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Will Your Next Home Be Pre-Owned, Spec or Built from the Ground Up?

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Your search for the American Dream. What to consider when choosing the path to your next home… 

Most people dream of owning their own home at some point; that’s why it’s called the American Dream. All prospective buyers want to find the right home for their family and their lifestyle, but the way each of them get there can be very different. Do you buy an existing new (“spec”) home? A previously-owned home? Or do you build the home of your dreams from the ground up?

If you’re ready to pursue the American Dream – for the first time or the fifteenth –we can help you better understand your options.  And, as the nation’s premier web site for residential lots and land, we have the resources to help you when you are planning on finding the perfect lot and building your new home from the ground up.

Your Next Home...The American Dream

 

Obviously, each real estate market, home and buyer situation is unique, but here are some thoughts that can help guide your decision-making process.

Buying a Previously-Owned Home

It’s safe to say that most homeowners buy a pre-existing home at some point in their lives. In most markets, there is a greater inventory and more variety of existing homes that are being sold by their current owners. If you’re attracted to homes with character, history, charm and perhaps a certain type of craftsmanship, an older home may fit the bill for you. Pre-existing homes often are the choice for those focused on their location and commute in that they can be closer to work if you’re employed in a city. Older neighborhoods offer established trees and landscaping (and sometimes a bigger lot), whereas new homes will have younger landscaping and in some new home communities the homes are built on smaller lots.

Already-built homes are the options of choice for many homebuyers who wish to find a “move-in-ready” (or nearly so) scenario. Previously-owned homes also can appeal to adventuresome buyers that wish to undertake remodeling, updating an existing home and customizing it to their needs without going through the entire new construction process and timeline.

Previously-owned homes may be more affordable when compared to comparable new homes. Also, when a neighborhood is established it can help provide a “track record” that helps you understand where the values are heading.

On the other hand, sometimes “older” is just “old” and in need of more repairs, renovations, maintenance and so forth. In fact, parts of the home may not be up to current code. Older neighborhoods may lack covenants and restrictions that preserve your property value, as well as the modern amenities of newer neighborhoods. Older home are unlikely to have the energy efficiency and other “green” benefits of some newer homes.

With older home charm you also may get outdated floor plans and features (e.g., too many walls/halls, smaller bathrooms and closets, no central vac, less storage, smaller garages (or none at all)). At the same time, pre-owned homes come in a range of ages, styles and the level at which they have been remodeled or modernized. And some pre-owned homes are close to new —  a 2 year old house won’t be a lot different from one that is brand new.

Obviously, when you buy an existing home, you don’t get to choose the floor plans, finishes and so forth, though you may remodel or simply add finishing touches to the home to make it “yours”. Keep in mind that when you’re looking at someone else’s home, you’ll need to look past their paint colors and décor, perhaps even walls, and see the potential in the home to be your perfect home. Consider what your priorities are and how much interest you have in remodeling if there are changes you’d like to make.

Buying Existing (but New) “Spec” Homes

A “spec” home is an existing home, but it is a new one that was pre-built on speculation by a builder before having a particular buyer identified.

The benefit of a spec home is that it is new and already built – or nearly so. It is possible to buy a spec home before the construction is finished and have some input into final touches, etc. Either way, a spec home offers a move-in-ready new home without the typical construction process.

As a new home, it should meet modern building code standards and will require less maintenance than an older home. Also, most new homes come with a home warranty of some sort. A spec home can be found as infill construction in an established neighborhood, but many are located in newer neighborhoods – perhaps with the modern community amenities you desire.  Some larger production homebuilders simply pre-build spec homes as part of their business plan, so you are likely to find a number of existing-but-new homes to choose from among the offerings in their new home community developments.

Of course, with a spec home you lose the ability to hand-pick the lot on which the home is located. But if you are happy with the location of the spec home and the lot, then it’s not a problem.

A spec home is a new home and you don’t have to wait for it to be built, but you also haven’t had input in the floor plan and a million other decisions about how it’s been built. Make sure that you ask the necessary questions about the home’s construction and features to ensure you’re buying what you think you are.  You may want to check out other homes this builder has constructed and check references. Even though you did not choose the builder, it is wise to go through many of the items on our checklist for hiring a homebuilder before buying a spec home too.

With the recent economic downturn there will be a low supply of spec homes on the market in most areas, as builders have been taking less risks in building a home before a buyer has been identified (and it is more difficult for them to get financing to do so). Some builders are eager to get out of their spec homes. So, depending on the situation, you may be able to get a better price on a spec home than on a comparable new home in a “non-spec” situation.

Building a New Home from the Ground Up

The American Dream of homeownership often relates to moving into the home of your dreams – one that was built just for you and to meet your needs and not one that was built for someone else. And building a home from the ground up (even a custom home) can be an option for potential homeowners across a variety of price ranges – it is not just for multi-millionaires and their mansions.

Modern technology has brought on the age of customization, and many home buyers now are finding that they can be more involved and particular about what their home looks like and where it is located. Instead of just choosing from existing homes – wherever they happen to be located – today’s buyers can search for the right lot or land for their new home and then customize their home up front to meet the needs and lifestyle of their family.

You can choose your location and customize your home (to varying extents) when having a new home built in the following scenarios:

  • Builder-owned lots, and
  • Build-on-your-own-lot.

Whether it is a production builder or a custom builder (learn about the differences), you often can choose from a selection of builder-owned lots. These lots are simply ones that have been pre-purchased by (or developed by) a homebuilder so that the builder will have lot inventory for building new homes. You will frequently find builder-owned lots in new home communities (especially a production builder’s community, where the builder may own or have rights to all the lots), but you also can find lots owned by builders in isolated and in-fill locations too. Buying a builder-owned lot allows you to have your home built in the exact location that you want, while having a builder involved every step of the way.

With builder-owned lots you often will be buying a completed home, and the lot simply will be part of the total Turnkey package offered by the homebuilder. Builders can market their builder-owned lots as “Turnkey Listings” on LotNetwork.com — letting you know that they will build a home for you on the lot — so be sure to look for these types of properties among our Featured and Premium Listings if you want the smooth process of just choosing your lot and having the complete, “turnkey” home built for you by the builder who owned the land.

In the past, production builders traditionally provided less flexibility for buyers – you had to pick what was built. Now many production builders allow buyers to have their home built to meet their needs by offering different house plans, floor plan adjustments, options and finish selections. In many new home communities you can meet with the builder, and then choose a lot, house plan and the options you want.

For some potential home buyers, a custom or semi-custom home is their preference.  If you would like to completely customize your home – from the lot or land that you choose to build on, to the floor plan, finishes, features, appliances, outdoor amenities – every single detail of your dream home is up to you if you build custom. Whether you buy from a custom builder who already owns lots or find a builder that can build on your own lot for you, building a custom home from the ground up allows you to create your dream home – restricted only by your budget, lot constraints and community restrictions, if there are any.

An astounding amount of information is available to help prospective homeowners who wish to go the route of building a home from the ground up. Today’s home buyers are fortunate to be able to sit at their computer and search for the particular location, home style, builder, community amenities, green home ideas and other requirements that match their needs. By searching LotNetwork.com’s database of over 250,000 lot and land listings, you can choose your community or location first and then find the lots that meet your needs – both builder-owned lots and lots that you can buy and then bring in your own builder.

A few additional things to consider when building from the ground up are financing, timing and patience. You will need a construction loan to build a home, and these are harder to come by these days when compared to a purchase mortgage for an existing home. Consider talking with community banks, who may be more willing to fund construction loans. In addition, when building a new home you should be patient because the home by definition is not “move-in-ready”. You need to be aware of how long it takes to build a new home from the ground up, because depending on the size and style of the home (and many other factors) the process for building a new home truly from the ground up can range in time from a few months for some production builders to well over 24 months — the national average is about 7 months from permit to completion. You also will need patience to undertake the time commitment and decisions that are part of building a new home. While some people like to browse showrooms and choose tile and faucets (and dozens of other things), for others that sounds like a nightmare.

 

How will you become a new home owner? The best scenario for you and your family will depend on many personal and financial factors. Hopefully this article helps give you some food for thought when undertaking the process.

 

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