A Tale Of Two Homes

Category: Finance, Real Estate.

Whether you are looking for a primary residence or a vacation home in Florida, purchasing a new home is a large investment of both time and money.

But since the average Florida homeowner only resides in their home for five years before selling, you will also want to consider what type of property will be easiest for you to sell down the road, and will yield the greatest amount of return on your initial investment. When shopping for a new Florida home, finding a desirable property in a good neighborhood is of primary importance. A tale of two homes. There are several variables that go along with each of these options, such as the age of an existing home and whether you purchase a new home pre or post- construction. There are two choices when it comes to residential real estate purchases: you can purchase an existing resale home, or you can purchase a brand- new home. Many of these variables will have a large effect on the resale value of a home, so you should carefully research all of your options before you buy.

One is an existing home, and the other, built in 1990 is a pre- construction custom home. So let s say you have completed your research and have narrowed your choices down to two homes. They are approximately the same size, and both are in good neighborhoods. The existing home is listed at$ 200, and the pre, 000- construction home will cost a total of$ 250, 000 including the home site. The existing home does not have any apparent repair issues, and will require only minor renovations and redecorating. On the surface, the existing home may seem to be the better bargain. But in order to determine which home will yield the highest return on your investment, and thus will end up being the ultimate" best buy" , we will need to examine a few of those variables mentioned earlier.

It is of the right size and in a desirable neighborhood, plus it costs$ 50, 000 less. Are you really saving$ 50, 000 by purchasing the existing home? On the existing home, you may be able to negotiate with the seller and bring them down a few thousand dollars. Let s start by taking a look at those asking prices. So after bargaining a bit, you now have a purchase price of$ 195, 00 But bear in mind, it is possible to negotiate with a builder as well. First, you can purchase your home during the winter time. There are actually two ways that you can save money on a brand- new home.

The low- season for Florida real estate runs from November through April. The amount a builder is willing to take off the sale price of a home during the low- season varies from builder to builder, but for our purposes here let s say you are also able to negotiate a$ 5, 000 price reduction. If you are able to time your purchase for some time during these months, you will likely be able to negotiate a lower sale price or additional options and features at no charge. So now your pre- construction home has a sale price of$ 245, 00 The second way you can negotiate a better sale price on a pre- construction home is to purchase your home directly from the builder rather than using a realtor. If you purchase directly through the builder, they are saving roughly$ 7, 500- $15, 000 on a$ 250, and will often, 000 home pass these savings along to you. A realtor charges the builder a 3- 6% commission for bringing a buyer to the table.

So at this point, you could have a sale price somewhere between$ 230, 000 and$ 245, 00That is still$ 35- 50, 000 more than the existing home, but this is where some other factors come into play. You may not think a home build in 1990 would have any major problems. The X factors. After all, the home is only 16 years- old. Air- conditioning units and heat pumps need to be replaced every 5- 10 years, and sixteen years is more than enough time for a home to suffer insect damage, and wood rot, leaks. But the average roof in Florida lasts no more than fifteen years.

All of this amounts to thousands of dollars in potential repairs. You never really know how well the home has been maintained, or what lies behind the drywall. It is always wise to have a home inspected by a professional before you buy, but no matter how qualified an inspector is, they can t always detect every potentially expensive problem. When you purchase a custom home, everything is brand- new. As for the remodeling issues on the existing home, even if they are minor they will require additional time and money. There is no need to worry about expensive repairs, because even if something does go wrong, it will be covered by the builder s warranty. With a custom home, you choose your own floor plan paint, tile and cabinetry colors, and lighting fixtures.

And when it comes time to sell, newer homes are in higher demand, even in a buyer s market. Finally, when you purchase a new home at a pre- construction price, you often earn an immediate return on your investment since the value of the home will usually go up before it is even completed. So ultimately, purchasing a brand- new home will earn you a much higher return on your initial investment than an existing home.