Welcome to “Ask Stacy,” a short video feature answering money questions submitted by readers and viewers. You can learn how to send in a question of your own below.
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Today’s question is about whether it’s best to buy a brand-new home or a used one.
Personally, I’ve always opted for pre-owned homes, primarily because I wanted to create sweat equity by fixing them up. But now that I’m reaching retirement age, I’m thinking of buying new. Which is best for you? Here’s what I think.
For more information on this topic, check out “20 Tips for Buying a Home in the Best Location, Location, Location” and “Find Your Dream Home — Step by Step.” You can also go to the search at the top of this page, put in the words “home buying” and find plenty of information on just about everything relating to this topic.
Got a question of your own to ask? Scroll down past the transcript.
Don’t want to watch? Here’s what I said in the video
Hello and welcome to your money Q&A question of the day. I’m your host, Stacy Johnson, and this answer is brought to you by MoneyTalksNews.com, serving up the best in personal finance, news and advice since 1991.
Let’s get right to our question. It comes from Jill:
“You always recommend buying a used car as opposed to buying a new car. Is the same true for purchasing a home? Is it better to buy an existing home?”
Jill, that’s a great question.
I’ve always bought older homes, fixed them up, put in my own time and money, and created sweat equity. However, now that I’m getting near retirement age, I’m considering another home, and this time I’m thinking about getting a new one because I’m tired of working on my house all the time.
Here are a few things to consider when approaching this question for yourself.
First, cost. According to Zillow, new homes cost 20 percent more than used. That’s a big premium: When you’re talking about a $300,000 house, 20 percent is 60 grand. So, you’re paying a lot of extra money to get a new home over an existing one.
On the other hand, older homes are going to cost a lot more to maintain. In fact, I spend more time working on this house than I care to admit. Not only is it expensive, it’s also a pain. It takes up a lot of spare time that I might otherwise use to do something a little more fun.
So, new homes cost more to buy and less to maintain, which could balance out. Whether that’s true will depend on how much extra you’re paying for a new home, how much work the used home needs, and whether you’re willing and able to do work yourself.
Another thing to consider is that you might find an existing home in a better location. For example, if you want to be near downtown, that’s where homes were originally built. So, a used home might be in a better location than a newer home.
Finally, something that’s personally important to me is landscaping. New homes probably won’t have as much mature landscaping as used ones. That gives them less curb appeal.
In summary, new homes cost more to buy, but less to maintain. They might not have as good of a location, or have as much mature landscaping. Which is right for you? Well, that’s going to depend on who you are. Obviously, if you can’t maintain things or you don’t feel like fixing things up, then a new home might be better — but you may not be able to afford as much home. If location and landscaping are important, used might be better.
Another thing you might consider is buying a pre-owned home that’s been completely redone. Just make sure the remodel was both thorough and properly executed, something a knowledgeable home inspector can help with.
Hope that answers your question, Jill. And now it’s time for our quote of the day. It comes from Napoleon Hill.
“The man who does more than he is paid for will soon be paid for more than he does.”
A nice thought to carry with you today. Make it a profitable one and meet me right here next time!
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The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.
I founded Money Talks News in 1991. I’m a CPA, and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate.
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