Remodel vs New Construction
There is a great debate among real estate professionals, contractors, and homeowners about choosing to build new construction or embarking on a “gut job” renovation of an existing home. Opinions are often strong, supported by various costs, stories of homes’ histories, and prime locations. I think the benefits and drawbacks vary in every situation. Additionally, I believe that cost is not always the determining factor in deciding which direction to move. There is currently a lot of new construction and impressive remodeling happening across the country. Because of beloved shows like Fixer Upper and Property Brothers on HGTV, the once-dreaded though of renovating a home has actually become kind of intriguing.
Buyers see the potential of a dated home now rather than casting it aside. They understand a bit about the process and costs associated with a major remodel, so they can plan and make an offer accordingly. On the other hand, there has never been a more exciting time to build a new home. Contractors are building efficient, customized, and downright stunning homes in new developments all over. It’s a tough call, one that I would have a difficult time making at this juncture after the many renovated and brand-new homes I’ve seen.
So how might one go about deciding whether to build, renovate and stay put, or invest in a “fixer upper” to remodel and customize? This post and my next post will outline what to consider for each option. Let’s start with some of the benefits and potential drawbacks of building a new home.
Building code and structural soundness: Building code is always changing. In my experience, the best builders are always up to speed on the most current regulations and implement them immediately on their projects. A new home is most likely going to be your best option if you want a house that will not have any structural issues. One caveat, of course, is making sure you hire a builder with a great reputation who stands behind his or her work. Unfortunately, I have seen some nearly-new homes with settlement issues or are not up to code when inspected, so know the work of the builder you are considering.
Short and Long-Term Costs: Each option is expensive! However, if you sit down and figure out costs line by line of building versus remodeling, you might be shocked at the breakdown. What will taxes be? What kinds of up-front costs are associated with each and what would be rolled into your mortgage? Generally, I have heard that renovating is actually costlier in terms of cost per square foot. However, there are many factors that need to be considered based on your specific situation and needs.
Return on Investment: Which option will afford you the most profit if you ever want or need to sell the home? Talk to an agent to get an idea of how homes are selling in various neighboring areas and what features are at the top of buyers’ wish lists.
Location: This would be a difficult factor for me personally because in the Evansville area, most new subdivisions are being built on old farmland and have no trees, very small lots, and little visual interest. That would prevent me from investing in a new home on that lot. However, if you own land or find a great piece of property you love either in the country or in a neighborhood, building would be the logical next step. Another option we are starting to see a lot is a tear-down new construction. In cities all over, buyers find a beautiful lot with trees, prime location, and a bit more space — perfect for their dream home. However, an old home already sits there. The most common “fix” or this problem is to tear down the old home and start from scratch. That way, the homeowners get all the benefits of a new house with the beauty of a mature property.
Efficiency and Technology: New construction boasts the latest energy efficiency features and building technology available today. If you were to remodel an older home, there would likely be some limitations on the efficiency and sustainability of the home because the original structure and its materials would still exist. New homes are just that — They have the most efficient windows, plumbing, electrical, roof and wall materials, and insulation. If you renovate, you’d just have to make sure any or all of those that you’d want to update could be changed.
Design and Layout Options: Typically, a designer or contractor can provide a lot more options if given a blank canvas. In an existing space, they are sometimes limited by space or code restraints. When designing a new home, the options are endless (within budget constraints). I am not referring to cosmetic finishes like countertops or cabinet colors in this point. I want you to consider how you want an area to flow and how it will be used. Be sure you can do what you want for that space when you are making your decisions about remodeling versus building.
Long-term Maintenance: It’s important to consider the overall maintenance of a home because cost, repair time, and potential issues can affect a new or older home. A new home should have very few maintenance issues and should also be under warranty for at least two (and sometimes up to ten years). There is a lot of comfort in knowing you are covered if a major component of the home breaks down for whatever reason. If you remodel, are you going to renovate every inch of the house, or will you still have an older HVAC system, plumbing, or roof? This part of the decision not exactly glamorous, but it is crucial in getting an overall picture of the best move for you.
Stay tuned, because my next article will outline many of the benefits and potential drawbacks of renovating an existing home. In the meantime, do you already know which you’d choose?