Buy vs. Build

Making the Right Choice for Your Future Home

Choosing a new home can be an exciting and stressful time at the onset. For many, the starting point is weighing the options between buying an existing house or building a new one. While buying tends to be the more cost-effective option for the short term, building allows for a greater level of personalization in the location of choice.

Know Your Finances

Whether it’s an existing house or a new build, the decision to purchase a home is an important one – with the results lasting years, decades, or even a lifetime. Many people may already have an idea of what their dream home will look like, include, or be located; others may not have as clear of a vision. Regardless of knowledge or experience, the first step for anyone looking to buy or to build is to seriously consider their financial situation.

“Funding is critical,” states Adam Beaulieu, Branch Manager for Hammond Lumber’s Portland location. “When you invest in buying a home, you don’t necessarily need capital up front, but will need it later for renovations and repairs. When building, you need nearly all the funding up front to make decisions and ensure what you want happens.”

Securing the funding and understanding the big picture of how much money one can safely and comfortably borrow are pivotal before making the decision to build or buy. Without an accurate assessment of the amount of money available to work with, budgeting and planning are nearly impossible.

No Cookie-Cutter Approach

Factors such as time frame, cash flow, and ability to secure land should all be considered during the decision-making process.

“There’s no one-size-fits-all approach because everyone’s situation is different,” explains Jon Mercier, Vice President of Real Estate at Maine Source Homes and Realty. “Not all realtors understand the building process, and not all builders also work in real estate – it’s important to sit down with someone who understands the process for both to advise on all possible avenues.”

Arguably, one of the best steps someone can take when weighing the options between building or buying is taking the time to make an informed decision. A common mistake of enthusiastic would-be buyers and builders is rushing decisions to meet contractor deadlines or the change of seasons.
“Most people are not thinking of all the peripheral costs and responsibilities beyond the purchase or build price, such as upkeep, maintenance, and fuel costs,” shares Matthew Morin, Drafting and Estimating Manager for Hammond Lumber. “Whether building or buying, all expenses fall to the homeowner at the end of the day – understanding and anticipating these costs helps reduce stress and makes the process easier to plan for.”

Finding Funding

Finding the right loan option for the type of building or existing purchase desired is imperative. In fact, most mistakes made by those looking to build or buy happen in regard to lending. No bank or lender is quite the same, and with the multitude of loan options available, many prospective buyers and builders remain unaware of their full menu of options.

“It’s tough because there’s no one central source for all needed information,” Mercier acknowledges. “Many people will meet with a bank for a conventional loan when what they actually need is a construction loan with different stipulations, or there may be a turnkey FHA loan available. People don’t realize there are other options out there that may better suit their needs.”

Buyer or Builder Beware

One critical aspect to remember in both building and buying is investing time and money into a home inspection. This step is imperative to mitigate oversight and avoid costly future repairs, ranging from smaller-scale concerns such as heat loss, to long-term hazards, such as foundation issues.

“You truly do get what you pay for, and you’ll want the best building materials you can afford,” says Morin. “The quality of the build will also greatly impact the resale value if you do decide to sell your home someday.”

Another area to be keenly aware of is how the home is built, whether it is a new or existing build.

“Not everyone invests enough in how the house is built – most are focused on what is most visible, like kitchens and bathrooms, all areas that will be renovated in 20 years anyway,” Beaulieu shares. “The focus should be on the building materials, ensuring nothing will go wrong that will require the house to be torn down to be fixed.”

On the buying side, especially, many people find themselves compromising on location, settling for an older home or in a less desirable area because it currently fits their budget.

“You can always remodel an ugly house in a great location to be happy in long-term versus buying a beautiful house in a location you don’t want,” Mercier explains. “It’s a long-term investment, and once you’re in, there’s nothing you can do to change your house’s location.”

Another important consideration is size before design. People often purchase interior features and fixtures such as cabinets and countertops — components that can be changed, unlike the structure of the house.

Communication is Key

While determining, understanding, and working within your budget is a must, regardless of your decision to build or buy, the building process comes with its own set of nuances. From formulating a plan with your goals and timeline within your budget, to having a conversation with all key players, communication — and lots of it — will only strengthen a smooth building process.

“You absolutely want to interview builders,” advises Beaulieu. “Get many involved, have a lot of conversations, and make sure you are comfortable with that builder. Pre-planning and being comfortable with the contractor are extremely important for the success and satisfaction of the build.”

Speaking openly with your builder about design and desired features is not only the best way to ensure you’re getting what you want — it will also help you determine the most cost-effective measures without cutting corners or making missteps.

“People will come in with a budget and a design plan that come nowhere near to matching — the Internet is full of attractive designs, and they do not always translate to affordability,” Mercier states. “Sometimes we can achieve the desired square footage, look, or feel with a better design. Many people spend a lot of money on design because that’s the fun part, designing your floor plan.”

Good Things Take Time

Allocating ample time for design and planning will make the process much smoother and easier for all involved. Being forced to make rushed, hasty decisions puts undue pressure and creates a stressful situation for the builder, the customer, and everyone in between.

Another distinction to consider when building is whether land has already been secured. If land has already been purchased, it’s imperative to speak with several builders to gather insight on plans that work well with the lot. This is also a critical time for conversations with different banks and leveraging the knowledge and experience of professionals.

“A builder or realtor can help advise on different loan types, and it is always recommended to speak with multiple people,” states Mercier. “Some lenders like to stick with what they know best and may only be good with high-end homes, or have a two-year wait, or are unable to work with certain types of loans — it can be tough to navigate.”

Some companies, like Maine Source Homes and Realty help locate land, then structure contracts to purchase the land and do the build. Other companies like Hammond offer home design services, complete with a database of home models to provide estimates on different styles and recommend contractors based on preferences.

“Once land is acquired, the contractor is the critical element – the contractor, the bank, and us,” says Beaulieu. “The bank can tell you what you can afford, the contractor can provide a budget based on the type of house you want, and we can finesse the rest.”

Location, Location, Location

On the flip side, for those without land wanting to build, a few steps need to be taken first to find and purchase the right lot – once again boiling down to clear communication, and lots of it. Some builders offer packages with land included, streamlining the process in a one-stop shop style. Those looking for something more custom will require additional research and planning with the contractor. More often than not, the land, neighborhood, and area will help dictate the type of house that can be built and anticipated challenges that could affect costs.

“The first step in securing land is really a whole team effort,” shares Mark Turner, President and Owner of Maine Source Homes and Realty. “You’ll want to start with a realtor who has construction knowledge and connections with builders – this will allow them to coordinate and ensure the lot will accommodate what the customer wants to build.”

In Maine, most homes are built during the spring, summer, and fall; however, waiting until the summer to plan will push the building until the following year. For most contractors, the goal is to plan in the fall and build in the summer.

That’s not to say building can’t occur in the winter — it just takes a little more time and effort. Fewer daylight hours, contending with competing schedules of contractor winter jobs like plowing and salting, and the logistics of pouring foundations in the winter all contribute to more costly variables that are not present during the milder months of the year.

“It’s important for contractors and customers alike to be flexible on timing because new construction is like a long set of dominos. One domino can delay the whole project.” Mercier explains. “Maine does not have as many contractors per capita as bigger markets. Many use the same electricians and plumbers, and these trades are extremely busy. We build year-round, just not as much in the winter, and it’s a slower process.”

Teamwork Makes the Dream Work

With so much time and money involved in such a big investment, where communication is imperative to reaching the outcome you want, finding the right team to work with is absolutely critical. Companies such as Hammond and Maine Source pride themselves on serving as liaisons to their customers, whether they are looking to build or buy, with deep connections in the real estate and construction worlds.

“We make it a point to treat everyone with respect and courtesy, understanding that not everyone works in this industry and understands our vocabulary and vernacular,” says Beaulieu. “For the buyer, it’s a once-in-a-lifetime experience, and we need to treat it that way.”

“We try to focus on educating our customers based on our experience to help them make the important decisions,” Morin adds. “We rely on builders for their expertise and knowledge to help the projects go smoother and form a partnership between the homeowner, builder, and ourselves to work together.”

Deciding whether to build or buy a home is a big decision, and taking the time to plan can make all the difference. By understanding your budget, exploring your options, and collaborating with the right professionals, you can avoid common pitfalls and achieve your dream of purchasing or building the home that truly fits your lifestyle and needs.

Hammond Lumber Company
Auburn | hammondlumber.com

Maine Source Homes and Realty
Auburn | mainesourcehomes.com

by Jillian Netherland | photography by Jennifer Grace