Should I build a house or purchase a house?

It depends what you want and where you want it.

Buying a house comes with some risks. Specifically, the possibility to misalign price with value exists when buying an already built house. You (or your inspector) may miss a material flaw in the house requiring costly remediation and if this is picked up too late, the price won't be adjusted accordingly, as one example. My friend always says: no such thing as a bad deal, only a bad price. What he means is a run down house for a low price may be perfect. Point here is that the already-built house can be investigated, vetted and you and the seller can agree on a fair price. You have a better idea of what you will be getting and for how much money. Not much stands in the way from you getting it.

Building a house comes with more risk and there are many more steps before you can move in.

First you need to decide how to build:

  1. Go with a large established builder or a small custom home builder (depends what you want given the large builder will have limited options whereas the custom builder will build nearly anything you want).
  2. Build yourself with carefully selected subcontractors for the aspects of work you cannot perform yourself. This is only an option for a site you fully control (and does not typically work in large new subdivisions simply because the incumbent builders preclude it).
  3. Decide on a pricing mechanism: fixed price (lump sum) would be best whereas cost plus (fixed markup) may save money but comes with more risk. Try to carefully align payments with tangible progress.

Next, decide what to build. You may have a plan in mind from an existing home that you love or you may want to evaluate plans and design something unique and most functional for you. Spend time on the plans. Building a new home gives you a lot of flexibility to design and craft exactly what is right for your lifestyle.

Choose a site. If it is a site you own, you may need to work exclusively with custom builders. Large builders generally own the sites and possibly the entire subdivision for economies of scale custom builders don't have. This part comes down to where you want the site. Property folks say "location, location, location." In the build new scenario you can truly build what you want anywhere you want it which is the primary draw. If done correctly, there is little or no compromise (except perhaps on cost).

Think about where you will live during the build. If you need to sell your primary residence to fund the build, an established builder may have better payment terms allowing you to stay in your house until the end. Some builders offer sale guarantees such that they will buy your home if it fails to sell at market rates a set period of time following completion of the the new home. A custom builder won't be able to assist in quite the same way if an existing primarily residence is part of the financing plan.

So it comes down to the potential stress and uncertainty of a new build versus the easier to evaluate tangible option of an existing home for sale. Each approach has its merits but one may be better for your needs.

Good luck!


Before the economic collapse a while back it was considered a better investment to build a house as it was cheaper and the growth of the economy allowed for a pretty high chance for profit. Now days, you can still profit from building a house and selling it later but it is more risky. If profit/equity is not of any concern to you and you are planning on staying in your next home for a long time or even life then there are a few things to consider before buying or building. 1. Is there a place/neighborhood where you want a home but there are none for sale or atleast none in your price range? 2. Are there certain things you want in or around your home that you just arent seeing in your target area? 3. Do you want a home that you design or is specifically designed for you? If you consider these questions and decide you want to build a home I would first consider getting a few quotes from nearby general contractors. If you compare those quotes to homes for sale with similar square footage and amenities and it seems like a fair value than I say go for it. Whether or not building is cost efficient compared to buying depends on your area and the current local economy.


You probably need to add more detail to your question to get more answers.

Building houses generally involves a lot of stress and aggravation. People tend to do it because they feel that they can get better results by being involved themselves, or because they have skills, or know people with skills that can get them more for their money, or they can make a profit.

There are generally teething problems with new builds. You need to prepare for this. I'm an architect, and doubled the size of my house, in effect building an extension that is the size of a small house. I didn't get everything right, and I design far more complex buildings than a simple extension!

The pressures of time and money often mean that compromises are made, and elements are omitted that are later regretted.

It can be extremely rewarding, but you need to make sure you have a lot more money than you think it will cost, or are meticulous in financial control and not changing your mind.

Even if you are extraordinarily careful in planning your build, you still need a healthy contingency. Generally 10–15% is customary for new builds. For refurbishments you should consider allowing up to 25% contingency, depending on the age and condition of the property.

If you get it right however, it's really rewarding!


Honestly, it depends on where you live.

Take for example, to build a house in Florida. You need permit fees, impact fees, site work fees, utilities and then the construction costs. It is very expensive to build a house there and easier to either setup a manufactured home or buy an existing house to renovate/remodel.

Now if you lived in say, Colorado, some counties don't even have building codes so you pretty much would save thousands, maybe even tens of thousands on the cost of the fees alone to put towards construction. It would be a more ideal climate to build in terms of money.

There are great answers and points towards costs, aggravation and headaches in building, but you get a home unique for your and your needs. Buying an existing home is less hassle because its already there and someone else did the work, so you can just alter to your taste. Ultimately, it is what you want in a home that should decide which route to go.


I'm a builder. In my market I chose to buy. New homes are going for $145sqft (which includes a 20% margin) and I paid $98. Granted it's slightly dated. Not bad, but slightly. See pic.


Thanks for the A2A Alex, though this is a question that depends so heavily on your personal needs that it is nearly impossible to answer.

Building a house is not for everyone. It can be frustrating, much more expensive than budgeted for and take more time to complete than planned.

On the other hand, it is the only way to get all the features that are special to you that aren't found in a typical builder home. It is also usually the only way to get the house of your dreams built exactly where you want to live.

If you have a set of plans or a fairly good idea of what you want in a house then it comes down to shopping around in the area you prefer to see if something already built will meet your needs. In newer developments it is possible to get involved very early on in the process and customize one of a builder's standard models. This is somewhat of a compromise, but you will end up with more of what you want instead of what the builder customarily provides.

As far as cost is concerned, there is no hard and fast rule that I can fall back on. In the right market you could build a custom home for the same or even less than a standard model in a subdivision. In a development you are paying your share of the total cost of development which includes land acquisition, infrastructure, and other fees that individual land owners do not have to contend with, and these are in addition to the actual cost of building the house.

So, if you are not satisfied with what is available then take your plans and shop them around. Get bids from reputable builders and check references. Many times the most expensive contractor is not necessarily the best, they are usually the one with the highest overhead., and there may be another that is equally qualified and significantly less expensive. As I initially said, building a home is not for everyone, but it can be rewarding when it all comes together.


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