Is it typically cheaper to buy a piece of land and build new on it (or erase an old house) or buy a relatively new house?

Asked by Craig, 94110 Sat May 22, 2010

What does it take to build new? Are there companies you contract to handle everything? I am basically trying to figure out.. is there a way to do it myself to erase the margin I'd have to pay a National home builder if I bought in a master planned community. I see a lot of this in Bellevue. Thanks!

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Dan Edwards, Agent, Bellevue, WA
Fri Dec 28, 2012
Funny thing is it only cost about 8-10K to demo a home.... that being said it's easier to get financing for a home that for raw land. So consider out of pocket expenses. In the long run you will save money building from scratch if you or your contractor know what they are doing. Might I recommend to help you sort that out. Good luck
4 votes
Dan Chase, Home Buyer, Texas City, TX
Sat May 22, 2010
Forget about building on site. Instead consider buying a modular house and having it put on your lot. It is built under factory conditions with the materials you specify. You could ask a dealer of modular homes just how much it would cost to have a well, septic, driveway, and foundation put on a lot.

You may find it is cheaper to buy used. It may be cheaper this way. The cost may be to close to care about the difference.

A modular is like a normal house except that it has a connector in the middle to put the two halved together.

After that ask a builder how much it would cost to build on site. If they charge more than the modular you now have negotiating ability. You make the choice in the end. This is simply anotehr option. I would not recommend a double wide as trailers depreciate and are often not as well built.
4 votes
What if I want to BUILD a lot. I don't want a factory/modular house!
Flag Mon Jan 25, 2016
Thanks for the suggestion of buying a modular home and having it put on a lot. I've been wanting to do research on if it would be cost effective to build your own home rather than buy one that has already been built. There were a few different suggestions in the comments, so it looks like I'll need to do more research! But I liked your suggestion.
Flag Mon Apr 13, 2015
Daniel Bretz…, Agent, Seattle, WA
Tue Aug 31, 2010
I have built homes and developed property. There are a lot of things that you can do wrong that will cost you money. If you do not have the experience, building your own home will not save you money. The natiional ome home builder actually can build a home cheaper than what a private builder can. They save money on the the plans, volumne purchase of supplies, and sub contractors will do things at a reduced rate. If you try to customize the tract home, then it will cost you money as the national builders make the money on the upgrades.

With that said there are a lot of builders who will be glad to build you a home on a lot that you own, and you will get the home that you want in the location you want, at the cost of construction. I have found that some of the homes are being sold at or near construction costs, thus it may be better to buy something that is already built, it is is something that you like.
2 votes
Cyndi Carver, Agent, Bellevue, WA
Tue Jul 20, 2010
Hello Kraig,

There are definitely advantages to building your own home. Whether you save money is up to you. A home can be basic or fancy depending on how much you would like to spend. I have referred my clients to Realty Homes. They have plans you can choose from and will do modifications for you. They are very reasonable when it comes to price per square foot and they build a solid home.
2 votes
Dan Tabit, Agent, Issaquah, WA
Sat May 22, 2010
It really depends on what you want in the end. Buying an existing structure to tear down and replace or significantly upgrade will give you a location you may prefer over a newer development, however finding a builder who does singles affordably can be an issue.
One option a friend used is They are a consulting company allowing you to be the general contractor. You are involved in every aspect of the process, but they provide the roadmap along the way and have a list of subs to consider. Choose your subs carefully; this was the biggest drawback for my friend. Sub's he found or knew on his own provided great service, some of the ones provided by the company were not as reliable.
It's a second job while you’re doing it and you will earn what you save, but my friend had a great outcome for significantly less than a general contractor would have done it for.
2 votes
Judie O'Brien, Agent, Bellevue, WA
Sun Oct 10, 2010
In this market, buy a home that needs updating.
1 vote
Shawnletaro, Home Buyer, Bellevue, WA
Tue Apr 25, 2017
I found that the easiest and most cost effective was to build with a builder that already owned the land, so you don't have to go through the headache of finding/buying the land first. I did this with D.R. Horton they had amazing homes in Puyallup Washington area! I loved it, it was so smooth. best of luck
0 votes
Jesse Peak, Agent, Bellevue, WA
Thu May 21, 2015
Unless you are an experienced builder or have an experienced builder available to you as a consultant there are many unforeseen costs associated with buying raw land and building a home. There are many advantages of an extensive remodel, not the least of which is that you won't be paying for to have the lot stubbed and surveyed. Also depending on the area you are looking in there are likely far more older homes that could be remodeled than there are vacant lots.
0 votes
stephenp19655, Home Buyer, Boca Raton, FL
Fri Apr 10, 2015
I love my new custom home from Hagen Homes. The owner was on the job site everyday. We couldn't be happier.
0 votes
Mongoose Mcq…, Home Buyer, Washington, DC
Mon May 19, 2014
Of course the realtors will tell you to buy a home already built so they can get a nice fat commission. But if you have the time to watch over the project, building it yourself would be more rewarding personally.
0 votes
Cyndi Carver, Agent, Bellevue, WA
Sun Feb 2, 2014
Craig, you can contract with a licensed General Contractor to custom build a home for you from the ground up with your own land and plan. There is no way to erase the profit margin unless you pay for time and material, which you can get some contractors to do but not all of them will. the cost per hour will vary from contractor to contractor. There are local builders that will build their plan and specifications on your lot, however. But they still will have a profit margin in order to stay in business.
0 votes
Ad, , Atterberry, IL
Sun Feb 2, 2014
It really depends on your needs actually. Usually buying a home is a bit cheaper but building one allows lots of possibilities. If you'd rather build than buy, check this blog out, interesting info.…
0 votes
Danny Evatt &…, Agent, Snoqualmie, WA
Sun Jul 14, 2013
Old question... but answering for anyone who sees this later:

Something to consider when buying land and either building your own or hiring a contractor, is the time/cost associated with all the administration, "due diligence," and permitting issues surrounding land & lots which have never been built upon before.

There are procedures one must follow before constructing much of anything, especially on raw land, and it's very time consuming - there's also more "risk" involved, as there's no guarantee you'll be able to utilize the land and build upon it as originally intended. When purchasing from a builder however, part of what the buyer is paying for, is to reimburse the builder for all of these previous expenses - in actual dollars, time, and the risks associated with development... and it's reasonable for the builder to expect to profit on these efforts.

So, before setting off to build on land you already own (or will buy soon), be sure to consider your own time, and the potential risks... as those aspects have significant value just the same.

Anthony Gilbert REALTOR®
The REALFX Group at Windermere Real Estate East/Inc.
14405 SE 36th Street Suite 100, Bellevue, WA 98006
0 votes
sean8448, Home Buyer, Everett, WA
Tue Feb 5, 2013
I just wanted to point out that it was asked by Craig, yet everybody replied to Kraig. Cheers.
0 votes
leonogor, Both Buyer And Seller, Los Angeles, CA
Fri Dec 14, 2012
Craig, it is cheaper to buy own land and build own home.
0 votes
Linda Lorenzo, Agent, McKinney, TX
Tue Jul 20, 2010
You need to ask yourself if you have the time and energy to build new. Most people don't realize how involved it can be, yes you can be your own contractor and if you want to be that involved great but it is a lot of work. Go to some of the Realtors in your area ( I know when I was with Windermere up there agents worked as site agents at new construction sites) and ask them if they know anyone building for individuals. Personally I think you get a better deal on a newer home say 1 to 3 years old as they have put all the work and money into window coverings, landscaping, etc. Sort of like buying a newer used car and getting the benefit of the depreciation.
Did you know that Bellevue was named #4 best community to live in by CNN Money magazine? See my blog for the link.
Good luck to you.
0 votes
Mack McCoy, Agent, Seattle, WA
Sat May 22, 2010
Kraig, you can't do it cheaper than the pros, especially the first time. You think they have a margin? They also (usually) have a reduced cost basis for the land and economies of scale beyond your wildest dreams; on the other hand, every contractor and sub you hire will have margins, too.

All the best,
0 votes
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