New Home or Resale Home – Cost Comparison of Features

Some home shoppers know right away if they want to purchase a new construction home or a resale home. Others however are open to both possibilities and may often find themselves in a situation of deciding between these two options as their final choice. There are a multitude of benefits and detriments to both scenarios. However, in focusing on the decision process between the two there are a few key items to keep in mind when it comes to upgrades, features, and finishes.

First, try to compare each home with similar features and finishes as much as possible to arrive at a truly comparative price picture. Many of the newest homes can feature upgraded energy efficiency or luxurious products and materials that carry more value than some older homes possibly under consideration. A number of product material differences throughout the house can add up to a rather large value difference. This may make a more expensive new home actually more worthwhile than a lower priced existing home, or even vice-versa if the resale home is a step above.

However, whether it’s the new construction home or the existing home that has the nicer features, don’t let features unimportant to your specific needs carry too much weight, especially in the cost comparison. For example, if a resale home has a finished pool in the backyard and the new construction does not, this could look like a justification for paying more for the existing home. However, if you don’t want or care for a swimming pool this feature might effectively add no value to you (or even detract in some cases) and make the premium paid for that feature worthless except maybe in the event of a tiebreaker between the two. The bottom line is to add appropriate weighting to all the features present based upon your desires and you’ll arrive at a more clear picture of the comparison.

Purchasing a new construction home can be a very rewarding experience as you’ll have considerable flexibility to mold the style, colors, and options that are important to your lifestyle into the new home. However, sometimes it’s this ability to customize the home that can inadvertently sway your choice when it’s not really justified. What effectively happens in many cases is buyers will add an excessive amount of options to the new construction home because they can easily make those changes, but when comparing the costs between new and resale homes this can dramatically skew the comparison. Building a dream home by adding every option doesn’t help in making the home choice between new and existing. Try instead to add options and features that more closely mimics the resale home to create a good price comparison. If after then you decide on the new home you can still add what you want to the home, but at least by not prematurely making those selections you don’t lose site of the accurate cost analysis.

A helpful hint in picking new construction upgrades or options is to create multiple scenarios, preferably at least three. Make the first upgrade package a bare bones selection. This could be with no upgrades or often using the upgrades that were used in your comparative analysis with the existing home is a good starting point. Second, create a package of upgrades that meets your every demand, wish and desire….effectively build your dream home in terms of features. For some people, especially those with more disposable income or possibly retired and less concerned with resale value of all the options, this could be the final product chosen. However, the third scenario created is often much closer to a practical solution. This package should meet your basic lifestyle demands in terms of features and finishes, but with an eye on practicality and even future resale value.

Another point when comparing resale and new construction features is the likelihood of making future changes. It’s all too often when looking at a resale home (or even new construction) that you’ll here a buyer make the comment about being able to change/remodel something they don’t care for down the road. In most cases those changes don’t even come to fruition. Unless you are committed to making changes immediately and have the cash on hand to pay for it, don’t rely on those “future modifications”.

Deciding between new construction homes and resale homes isn’t always an easy decision, but at least by keeping some of these points in mind you’ll have more information to consider when analyzing features and the relative costs of both.

Stephen Woodall
REALTOR, GRI @ Long Realty Company
Stephen has made real estate his full-time career and passion since 2008, primarily specializing in the Foothills & the Northwest Tucson areas of Oro Valley and Marana. He is a multi-million dollar producer, representing both sellers & buyers. Stephen has tremendous experience in new home sales, listing & selling primary residences, listing & selling vacant land, listing & selling luxury homes, investment properties, rentals, and real estate development parcels.

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