Beware of renovation costs when comparing houses
As a Realtor, you always see people looking for their dream home. Chances are that if you’re not buying your first home, you have some big plans for this home. Not everyone can afford to buy a newly built dream home, so they want to try to make some renovations to a cheaper home. Here are some things that will help you decide which way to go.
Obviously the most important thing is to figure out what you can afford. Sadly, some people won’t be able to afford the home they have in mind. HGTV has brought dream homes into everyone’s home, but the cost of these renovations will get pricey very quick. So, when you’re considering whether to buy new or whether to renovate, start with a price in mind. Then talk to a builder who could do the renovation for you. They will be able to give you the price that it’ll cost to get the house to where it is to where you want it to be. This will let you get a better comparison between the cost of new construction and renovating an older home.
The cost comparison is probably the largest piece of the puzzle. The bank will only give you so much money, and you can only manage so much debt. If both those numbers come out and make you gasp, it doesn’t mean you are out of luck. Patience may be the key to succeeding in your project. If you cannot live without a fully finished basement, maybe you start with this. You can do renovations over time. They may drag on for a while, but with most renovations, you can still live in the house.
Unfortunately, a new construction house will not be livable. You’d end up with a tent in the lawn if you tried to drag out the process. The piecemeal renovation process can help you develop your home into the dream home, but it will take much longer to get there, patience is required.
The final piece that may push you towards a renovation is location. Custom home builders can build in most areas, but many of them will already have specific lots available. If you are buying a house on a lot that the builder already has, you may be limited in your choices. So, you really need to think about what you’re willing to commute to work, school, etc. before you get too far with a new home. When you buy a home to renovate, you have a little bit more leeway in choosing a spot.
So far, I have given you lots of reasons you might want to consider buying a house and renovating. However, it’s not always the right choice. If you look through all these concerns and you say, “Yes, I
can afford to pay the cost up front” and “Yes, I like the location that they are building in” then new construction is the way to go! The cost to cost comparison of renovating a home vs. building a new one will not be equal. New Construction will give you a greater value. Your input comes in the design phase, rather than paying to tear down
existing walls, etc. This saves you money, and you are getting a guarantee for the house!
Don’t think of the house much differently than buying a car. Would you prefer to buy a Tesla or to pay someone to convert your Prius to a completely electric car? There are lots of companies that can do fantastic work in converting homes,
but you may end up with a Frankenstein home. A new home will guarantee that it all fits together, because it was designed to fit before a shovel hits the ground.
So, before you start shopping for that dream home, consider whether you want to get out of it, and how much you’re willing to pay to get it. Make sure that you walk the house with the
person you will have doing the renovations so that you know what the apples to apples price comparison will be. I can guarantee you that if you make sure you take these points into consideration, you will be in a great spot when it’s time to make a decision.