This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Buy New Or Used?

For buyers who are on the fence between buying a new or existing home, multiple factors should be considered, including which property will maintain the most value.

When you buy a used home, be sure to research home values going back for five to 10 years. While there are no guarantees of future home prices, prices on existing homes in established neighborhoods are often more stable than those in new communities, says Vince Verni, a Realtor with Coldwell Banker Residential Brokerage in Babylon, N.Y.

"When you buy a new home, it's essential to research the reputation of your builder and look at the quality of the materials being used because that will have an impact on how well your home value holds up," says Raylene Lewis, a Realtor with Century 21 Beal in College Station, Texas.

Typically, new homes represent about 15 percent of the housing market, says Walter Malony, spokesman for the National Association of Realtors in Washington, D.C. Although in 2012, just 7 percent of buyers opted for a new home.


It's the same financing process when qualifying for a new or existing home, says Rob Ross, vice president and branch manager of MVB Mortgage in Reston, Va. The loan programs and fees are the same, too.

"The big difference is that you're likely to close a lot later on a new home than a resale," he says. "You can usually lock in your mortgage rate for up to 60 days for free, but if you need to wait six months or a year to close you'll have to decide whether to risk higher rates or pay a large fee to lock in current mortgage rates."

Ross says that some lenders allow you to lock in your rate for as long as a year, but this can cost up to two points, which would be $6,000 on a $300,000 loan. Fees for locking in your rate are usually nonrefundable, he says.

4 reasons to buy new

No. 1: Customization

"A lot of buyers like new homes because they can choose everything from the stain on the hardwood floor to the granite for their counters," says Verni. "Some builders allow you to change the layout and move walls."

Lewis says the amount of customization depends on how expensive the home is.

No. 2: Low maintenance

Buyers like the idea that they won't have to do much maintenance on a new home, says Lewis. Most builders provide warranties that require them to make repairs.

Existing homes typically require more money for upkeep down the road, says Verni.

No. 3: Modern amenities

New homes have to be built to the latest code and most builders use the latest technology, including USB openings on electrical outlets, wireless Internet access and energy-efficient features, says Verni.

No. 4: Modern style

Newly designed homes match today's tastes like an open family room and kitchen, higher ceilings and more storage space, says Verni.

4 reasons to buy used

No. 1: Cost

"The biggest advantage to buying used is the price," says Lewis. "You pay a premium for buying new." In an existing home, you know what you're getting for the price and don't have to worry about builders doing a "bait-and-switch for upgrades that buyers thought were standard."

Homeowners tend to negotiate more than builders, although builders sometimes offer incentives like paid closing costs to help offset the higher price, says Lewis.

No. 2: Waiting time

Existing homes are available on the specified move-in date, whilenew homes can take months to build, says Lewis.

No. 3: Unfinished community

In a used home, you know what amenities are in the community and nearby, while in a new community you don't always know if planned amenities will be built, says Verni.

You can also avoid the noise and mess of living amongst a construction site if you buy used, says Lewis.

No. 4: Landscaping and interior features

A big advantage of existing homes is that they have landscaping already in place, says Lewis.

"Friends of mine who bought new were frustrated when they realized that they had to buy every single hook, curtain and blind for their home," says Verni.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 17,778.15 +421.28 2.43%
S&P 500 2,061.23 +48.34 2.40%
NASDAQ 4,748.3960 +104.0840 2.24%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs