New homes tend to cost more than older homes, but the sticker price doesn't tell the whole story.
For instance, the price of a new home usually doesn't include window coverings or landscaping, and the flashy upgrades that caught your attention in the model home cost extra.
However, new homes are built to current National Building Code requirements, they're energy efficient, and they're free of the deferred maintenance that can result after years of use and neglect. A well-built new home should be relatively maintenance-free for the first ten years or so.
This doesn't mean that you won't have any problems with a brand new home. A new roof can leak if a skylight or vent pipe isn't properly sealed. You should expect there will be a number of little items that need fixing within the first few months of buying a new home.
Home Only as Good as its Builder
Be sure to investigate the builder carefully before buying one of their new homes. Although minor problems are to be expected, you want to find a builder who has a history of building homes that don't develop major problems, and a solid track record for taking care of problems promptly.
One couple bought a new home in a small development. Soon after moving in, serious problems developed which the Builder refused to fix. Windows leaked, the drainage system didn't work properly, and water seeped through the exterior walls. Unfortunately, by the time the buyers decided to sue the Builder, he was bankrupt.
First Time Tip: Any home you buy, new or old, should be thoroughly inspected by licensed professionals before you complete the purchase.
New homes have mandatory inspections per local municipal guidelines with the National Building Code as the standard. However, sometimes mistakes are made that the Building Inspector did not notice.
It's a good idea to have a new home inspected twice: during construction by the municipal Inspector (included in the purchase price) and again when it's completed (your own Inspector after completion and before you move in).
The big disadvantage of buying an older home is that it may need refurbishing. Although an older home may cost you less than a new home initially, it may end up costing you much more when the expense of updating is taken into account.
Evaluating the True Cost of Buying an Older Home
Find out the age of the roof, appliances and major systems like plumbing, heating/cooling and electrical. Ask your home inspector to estimate how long each of these items is likely to last. Then get replacement estimates from licensed contractors.
Ask sellers for documentation on any major work they've done to the property. For example, if they put in a new drainage system, ask for copies of the work proposal and the paid invoice. This will be useful when it comes time for you to sell. If the roof was replaced recently, find out if the roofer will extend any remaining warranty to you. Also find out how much the utility bills are in an average summer and winter month.
Older homes require more maintenance than new homes. This takes time and money.
However, older homes often have more character and architectural distinctiveness than new homes. Older homes usually have mature landscaping and they are often more conveniently located. Older neighborhoods may also offer better schools. And, while older homes may need updating, they have withstood the test of time which is not the case with new homes.
From an investment standpoint, your best choice is either a quality-built new home, or an older home that has been meticulously maintained.