Whether you’re buying or building a home, the process can be exhilarating, rewarding, and stressful. Each option has advantages and disadvantages, which may be defining factors for soon-to-be homeowners.
Custom homes allow you to personalize your home, adding little touches throughout, but they tend to take a while. While the timeline of buying a home is generally much shorter than building a new home, it can be stressful in a seller’s market. If you’re on the fence between buying a house and building one, there are several things to consider. This article reviews both of these options to help you decide which is the better option for you.
Custom Home vs. Buying A Home
An expansive array of characteristics distinguishes custom homes from existing homes and vice versa. For example, if you build your own custom home, you have room to pick and choose what features you’d like in your home, the floorplan, color schemes, flooring, etcetera. The process generally takes a while, as it requires everything, literally from the ground up.
On the other hand, if you buy an existing home, you may compromise on certain things. While you can revamp the color schemes, flooring, and decor, the fundamental elements will likely remain the same (unless you plan on tearing out or adding walls to create different spaces). However, the buying process tends to go much quicker than building a custom home, allowing you to proceed with your move much faster.
We’ll discuss each of these aspects in detail to shed more light on the advantages and disadvantages of each option, but these are a few of the primary, fundamental differences.
Custom Homes
The process of building your own custom home can be a rewarding adventure. However, like most adventures, you’ll encounter various ups and downs throughout the process. For some individuals, custom homes are the clear answer, as they allow customization (as the name implies).
Soon-to-be custom homeowners don’t necessarily need to worry about compromising on their must-haves and have a direct say in how the final product looks. The custom-building path is an appealing choice to thousands of homeowners, but it certainly has advantages and disadvantages.
Custom Homes Pros
The best part of building a custom home is that you, as the homeowner, get to decide precisely what you want, providing it’s within your price range. This means you get to have a say in the layout, flooring types, color scheme, and various customizing features.
However, the pros of building a home extend beyond the ultra-customization capabilities. Some of the other perks of building a custom home include:
- Control: You can bring your dream floor plan to life in the location you prefer, giving you control over what you’re looking for. Instead of meeting in the middle or compromising on various features as you would with an existing home, you have complete control.
- No competition: The beauty of a custom home building is there isn’t any buyer competition. After buying the land, you don’t have to contend with any other competition for your dream home.
- Customizable: Although we mentioned this above, you get to make the calls when building the house, which leads to a result that echoes your tastes.
- Less ongoing maintenance: Newer homes tend to have fewer maintenance costs than older, existing builds. While you’ll eventually run into necessary care, it may not come up as quickly as it could with an older home.
- Energy-efficient: Technology has advanced exponentially in recent decades, translating into more energy-efficient components in your new home. While older homes usually have considerably less efficient features, newer homes are built with energy efficiency in mind. Should you so choose, you could incorporate green energy architecture and sustainability elements into your home, like solar energy.
- No toxic components: Another benefit of new builds is their modern materials. There’s no need to worry about toxic elements in your home, like asbestos or lead paint found in older homes.
Custom Homes Cons
Building a custom home isn’t the ideal choice for everyone. Custom builds come with their fair share of downsides, which may deter some people from choosing this option. A few cons of building a home include:
- Time consuming: The construction process takes time, not to mention finding and purchasing the land. From start to finish, the entire process can take several years and is nowhere near as simple as buying a home and moving in.
- Requires more effort: Designing and building a custom home involves input from dozens of subcontractors, which means you’ll have to work with various people to create the home of your dreams.
If you hire a general contractor, the headache of finding and hiring each subcontractor is generally eliminated, but you’ll still have to collaborate with various professionals. Additionally, you’ll have to make several decisions regarding your home, which is a dream come true for some but a nightmare to others.
- Potential for unexpected costs: It’s not uncommon to run into unforeseen expenses in the building process of a custom home. Although you will likely receive an estimate of the expected costs upfront, the potential for surprise expenses is all too real.
- Risky loans: Land loans can be tricky to obtain due to the lack of collateral, which is often a necessary component, as most individuals can’t afford to pay for the entire cost upfront. Often, they come with a higher down payment and a steep interest rate to compensate for the risk to the lender.
- No landscaping: After the build completes your home, you’ll still need to do landscaping to achieve the beautiful, seamless, finished product. Landscaping is an aspect many new homeowners neglect to remember as they’re often so caught up in the details of their new home.
It can be a costly adventure, should you choose to hire a landscaper. If you do the work yourself, it might be cheaper in the long run, but it’s a time-consuming process.
- Stress: Building a new home can be a stressful venture for some individuals in certain situations, as complications, unexpected costs, and defining decisions may arise.
- Land preparation: In addition to finding and buying the land, it will need to be prepped for the build. Depending on the location, this can be an expensive part of the process. Additionally, it may require extra labor to have utilities and a road built.
Buying A Home
Most individuals consider the option of purchasing an existing home before examining the possibility of a custom build. Buying an existing home can eliminate the stress and headache that may accompany a new build, but it also has a set of restrictions, which may discourage some soon-to-be homeowners.
Buying a home is an attractive option to countless new homeowners, giving them the ability to move into the house without the lengthy wait, tough decisions, or unexpected expenses. However, as with nearly anything else, buying a home comes with its fair share of pros and cons.
Buying A Home Pros
New homeowners who choose to buy a new home reap various benefits provided by the existing home. Some advantages of purchasing an existing home include:
- Shorter wait time: Construction projects, specifically building a house, require a considerable amount of time. If time isn’t in your favor, purchasing an existing home may be a better option. However, depending on the housing market, finding the perfect home can take a while depending on the housing market.
- Generally cheaper: For the most part, buying an existing home is less expensive than building a custom home. Additionally, home loans are usually less risky than land loans, translating to lower down payments and a decent interest rate.
- Existing landscaping: Existing homes usually feature complete, mature landscaping, eliminating the cost of hiring someone to handle it. Since hiring a landscaper to revamp the land surrounding your home can be expensive, this is an excellent bonus for existing homes.
- Renovation options: While you’re somewhat restricted by the existing home’s layout and design, you could renovate the house later. For example, you could knock out walls, create a larger space, or tear out the existing kitchen and build your dream kitchen.
The beauty of an existing house is it’s usually ready to go, which means you can revamp the space to meet your design ideas later on when you have the time and money to do so.
- Various choices in developed areas: Most suitable lots already boast turnkey homes in developed areas. While this isn’t ideal for building a home in a particular location, finding a suitable lot can be difficult. However, it’s convenient for buyers seeking an existing home.
Buying A Home Cons
On the other hand, buying an existing home comes with a couple of drawbacks. If you’re considering buying an existing home, here are a few things to keep in mind:
- Time and effort: The process of searching for a suitable home can be tedious and require copious amounts of effort. If you enlist the help of a talented real estate agent, the process may be considerably easier and faster.
- Various compromises: Since you’re dealing with a preexisting build, you may have to compromise on multiple aspects. It might be challenging to find the specific floor plan you’re looking for. While you can easily change color schemes, changing the layout isn’t quite as simple.
- Bidding wars: Bidding wars aren’t uncommon, particularly when the market is experiencing a shortage. They can be stressful, as you’re dealing with direct competition from someone else, sometimes multiple other interested parties.
- Less energy efficient: Older homes generally are less energy-efficient than their newer counterparts, translating to higher energy bills. For example, the HVAC system may be outdated and highly inefficient, which wouldn’t be a problem with a newer home due to Department of Energy (DOE) regulations.
- Maintenance requirements: Since you’re dealing with older plumbing, appliances, and electricity, you may encounter many maintenance hiccups sooner rather than later. Depending on the severity of the problem at hand, it could end up being an expensive repair or replacement.
Buying vs. Building A Home Comparison
Buying and building a home are two vastly different options when becoming a new homeowner. The chart below helps further explain the significant differences between the two.
| Building a Custom Home | Buying an Existing Home | |
| Cost | Can range from $119,022 to $449,772, depending on the features and complexity | $363,800 on average as of August 2021 |
| Time | May take anywhere from seven months to 2 years | Generally takes about two months to close |
| Effort | High level of input required from homeowner | Depends on real estate agent |
| Maintenance | Usually fairly minimal to nonexistent at first | Depends on the quality of plumbing, electrical, and appliances |
| Compromise | Not typically necessary, within reason | Possibly, depends on your priorities |
| Energy Efficiency | Usually excellent | Varies based on the age of the home |
| Competition | Minor, none beyond purchasing the lot | Yes, depends on the housing market |
Which Costs More?
In 2021, the average cost of buying and building a home was over 13% higher than in 2020. The elevated costs result from higher prices for land, labor, and building materials, thus driving the overall total through the roof.
For the sake of comparison, consider the average cost of each option in 2021. An existing single-family home in the United States averaged around $363,800 as of August 2021, the highest recorded price at the time.
On the other hand, the median cost of building a home is approximately $284,397. However, the price doesn’t include the cost of land, which can drive up the total cost.
The cost of building a custom house hinges on various factors, which explains the drastic cost range of custom homes ($119,022 to $449,772). A few factors that affect the cost of building a home include things like building materials, permitting and utilities, excavation, new major appliances, and necessary loans.
Defining factors that affect the price of an existing home include aspects like maintenance, lower energy efficiency, the real estate agent’s commission, and homeowners association (HOA) fees.
How To Start Building A New Home
The process of building a new home is extensive and requires the help of nearly two dozen different subcontractors. After you decide you want to build a new home, your first steps should be to figure out your priorities and set your budget.
From there, you can hire a general contractor, who will handle hiring the subcontractors and oversee the entire construction. You can skip hiring a general contractor, but that leaves a massive amount of responsibility to you, so usually, it’s easier to hire one. Next, you’ll need to find your land, then work with an architect to design your custom house plans and ensure the house will work on the land.
Some builders offer various home plans that can be adjusted to meet your needs, so that’s an option. After that, things will begin falling into place with the assistance of you and your general contractor. The process takes a while and requires patience, but the finished result is rewarding, leaving you with your dream home!
