I have been asked a lot recently about my opinions on resale v.s. new. I am going to go through some advantages and disadvantages of both. By no means is this the be all and end all – it is a rough summary and you should always do your due diligence before making a significant investment. There are a vast array of choices out there – many builders, many new housing developments. It's a good sign – the GTA is growing. I have been asked many times of my thoughts on whether resale is better than new, or vice-versa. Here I will try to weigh up the advantages and disadvantages of both. New Home (Advantages)
- You have the ability to decorate the new home exactly how you wish – from colours to finishes.
- New homes are more likely to have modern conveniences – better insulation, more energy efficient.
- New furnace, new roof, and sometimes new appliances (depending on what the builder is giving as an incentive).
- A builder's warranty is a great bonus with the purchase of a new home.
New Home (Disadvantages)
- You should be prepared for the on-going construction around you. The grass will not be in (for a while sometimes), and neither will your driveway. The streets will most likely be the last to be finished.
- Additional expenses associated with new homes including (but not limited to): Appliances, window coverings, light fixtures, central vacuum, fencing, electric garage-door openers, and finished basement.
- Higher closing costs. The purchaser will pay for the new home warranty. The buyer may be responsible for the shared costs/levies for tree planting, utility hook-ups, driveway paving.
- No guarantees as to what you see is what you'll get.
- You are moving into a more established (relatively speaking, of course) neighbourhood. There is no driveway paving to do, lawn to lay, shrubs to plant, etc.
- Usually re-sale properties come with appliances, light-fixtures, window coverings, central-vacuum (?) system, electric garage-door openers (?).
- More value. A lot of times owners have already spent money on upgrades and home improvements – some of which may not even increase the market value of the home, but will make the home more attractive to potential buyers.
- Negotiability of the price – you can almost always negotiate the price of the home whereas a new home there is very little (if not any) negotiations you can do.
- Neighbourhood has some history – sales history, other neighbourhood data – type of people who live there, crime rates, growth rate data, etc.
- Some homes may not be “move-in ready”.
- Some homes may require additional work such as problems with heating/cooling system, roof, windows, etc. This could also present an opportunity for handy people.
Other important thoughts and considerations:
Is the new home being built in a desirable location? Do you know the surrounding zoning? Do you know what else will be built in the area that could affect growth rates and/or resale value? How close/far are the amenities? How is the commute to work? Is the new home being built in a desirable location? Do you know the surrounding zoning? Do you know what else will be built in the area that could affect growth rates and/or resale value? How close/far are the amenities? How is the commute to work?
Typically, due to the continual addition of features, rising labor and material costs, new homes tend to cost more than similar resale homes. Are you having to pay significant impact or lot levies or taxes and fees that are imposed on the builder? Are the taxes on the new home much higher than a comparable resale home? Is the home going to be high priced compared to other homes built or going to be built in the area?
Are the style and features that you desire only available in a new home? Can you find a resale home with most of the features and amenities you desire? Can you add the features you desire to a resale home? Are newer resale homes available that meet your needs?
Is the new home builder or developer financially stable? Is the builder a well-known company with a solid track-record and good reputation? Is the builder asking for significant down payments or advance payments? Are there complaints lodged against the builder? Has the builder been delivering homes when promised? Check with your Better Business Bureau, the town or the city and talk to homeowners that have purchased a home from the builder.