real estate

Should you buy an old or new home?

Houses built in the 1950s and 1960s that are well-built, but outdated can be good opportunities for buyers who are willing to put up some sweat equity, says Lisa Johnson, a Realtor at Coldwell Banker Residential in Haverhill, Mass.

Remodeling can be quite costly, and a larger home typically will be more expensive to do over than a smaller one. Buyers who are willing to make the investment can open up the space of an older house and personalize their home, says Bernie Smith, CEO of Masterworks, a home remodeling company in Atlanta.

Other new-versus-old tradeoffs for buyers

The age of a home also affects other aspects of the homebuying decision.

Newer homes tend to be larger, located in suburbs and surrounded by small plants and short trees while older homes are often smaller, located in urban areas and complete with mature landscaping. An older home may have especially small bathrooms and closets.

"The newer the home, the better the closets are. That's one thing that has improved big-time is the size of the closets -- and the size of the bathrooms," Smith says.

Homebuyers also should ask about interest rate buydown offers, which may be offered by a builder or seller of a resale home, but are much more common in new construction. An interest rate buydown can save thousands of dollars -- or more -- off the mortgage expense over the lifetime of the loan, a considerable advantage for the buyer. Still, many buyers focus on the price of the house, instead of the interest expense, according to Johnson.

"You will see some property that is on the market with a fantastic build-will-buy-down-your-rate offer, but just sits," she says. "The key is knocking down the price because people are saying they would rather have that money off."

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