What Is A Resale Home? Benefits And Disadvantages

While you might believe that the only way to find your dream home is to build it yourself, that’s generally not true. Resale homes have character not found in a lot of new construction and can be customized to fit your needs just like a brand-new home – plus, there are some benefits to buying instead of building.

Let’s talk about what a resale house is, how it compares to a newly built home and what some of the pros and cons of buying this type of house might be.

What Does Resale Home Mean?

A resale home is one that has been previously owned and is not newly constructed. If you buy a house that’s been listed by a real estate agent or for sale by owner, that’s generally a resale home. Buying a resale home is often seen as the default option by many aspiring homeowners, especially since the cost of building a home has spiked due to increases in lumber costs. While a resale home isn’t customized to your exact liking the way a newly constructed home would be, it still has plenty of perks for homeowners to enjoy, and many aspiring homeowners may actually prefer to buy a previously owned home over a custom-built one.

What Does New Construction Mean?

The opposite of a resale home is a newly constructed home. New construction houses are homes that are inhabited for the first time by the home buyer/builder. There have been no previous residents and the house itself has typically been designed to fit the homeowner’s unique needs. Newly built houses tend to have modern appliances, more eco-friendly or “green” features and are less likely to need immediate maintenance. Owners of newly built homes enjoy brand-new everything and won’t have to worry about maintenance costs for a while, but miss out on some of the perks of buying a resale home like living in a more established neighborhood, enjoying a more classic style of architecture and the freedom to negotiate on the home’s purchase price.

According to HomeAdvisor, it typically costs $119,022 – $449,772 to build a house, depending on how big the home will be and what features the owner wants to include in the final design.

Benefits Of Buying A Resale Property

Your decision to build or buy will probably be based on a variety of factors, including budget and what you want overall from your home. While a brand-new house can be built to your exact liking, it can also cost a lot more, generally, than buying a resale home – especially for first-time home buyers. With a brand-new home, you may be somewhat limited in terms of where you can build, whereas with a resale home, you can probably find real estate available virtually anywhere, whether that’s near a specific school district or even in a particular neighborhood.

Let’s talk about a few more perks of buying an existing home.

Lower Costs Than New Construction

One of the main perks of buying a resale home is that it will likely cost less than building a house. According to data from the National Association of REALTORS® (NAR), those 30 years of age and younger paid a median price of $229,000 for a home in 2021. With the costs of building a home ranging from about $119,022 to $449,772 or more, it may be more friendly to your budget to find a home than it would be to build one from the ground up. 

Opportunities For Home Improvement Upgrades

When you buy a resale home, it may not have appliances and other upgrades as up to date as a brand-new house, but it does offer you the opportunity to potentially add these things yourself. If you intend to sell your home in the future, adding home improvements can add value to your house that might help you sell it for a profit down the line. Whether you update the exterior of the building or refresh the kitchen, you’re likely to get a large portion of your renovation costs back when you sell.

More Traditional Architecture And Floor Plans

Home design styles come and go with time, so if you love the look of older homes, like Tudor-style or Victorian-style houses, you may be better off buying a resale home than building a new house. If unique architecture, attention to detail and craftsmanship are important to you, buying an older home may be a better and more cost-effective option than building one yourself. Plus, older homes – particularly Tudor, Neoclassical and Victorian homes, often have history and charm to them that can’t be found in new construction.

Potential To Negotiate Purchase Price

When you build a house, there are many costs involved that can make it hard to know exactly how much you’ll end up spending – not to mention financing can become a little confusing. To finance a newly built home, you may have to first get a construction loan that would convert into a mortgage after the house is built. With a resale home, there is no mystery involved. The cost of your home will be the sale price and whatever closing costs you have to pay – plus, a down payment and other factors can give you the power to negotiate your sales price, an option that you won’t have when paying to build and mortgage a brand new house.

Lower Real Estate Property Taxes

In some states, newly built houses may have higher property taxes than resale homes because it can be difficult to assess the value of these homes when they aren’t fully constructed. Since resale homes already have an assessed value established – and aren’t still under construction – the estimate for what you’ll pay in property taxes on these homes won’t be a surprise.

More Established Neighborhood

If location is important to you, resale homes generally have more to offer. When you build a house, you may be limited to where you can live based on the availability of land. You may find yourself restricted to developing neighborhoods or new-construction suburbs. Resale homes, however, can be found anywhere – and often in already developed and established neighborhoods. Resale homes, particularly older ones, may also be more centrally located to metro areas and transportation. So if you want to be near a particular school district, area of a city or any other attraction important to you, it will likely be easier to achieve this by buying.

Larger Yard With More Mature Landscaping

Resale homes often have more mature landscaping than newly built homes as well – which means fully grown trees, established flower beds, etc. This extra curb appeal may not seem like a big deal, but having a lush, beautiful yard can add considerable value to a home. For some potential buyers, a home with a big yard and a tree that can hold a tire swing may sway their opinion away from a house with an undeveloped yard full of recently planted trees. Plus, older houses – particularly ones built more than a few decades ago – tend to have larger yards in general, since many houses were built on larger lots at the time.

Less Stressful Home Buying Experience 

Buying a resale home is also, in general, not as complicated as building a house. When you have a new home built, there are many decisions to make about features, materials and design. If attending design meetings and being extremely involved in the process of putting together a home doesn’t sound fun to you, consider buying a resale home instead. When you buy a resale home, all you have to do is secure financing and move in – no meetings or long lists of decisions required. If there are things you’d like changed in your home, remember that you can always renovate a resale house when you’re ready to match the vision for your dream home, too, if you want to.

Disadvantages Of A Resale House

Just like building a new home, buying a resale house has its downsides, too. Let’s take a look at some of the potential negatives involved when purchasing an existing home rather than choosing to build. 

Frequent, Higher Maintenance Costs

When you buy a resale home, you sign up for more frequent and likely higher maintenance costs. Since the house has been lived in prior to your arrival, potentially for a long time, it’s bound to have a few issues that have cropped up with age. Even if a home inspection goes well, you should expect surprises when you buy a resale house because it isn’t ever really possible to know the true condition of a home before living in it.

Problems with a home’s air conditioning, heat, appliances, plumbing and even structure could crop up after you buy, and you’ll have to solve them. According to the National Association of Home Builders (NAHB), typical home maintenance costs close to $1,000 a year on average, potentially much more if a large project crops up.

Fewer Safety Regulations = Higher Potential For Health Hazards

Depending on the age of a resale home, there could also be some safety hazards to keep in mind. Many homes, particularly those built prior to the 1970s, didn’t abide by the same safety standards we follow today. Before buying a resale home, especially an older one, it’s important to have a thorough home inspection performed to identify any potential hazards in the home, including the use of lead paint, the presence of asbestos or radon, structural issues and old plumbing or electrical systems that may be potential fire hazards. It’s a good idea to make sure safety features like smoke and carbon monoxide detectors are in working order as well. 

Smaller, More Traditional Home Layout 

While some potential homeowners may love the idea of a smaller, more traditional home layout with plenty of cozy, separated rooms, other buyers might not agree. If you prefer an open floor plan or a house with lots of extra closets, storage or more than two bathrooms, an older house may not have what you’re looking for. Newer homes tend to have more storage and more open layouts when compared to houses built in previous decades. 

Lower Energy-Efficiency = Higher Utility Costs

Resale homes also tend to be less energy-efficient than newly built houses. Because they often lack features that come standard in new construction – like brand new, insulated windows, more efficient HVAC systems, better insulation and smart home devices like “learning” thermostats – older homes may have higher energy costs and can make your utility bill more costly than it needs to be. 

Fewer Opportunities For Customization

While resale homes can be renovated to your heart’s content, you don’t have the same creative freedom that you get when you design a home yourself. If you have specific things in mind for your ideal home, from floor plan layout to the shape of the roof, it can be hard (and costly) to implement some changes when you own a resale home.

Fewer Modern Technological Amenities And Safety Features

A resale home may also lack some technological amenities and safety features that might come built in if you went with a newly constructed home. Home security systems with built-in cameras, adaptable thermostats, alarm systems and even lighting that can be controlled via smart phone are a few examples of such features. Some older homes may not even have a dishwasher and may need upgrades to meet the needs of a modern family.

The Bottom Line: Is A Resale Home What You’re Looking For?

When you’re ready to become a homeowner, the decision to build or buy is up to you and what you want in a home. If you’re someone who wants modern features, an open floorplan and a great deal of customization, building a home might be the perfect choice for you. If you’d rather buy a home in a more established neighborhood with mature landscaping or even historical character, a resale house might be a better move.

If you’re still on the fence about building or buying, it can help to pinpoint what exactly you want in a home. Once you know what you’re looking for, you can cross reference the results with homes that are available in your desired location.