When You Sell Your House, Where Do You Plan To Go?

Table of Contents

• The Pros of Newly Built Homes

• The Pros of Existing Homes

• Bottom Line

If you’re thinking about selling your house, you may have heard the supply of homes for sale is still low, and that means your house should stand out to buyers who are craving more options. But you may also be wondering, once you sell, how does the current supply impact your own move? And, will you be able to find a home you want to buy with inventory this low?

One thing that can help you find your next home is exploring all your options, including both homes that have been lived in before as well as newly built ones. Let’s look at the benefits of each one.

The Pros of Newly Built Homes

First, let’s look at the advantages of purchasing a newly constructed home. With a brand-new home, you’ll be able to:

1. Get a Lower Interest Rate. Home builders are handing out mortgage rate buy-downs like candy! 🍭 This means home builders are willing to use some of the sales proceeds to lower your interest rate for several years, or possibly even permanently. Most commonly, builders are offering 3-2-1 or 2-1 mortgage buy downs, which would lower your interest rate between 3-1 percentage points depending on the year. Most projections show interest rates coming down quite a bit within the next 3 years, which means you would be able to take advantage of a lower interest rate in the short term and refinance before year 4 starts with ideally a permanently lower interest rate. The image below illustrates how much money a 3-2-1 buy down could save you over a 3 year period.

   

   Example of a 3-2-1 mortgage rate buy down on a $500,000 home with a 5% downpayment and 7% interest rate.

2. Create your perfect home. If you build a home from the ground up, you’ll have the option to select the custom features you want, including appliances, finishes, landscaping, layout, and more.

3. Cash-in on energy efficiency. When building a home, you can choose energy-efficient options to help lower your utility costs and reduce your carbon footprint.

4. Minimize the need for repairs. Many builders offer a warranty, so you’ll have peace of mind on unlikely repairs. Plus, you won’t have as many little projects to tackle.

5. Have brand new everything. Another perk of a new home is that nothing in the house is used. It’s all brand new and uniquely yours from day one.

The Pros of Existing Homes

Now, let’s compare that to the perks that come with buying an existing home. With a pre-existing home, you can:

1. Possible Alternative Financing. While some sellers will provide mortgage rate buy downs, similar to home builders, it’s a little less common. But, there are other ways to secure a lower interest rate. You can explore seller financing (making payments to a seller over time), or taking over mortgage payments from another seller rather than getting a new mortgage to purchase the home. Depending on the situation, you could get an interest rate lower than what’s possible with a mortgage rate buy down. These deals are harder to come by as sellers need to either have low enough equity to pay at closing, similar to a downpayment towards a mortgage, or be willing to receive payments over time for their equity. However, it can be an excellent win-win strategy in many circumstances, and existing home owners are much more likely to offer this than home builders. These types of situations require a professional who knows how to properly structure the home sale/purchase agreements.

2. Explore a wider variety of home styles and floorplans. With decades of homes to choose from, you’ll have a broader range of floorplans and designs available.

3. Join an established neighborhood. Existing homes give you the option to get to know the neighborhood, community, or traffic patterns before you commit.

4. Enjoy mature trees and landscaping. Established neighborhoods also have more developed landscaping and trees, which can give you additional privacy and curb appeal.

5. Appreciate that lived-in charm. The character of older homes is hard to reproduce. If you value timeless craftsmanship or design elements, you may prefer an existing home.

The choice is yours. When you start your search for the perfect home, remember that you can go either route – you just need to decide which features and benefits are most important to you. As an article from The Mortgage Reports says:

Either way, working with a local real estate agent throughout the process is mission-critical to your success. They'll help you explore all of your options based on what matters most to you in your next home. Together, you can find the home that’s right for you.

Bottom Line

If you have questions about the options in our area, let’s discuss what's available and what's right for you. That way you’ll be ready to make your next move with confidence. Don’t hesitate to reach out!