyone as to whether to buy a new home or an old home, but based on my experience with purchasing both, I am familiar with the general pros and cons. I also consulted a realtor/broker about the advantages and disadvantages of buying a new home vs. an old home or having a brand new home built.

Gerald Woods of Dallas Professional Real Estate says that which home you purchase depends on what neighborhood you want to live in, how large you want the house to be and how much you can afford to spend. You also want to consider whether you want to be part of an HOA (Home Owner's Association). Woods said, "I may have a client with a good credit score, a great monthly income, but no savings. A new home builder can generally work with this client a lot better than a loan underwriter on a loan for a pre-owned home." He points out however, that "On a pre-owned home you can sometimes get the seller to pay part of the closing costs."

Mr. Woods went on to say,"If you go into a new home community, you might be able to find a well maintained one or two year old home that almost exactly matches what the builder is selling in a brand new home, but for a 10-20% discount."

Having a New Home Built

Pros: You can choose everything you want for your new home; floor plan, paint, appliances, counter tops, etc. You know that no one has ever lived in the home before, never used the showers or cooked in the kitchen; you are the first! Builders generally offer a 2 year or more warranty on the new home.

Cons: You have to wait to move into your new home; construction can take 3-6 months or more. You will likely be dealing with other construction continuing in the neighborhood for a while after you have moved into your new home. A problem in some parts of the country is house foundation issues. Your new house may settle and can leave you with cracks in the wall, doors that don't close properly and the hope that your builder still has you under warranty to fix it.

Buying a Home Under 10 Years Old

Pros: The home should be "move in" ready and any problems with the home are likely to have shown up in the first 5-10 years after it was built. It is usually cheaper than having a brand new house built and you will have a good idea of who your neighbors are and what the neighborhood is like.

Cons: You may not get everything you want as far as floor plan, paint colors, size of the bedrooms, etc. You may have to invest some money in the home to paint, change the counter tops and flooring and bring it closer to exactly what you want.

Older Home Purchase

Pros: You will be in an established neighborhood and older homes are generally cheaper to buy than newer homes. The home seller may pay part of your closing costs to assist you in the home purchase. Older homes often have a lot of charm and character.

Cons: Renovations may be needed to modernize the older home, depending on your tastes. You may need to replace older appliances and older pipes and electrical work may need to be redone. This can get costly. You may not have a home warranty on a much older home.

Whichever home you choose, make sure you can afford it and that it will make you happy for years to come. Happy home shopping!

Source:Author's personal experience purchasing two homes.
Gerald Woods interview.