Purchasing a home involves a number of important choices, and one of the very first is whether to shop for an existing house or build a new one. Here's what to consider before making your choice.
For some prospective homeowners, the idea of building a dream home that can be customized to perfection, is more desirable than purchasing a home that is already built.
According to Adrian Goslett, Regional Director and CEO of RE/MAX of Southern Africa, “Although building a home does have numerous benefits, there are also several vital aspects that should be considered before the project is started, such as cost, time and personal preference.”
The advantages of a building a home:
Goslett says that one of the potential benefits of building a custom home, is having the creative freedom to build a finished product that is tailored to suit your own individual preference.
As the market is becoming more eco-conscious, building a new home, also has the additional advantage of being more energy efficient, with a number of new homes being developed with energy-saving elements and green principles in mind.
A new home is also considered to be a healthier space to live in as opposed to an older home where the owner could run the risk of being exposed to certain toxic materials, such as asbestos, lead paint and mould.
Factors to consider when choosing to build:
- Unpredictable costs:
The building of a home is a costly affair and in many instances the final cost of the project can exceed the initial expenses anticipated.
- Finding the right contractor:
There is also the task of finding the right contractor for the job. According to Goslett, conducting sufficient research before choosing a builder is an essential step in ensuring that the builder is qualified and capable of doing the job.
“The success of a building project will largely be based on how competent the contractor is to complete the endeavour in a professional manner and within the allotted time period. Regardless of whether it is building a home from the ground up or merely taking on a renovation project – using the right contractor is essential,” Goslett advises.
“Perhaps the riskiest part of building a home is the construction, which is why it is so important to scrutinize the builder’s credentials and track record. Below standard workmanship will cause issues down the road and will be costly to rectify at a later stage – not to mention the fact that the home will be unsafe for its occupants.”
According to Goslett, the builder appointed should be registered with the National Home Builders Registration Council (NHBRC) to ensure that you are dealing with a certified building contractor.
“The aim of the NHBRC is to reduce the risk of subpar workmanship as much as possible and ensure that only qualified and experienced contractors are used to build homes. For their own protection homeowners should only use building contractors who are affiliated to the organization. To a large degree this will ensure that the standard of workmanship is up to standard, and provide some protection against defects occurring from substandard building,” says Goslett.
In addition, should the building project be financed through a bank, the financial provider will only release the necessary money, if the builder appointed is a registered member of the NHBRC.
- Timing of the project:
Timing is another aspect that requires careful consideration. If the building of the home takes longer than anticipated, this can have harsh financial implications for the owner.
“During the time that the home is being built, the owner will require accommodation until the property is habitable. Either the owner needs to stay with friends or family, which is cost effective but sometimes inconvenient, or the owner will have to incur the additional cost of renting a home while they wait - bearing in mind that the owner will also be paying for the land and building costs of their new property” says Goslett.
Should the project be delayed, this can cause additional expenses to account for which can lead to a financial setback, in the event that the owner hasn’t budgeted for cost over runs.
- Obtaining a loan from the bank:
If the bank is financing a building project, the owner is required to provide several documents such as the building plans, which should include a schedule of finishes to determine the property’s market-related value once it is complete.
These documents are essential in determining the amount of capital that the bank will lend, within the parameters of the bank’s credit policy.
“Irrespective of whether buyers decide to purchase an existing home or build one, in most cases they will be required to have a deposit. However, due to the higher risk involved with building a home, the deposit required in order to finance the build of a home will be higher,” says Goslett.
Why buying is the better option:
For many people, deciding whether to buy or build comes down to money.
While the buying and building of properties both carry costs that may not be apparent at first, the general rule of thumb is that building a home tends to be cost more in comparison to purchasing an existing home with similar features.
“Regardless of the option that the owner chooses, property should always be viewed as a long term investment and the necessary research should be done in order to make an informed decision,” concludes Goslett.