The pros and cons of buying a new home vs an older home.
Con: The listed price does not include window coverings or landscaping and the flashy upgrades you see in the model home. That's extra.
Pro: New homes are built to current code requirements, they're energy efficient, and they're free of the deferred maintenance that can result after years of use and neglect. A well-built new home should be relatively maintenance-free for the first ten years or so. Con: Don't expect to move into your new home and think everything's new and there's no problems to think about. You will see imperfections. Just make sure your contract includes a new home warranty and don't forget to read all the fine prints. Not all builders offer the same warranties.
Con: It's often said that a new home is only as good as its builder. Be sure to investigate the builder carefully before buying one of his or her homes. You're looking for a builder who has a good track record for taking care of problems promptly. Although minor problems are to be expected, you want to find a builder who has a history of building homes that don't develop major problems.
One couple bought a new home in a small development. Soon after moving in, serious problems developed which the builder refused to fix. Windows leaked, the drainage system didn't work properly and water seeped through the exterior walls. Unfortunately, by the time the buyers decided to sue the builder, he was bankrupt.
First Time Tip: Any home you buy, new or old, should be thoroughly inspected by licensed professionals before you complete the purchase. Don't make the mistake of foregoing an inspection just because a home is new. In fact, it's a good idea to have a new home inspected twice: once during construction and again when it's completed.
Pro: New homes should come with a 7year warranty but remember the interiors are covered for only 2years (such as plumbing and leaking) and the remaining 5years really cover only structural damage.
Con: If you purchased a new home just looking at a blue print, this may be a huge disadvantage because you might be very disappointed when you finally see it built. You might have misunderstood the layout and if you don't like it there's nothing you can do about it. It's recommended that you either look an actual model home that is already built or at least a 3D interior graphic version of the home.
Pro: A new home is not built until a much later period so you have time to financial prepare for the purchase. Normally, the builder will require a deposit and a schedule of further sum deposits until the closing date whereas with an older home, you will need all your downpayment and closing cost a lot sooner, normally in 60-90 days.
Con: You can get prequalified for a mortgage amount but the bank only offers you a rate for no longer than 120 days. If you can close within the period offered than great but if the closing is one or 2 years later, you will not know the interest rate until closer to your closing date.
THE BIGGEST ADVANTAGE OF BUYING NEW, IS NO ONE HAS LIVED IN IT, YOU CAN PICK AND DESIGN YOUR HOME WITH THE FINISHES YOU WANT. BUT THE MAIN DISADVANTAGE IS THAT EVERYTHING YOU WANT WILL BE AN ADDITIONAL COST. ****In Ontario, you may find that the biggest disadvantage is not knowing the property tax. The home is not built yet so the property is not assessed. Some new homes today have a much higher property tax compared the same size home down the street that is 15 years old. Buyers beware. Look for a similar newer home that is already built within the last year and your sales representative may be able to give you an estimate.***
Buying old is any home other than new. So buying a one year old home - 5 years old home can be a huge plus if you do your research.
Pro: An older home cost you less than a new home.
Pro: An older home comes with furnishings such as window coverings, and cool gadgets the previous owners installed - such as garborators, light dimmers, water filters, surround sound system, garage door openers, and so on that ad up so it's recommended you investigate some resale homes before you decide on buying new or old.
Con: Depending on the age of the home, a big disadvantage of buying old is it may need refurbishing. To evaluate the true cost of buying an older home, find out the age of the roof, appliances and major systems like plumbing, heating/cooling and electrical. Ask your home inspector to estimate how long each of these items is likely to last. Then get replacement estimates from licensed contractors. Ask sellers for documentation on any major work they've done to the property. For example, if they put in a new drainage system, ask for copies of the work proposal and the paid invoice. This will be useful when it comes time for you to sell. If the roof was replaced recently, find out if the roofer will extend any remaining warranty to you. Also find out how much the utility bills are in an average summer and winter month.
Pro: Depending on the age of the home, some older homes often have more character and architectural distinctiveness than new homes. Older homes usually have mature landscaping and they are often more conveniently located. Older neighborhoods may also offer better schools. And, while older homes may need updating, they have withstood the test of time which is not the case with new homes.
Pro: You can shop for a good interest rate and secure this rate for your home mortgage. The banks normally guarantee you a rate for as long as 120 days but not beyond that. It's a peace of mind knowing what your monthly mortgage amount will be.
Pro: Shopping for an older home gives the power to negotiate a better price, and you can also negotiate the chattels in their home. For example, you can say I just saw your competition and they offer a new kitchen for the same price, so I will buy your home for $30,000 less and most of the time, you the seller will be reasonable. If you can prove they are overprice, they will work with you. Another example is you can ask for all their upgraded light fixtures in the home and most of the time, the sellers will give it to you.
THE BIGGEST DISADVANTAGE OF BUYING OLD IS EACH PART OF THE HOME WILL HAVE AN EARLIER EXPIRY DATE AND YOU WILL NEED TO REPLACE OR REPAIR IT SOONER as there is no more warranty on the home. The Biggest advantage though, is you can choose the home with all the upgrades you like and it's already included in the purchase price.
Teresa Vu, Sales Representative
RE/MAX Platinum Limited, Brokerage
Independently Owned and Operated