Whether You Build or Buy Existing, Homeownership Is the Best Choice

Realtors Kenya Lewis and Kent Welch discuss why both are great options.

By Jeanene Dunn

 

Reece Nichols Realtor Kenya Lewis is busy helping clients find their dream homes on the resell market. “It is still very competitive, because the demand remains strong despite continuing inventory challenges.” Lewis says. The clients she serves are looking for pre-existing homes, whether they are first-time homebuyers or empty nesters looking to downsize.

 

Lewis counsels her clients to be flexible and patient. “It can be emotionally deflating for buyers to submit multiple offers and have to keep searching. I have some who are exploring the new build option.”

 

Weichert Homes President Kent Welch is seeing more of his clients choosing to build new homes, instead. “They are frustrated with not being able to find what they want on the existing home market and are tired of dealing with the bidding wars.”

 

Interest in New Construction

 

Weichert says his buyers range from empty nesters downsizing, to those who are upsizing. “The ability to customize to suit their needs is a big draw and eliminates the need to go from showing to showing,” says Weichert.

 

And there are a variety of styles to select from. The Heartland Multiple Listing Service, a popular real estate information provider commonly known as Heartland MLS, shows that over the last 12 months of sales, 25 percent of new builds are two-story, 29 percent are ranch style, 13 percent are 1.5 story and 32 percent are reverse 1.5 story homes.

 

In response to the demand, builders are trying to keep up. “There are only about 170 new builds waiting to close in the next 30 days across the entire MLS,” Weichert says. “Additionally, there are 977 new homes which have recently started construction. We expect all those homes to be sold or under contract by the end of the year.”

 

Considerations Related to a New Build

 

Cost. Lewis and Weichert agree that it is more expensive to build a new home. There are upfront costs buyers could incur depending on how much or how little they want to customize. And there are three common types of new builds:

  • Tract – Buyers select from a choice of floor plans and are limited in how much they can customize.
  • Speculative – Also referred to as “spec homes”, builders construct these homes in the hopes that they will sell quickly for a profit. The builder selects the floor plan and all the other amenities in the home.
  • Custom – This is where the buyer is in the driver’s seat from start to finish – from selecting the land to managing the construction details to selecting every amenity that will go into the home.

The variables that can impact the price of building a home include square footage, appliances, fixtures, and the technology you choose. Your builder can work with you to find what is available according to your budget.

 

Time. It could take anywhere from a few months to a year to construct a home. Factor this in if you are placing your current home on the market or are a renter under a lease. Explore your options if you need more time in your current home.

 

Weichert says it is exciting to see buyers’ dreams of owning a brand-new home come true. “Keep the lines of communication open between your realtor and builder,” he adds. “Be sure to ask the builder about a regular schedule and their preferred form of communication.”

 

Considerations for Buying an Existing Home

 

Pack your Patience. Lewis says on average, it can take up to six months to get to closing. “I communicate this to buyers, so they know what to expect when we start the journey.”

 

Flexibility. “You may not find the house you want, in your preferred area,” Lewis says. “But you may find the right home in your price range in areas of the city you haven’t considered –such as the Northland, KCK, or south Kansas City.”

 

She says some of her buyers are also fully covering closing costs and are not asking for minor repairs from sellers. “They are willing to accept less than perfect to get into a home.”

 

Weichert says he also encourages his existing market clients to be more open-minded. “The buyers who are willing to be flexible tend to find good buys. They are out there.”

 

Request an Inspection. Make sure to request an inspection of the home. “I educate my first-time homebuyers to make this a priority, so they get a full picture of what they are purchasing,” Lewis says.

 

Possible Repairs. Even in a home that’s been rehabbed, you may have to do minor repairs. Be sure to factor this possibility into your budget. Investing in a home warranty plan can be a cost savings, too.

 

About those Interest Rates. Current interest rates are nowhere near historic highs. Lewis says buyers should steer away from trying to wait out the market. “There is no guarantee what direction rates will go. The numbers change all the time, so don’t let that be a deterrent to pursuing homeownership.”

 

The Bottom Line: Homeownership will always be the better choice. Why? Because it is an investment that creates wealth. “Over time, the home will increase in value,” Weichert says. “You just can’t go wrong with homeownership, whether it is a new build or existing home.”

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