Buy an older home or buy new construction? (Fort Worth, North Richland Hills: sales, HOA)

[shaxs]

I have been struggling with this question and wanted to see what you'all think. When we buy, we are trying to decide between new construction or buying an older, established home. I thought I would list my pros and cons for each. If you have any feedback, I would LOVE to hear it!

New Construction:
Pros -
- 10 year warranty from home builder
- HOA
- More neighborhood amenities
- Can pick all the options we want from the start and roll it into the mortgage
- Much more energy efficient
- More modern floor plans, more open

Cons -
- smaller lots
- cookie cutter
- HOA
- No mature trees (in general)

Older Home:
Pros -
- Larger lots
- Mature trees
- More unique houses
- No HOA

Cons -
- No HOA
- Less neighborhood amenities
- Not as energy efficient

So here is our situation. We are looking to spend up to $250,000. We have roughly $25,000 to put down. With new construction, we can choose the cabinets, the paint color, the granite, ect and have it rolled into the mortgage. If we buy an older house, we would need to renovate it. The question is how do you pay for the renovation? Do you forgo putting the money down and use the $25,00 to renovate? Can you negotiate with the bank to take out a mortgage for more than the current houses worth to pay for renovations?

I put HOA as pros and cons for both. HOAs can be oppressive, but they also can help keep the neighborhood clean.

The energy efficiency thing is huge to me. I have read things here where older. non efficient homes, have 3-4 times higher utility bills. In an older home, the windows probably would need to be replaced. a more efficient AC unit, better insulation, and maybe a radiant barrier?

The other issue is newer homes have a more open layout- which I like. I fell in LOVE with this house Standard Pacific Homes - New Homes in Fort Worth/Saginaw at Creekwood when I was out in Fort Worth last year. Love how the kitchen flows into the living room like that. In older houses you will probably need to do some serious restructuring.

Ah, I dont know. What do you guys think?

[HappyTexan]

Sounds like energy efficiency and open floorplan are high on your list.

You could always find an older home and make it energy efficient a bit at a time.
As far as open floorplan, I saw some really nice renovations of older homes where walls were knocked out but columns remained (I assume they were load bearing walls) as opposed to completely open and it looked very nice and roomy. I would imagine that type of renovation is cheaper.

[golfgod]

After 30 years here, and owning more than an average number of houses here are my thoughts on what you posted.

I like HOAs, even though we've always lived in more "upscale" neighborhoods, having money doesn't make people behave in ways that I like my neighbors to behave. Sorry if that makes me sound "snobby". I don't like RVs parked in the street or driveway, chain link fences, outlandish colors and dogs running loose.

You better $value$ is always going to be with the older house. That said I agree with you about the efficieny, except about the 3-4 times higher bills. The big part in TX is the COOLING and we have a loooong cooling period. But 90% or so of your HEAT GAIN is through the roof, not the windows.

My current home (built in '83) had poor insulation but we added batts and took it up to R40+. We already had double pane windows (although there are parts of TX where they have a very long (20 year) payback! We also replaced just about every bulb with compact fluorescents. We have very low bills.

The one thing I didn't do, that I wish I had was the "recirculating water pump" for the hot water to the shower.

Remember though that one of the biggest things affecting utility bills is YOU. How you live, what you do from day to day. We have 2300 square feet, all electric, zoned heat and air (only 2 of us at home) TV on almost all the time and computer too-I office at home, and our bills average well less than $200/month. I would have loved gas heat and hot water (this is the first house I ever had that was all electric) and we'd be down around $100/month like our last house.

New construction for a house like mine is $130/square foot, but I've got less than $100/foot in mine. And that includes updating the kitchen (granite, stainless etc) adding a utility sink in the laundry and a fair amount of cosmetic stuff.

Another thing with "older" houses is that the yard and landscaping are established and most "major" problems generally show up in the first few years. IMO builder's warranties aren't worth much.

BTW, our neighborhood has a restriction on the times that a floorplan can be repeated, 3 times I think. This is the second time I've lived in a place with that restriction.

golfgod

[jm21]

I was reading an article about how the air quality in the super-efficient new homes is 5-10 times worse than outside on average, due to them being better sealed and such. Something to think about, especially if there is someone with asthma or allergies, or otherwise sensitive to air pollution. Some efficiency upgrades to an older home might cost so much that they outweigh the utility bill gains too. 3-4 times higher bills seems way over-stated, unless the old house is barely holding together and being compared to a perfectly constructed new home.

[shaxs]

Originally Posted by golfgod

BTW, our neighborhood has a restriction on the times that a floorplan can be repeated, 3 times I think. This is the second time I've lived in a place with that restriction.

golfgod

Thanks for the great feedback- I really really appreciate it.

If you dont mind me asking, what area do you live in and do you like it? I was thinking mid cities might be good like Hurst, Beford, North Richland Hills ect.

[shaxs]

Originally Posted by jm21

I was reading an article about how the air quality in the super-efficient new homes is 5-10 times worse than outside on average, due to them being better sealed and such. Something to think about, especially if there is someone with asthma or allergies, or otherwise sensitive to air pollution. Some efficiency upgrades to an older home might cost so much that they outweigh the utility bill gains too. 3-4 times higher bills seems way over-stated, unless the old house is barely holding together and being compared to a perfectly constructed new home.

So very valid points. We are not asthma prone, so I don't think that will be a problem for us.

[nsumner]

Very valid points you make. There is really not a just one answer to your question. A home is something that has to fit like a glove when you visit it. No matter how good it sounds on paper, it's something you have to see and feel when you for yourself.

If you like the feel of newer homes, you may want to look at a home that is just a few years old -3-4, that way the homeowner had a chance to put in upgrades that actually add up a lot when you build new such as (ceiling fans, window coverings, landscaping, sprinkler and more)

On the warranty side, the builders only cover the foundation for the 10 years, and they always find that if you didn't water the foundation properly, that warranty is voided.

You can always purchase a home warranty (doesn't cover the foundation) but almost everything else on a pre-owned home for a year. Runs about 400 a year and I would ask the seller to pay for it for the first year.

Energy efficiency: Invest in solar screens. Always try to get a house with gas heat. Weathstripping all the outside doors is a very cheap way. Add insulation in the attic. Insulate your water heater if it's located in the garage. Get acquainted with your programmable thermostat ;-)

Going back to builders, you will be able to negotiate a better deal if the builder has the home you like in inventory. Building from scratch doesn't give you any room to negotiate.

How to pay for renovation: A couple of ways to do it but your mortgage company has to be on board to agree to this.

1) Get estimates on the work you want done, raise the sales price of the house by that amount, then escrow that amount with the title company. The work has to be completed withing a certain time after closing, usually 3-6 months.

2) Get a home improvement loan

3) Lower your downpayment and pay for the improvements in cash. Your interest rate will not change since you're not putting down 20% anyway.

[texcali32]

buy an older home!! get something that needs to be fixed up a little at a good price and put in all the upgrades you want. If the builder puts them in for you, you are not getting a deal, you are paying them to do something you could do for less money. If you find a home that has a good floor plan or one that can be changed easily than you should go for it. When I have purchased homes I have looked #1 and the location and the lot. #2 at the home itself. You are just not going to get the same mature landscaping in a newer home. you wont get character either, the newer homes are downright boring in my opinion, ugly and built like crap...just my opinion.

I agree with nsummer do your upgrades with cash dont pay interest on them.

[tstone]

Originally Posted by shaxs

The energy efficiency thing is huge to me. I have read things here where older. non efficient homes, have 3-4 times higher utility bills. In an older home, the windows probably would need to be replaced. a more efficient AC unit, better insulation, and maybe a radiant barrier?

What does "older" mean to you? We have a '95 house, and it's pretty well-insulated. 1 story, 10 ft ceilings, 10-12 ft attic, 2200 sq ft. Energy bills (gas + electric) run about $200 in the peak of the summer, $75 in the fall/spring and $125 in the coldest of the winter. Digital thermostat, the furnace is original, but we bought a new A/C and evaporator coil system. These run about $5-7k depending on the size. If you need 2 units, double it. I don't think any house comes with special windows unless you order them. The lights in the kitchen were hot spotlights, so we replaced with the flourescent type. However our windows have a "HUD approved" label, bare minimum standard. Pretty stupid for a $190k home for its size, as those dual-paned, efficiency type windows should honestly be standard here. But you can add these and some storm doors as well. Maybe take care of a couple of minor repairs you'd expect on a slightly older house. I think doing this, you may be just as efficient as well as financially ahead compared to buying brand new, esp if you had to sell out in an emergency. If you build new you may have to live there for awhile to simply get your money back in a sale. Really depends. However some people with odd thoughts running through their heads are really opposed to buying a house someone else has lived in, no matter the money.

BTW those $400-500/yr home warranties are pieces of sh.... My experience is they use the cheapest contractors to rig band-aids on problems that will only come back with a vengence. However I would still recommend having the seller include one with a used house, because then at least you know what problems you need to save up for to get fixed properly once the 1 year term is over with.

[Trainwreck20]

So much depends on what you want in your house, and I am not sure that anyone on here can answer that for you. We can tell you what we have learned, but it may not apply to you.

I have owned a couple of homes - one older ('77) and one (the current) pretty new (2000). Both had good and bad points, so it is hard to say which is 'better'. The older home was a project for me, being my first owned home. I spent ~100k purchasing it and over the 6 or so years that I lived there put back in ~20k, although 3/4 of that was to get it ready to sell. The first 5k was all work done by me, and I learned to sweat copper pipes, lay tile, improved my carpentry, and updated the wiring (added some lights and fixed some sins of the 70s). I also did quite a bit of landscaping. The last of the fixer up money was spent on painting, roofing, new counters/fixtures, and some carpentry work that I did not have the time to do. I am not a big handyman type, but taken in small pieces, the work is kinda fun and I like to know how it all is done. The biggest minus (for me) for a house this old was the energy efficiency. Some of it was just plain poor construction/design and was difficult and/or expensive to fix. Not to mention the ancient A/C unit that really needed ~4k upgrade. There was no HOA there, and there really was no need for one. I understand that they are needed in some places, but it is very location specific. I personally would not seek out or avoid one, or make it a priority.

The newer home we bought one year after it was built. The original owner was transferred shortly after moving in (bummer for him). Anyway, the home warranty transferred and we actually used it for a repair to one of the bathrooms. That was nice, saved us probably $400-$500. The eff. is great, too, and it definitely has nice, high ceilings and is very 'bright' and 'open'. The A/C and water heater is in the attic, while the old house had them in a closet in the garage, which was much nicer for filter changes and potential repairs in the future. There are some other things that I think were done 'better' in some older home designs.

Regarding the lot size/space/cookie cutter houses. I, personally, have grown tired of yard 'work' (mowing/trimming/blowing) and prefer to play with flowerbeds and gardening. In this regard, I would prefer either 5 acres or more in the country (like when I was growing up), or just enough yard to have room to experiment. Having a big yard that I have to maintain St. Augustine and trim/mow is not a plus to me. I live in a neighborhood in which the houses are pretty close together, but I have found that this does not bother me at all (and I thought it would). On the weekends, I enjor walking down the sidewalk with my daughter and visiting several of the neighbors with younger childern. The walls of my house provide plenty of privacy and I am not sure what I would gain by having more distance between those walls. Also, I think about every 8th or 10th or whatever house probably has the same floorplan (or variation of). Because of the variations in outside materials, orientation, and options, you really can't tell and I have found that I really don't mind someone having a similarly constructed house.

My dad always went the other way...he hired a builder and architect and bought 5 to 10 acres out in the country (he now lives on 25 acres waaay out in the middle of nowhere). The houses were neat, but you would be surprised, even with a very good builder, how many issues can arise in a truly custom design. Every time, my dad was thinking of what needed changing or improvement as soon as he moved in .