Buying vs building

building

Buying vs Building a House

building or buying new homes
The biggest mistake people make when they are building is to trust the builder to do a great job. The fact that he is NHBRC registered is no guarantee! Do yourself a favour, get interim inspections done. It’s not expensive!

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Buying vs building

With buying vs building, it is generally true that buying is approximately 20% cheaper than building a new home!

In times of uncertainty, buying or building a home remains a safe and reliable investment. The economy is not in the best shape, but the surge of new developments make it easier to own property.

For home buyers and property investors considering buying and investing in property, the time is now! The recent negative real property price growth makes for a buyer’s market.

Buying an Existing Home

Advantages of buying:

  • Security: it is less likely that there are vacant stands in the vicinity.
  • Established neighbourhoods have the necessary major arterial routes and amenities. Therefore, a central business district, public transport, schools and shopping centres are close by.
  • It is easier to determine current and future property values in an established area.
  • Older houses usually have larger rooms and larger stands.
  • You can get expert advice on patent and latent defects to the house. A home inspector will assist you.

Disadvantages of buying:

  • The area you buy in may be in decline.
  • Older properties are bought with the ‘voetstoots’ clause. There is no recourse or a warranty.
  • Costs for repairing latent defects building maintenance could be exorbitant.
  • Design and finishes may not be to your taste.
  • Renovation costs may exceed the overall value of the property.

Homebuyers also need to consider that the voetstoots clause in sale agreements means they are purchasing the property “as is”. Therefore, the onus is really on them to check carefully for any defects before signing on the dotted line.

Homes more than 10 years old are likely to be more spacious than new ones because steeply rising building costs. In recent years developers and architects have had to design smaller homes in the interests of affordability.

Better still, get a home inspector to do so for you. And remember, the seller must provide you with the required certificates of compliance and a seller’s disclosure.

Building a new home

Advantages of building:

  • When buying a home from a developer the price includes VAT. As a result transfer duty falls away.
  • You have a 5-year major structural defect warranty and a 1-year roof leak warranty. All building contractors registered with the National Home Builders Registration Council (NHBRC) must comply with this regulation.
  • The overall design of the house is according to your needs and taste.
  • Maintenance costs are low.

Disadvantages of building:

  • New developments and vacant stands are usually on the outskirts of major urban areas. Security could become an issue, as well as access to major arterial routes and amenities.
  • Costs may escalate architect and engineer fees, land excavation and land preparation costs etc.
  • Building projects often have time overruns.
  • You have little impact on the design of other constructions in the vicinity.
  • Stand sizes are usually smaller.
  • Project managing the construction of the house is a time consuming and stressful endeavour.

On the other hand, there’s nothing quite like a home that is purpose-built for your needs. But for most South Africans, the thought of building a house from scratch is more than a little overwhelming.

The good news is, with help and a lot of planning, it’s possible to build the house of your dreams.

Again, employ a home inspector to do periodic quality inspections before making progress payments to the contractor!

Investing in property

However, investors should understand that building a house is unlikely to be the cheapest option. Therefore they should either consider buying and renovating than buying a new home. Our relatively high construction costs tend to make building significantly more expensive than buying. 

Wise investors ensure good value by having a property inspection or multi-unit inspection before they commit to buying investment properties.

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THE HOME DETECTIVE » renovation cost

Renovations

renovations

Home Renovations & Extensions.

the builder and renovations
The biggest mistake people make when they are doing extensions and renovations is to accept the cheapest price and expect a great job. You should have interim inspections done by a neutral party like a home inspector. It’s not expensive!

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Renovations and extensions usually prove to be cheaper than buying a new house.  However, it is important to employ a good builder with good references!

Do not over-capitalise on your property! It is probably best to speak to a real estate agent familiar with property values in your area.

Moreover, buying a new property does not only involve the purchasing price, but also a number of additional costs (transfer fees, registration fees, the real estate agent fees etc.).

Adding value

Renovations and additions that add the most value:

  • extra bedrooms,
  • bathrooms,
  • garages,
  • swimming pools or cottages.

Make sure that the renovation or addition really adds value. Therefore, just because you like a feature it does not necessarily add value. Furthermore, the value may actually be reduced; think of a garish paint job.

An “income-generating”, e.g. rental space, often increases value.

Make sure that the quality of the workmanship is of the top order. A badly finished renovation, poor paint job or ill-fitting units will put off any prospective buyer. In addition, interim reports by a home inspector can ensure the quality of your renovations and extensions are up to standard.

Do not cut corners. Also, ensure that only skilled craftsmen work on your property!

Watch the design

An additional bedroom adds value. However, if it fits poorly into the architecture of the house, it will likely deter future buyers. Poor design may even reduce property value.

Stay in keeping with the original style of the house. Also, maintain the same fittings throughout, e.g. wooden floors, high ceilings etc.

Inexpensive renovations

The value of a house can be increased with inexpensive renovations:

  • Re-grout bathroom tiles
  • Replace damaged, dirty or tired fittings
  • Clean or refit carpets

A neat garden increases value:

  • Neat beds
  • Manicured Lawn
  • Well-maintained boundary walls
  • Neatly arranged pot plants
  • An outdoor seating area.

Saving costs

  • Undertake serious renovations in an economic downturn, when discounts are available.
  • Be an owner-builder.

Keep in mind that building costs are usually more expensive per square meter than buying.

However, in an economic downturn, builders and suppliers are open to negotiation price. Currently, building costs are much closer to the real value of the home. Therefore, if you make it clear that you have a strict budget, suppliers can advise you on less expensive options, with the same finish.

Prioritise renovations:

  • Newly renovated bathrooms and kitchens are appealing to buyers. Such renovations can be very costly. Whilst granite and Caesarstone is very popular for kitchen tops, a high gloss finish can also be achieved with PVC-wrapped kitchen units.
  • You do not need to replace taps with the most expensive designer imports. Local manufacturers, e.g. Cobra, have a very attractive range of products at much lower prices. Also, the installation is not problematic.
  • Do not overspend on your swimming pool. It costs anywhere from R20 000 to R50 000 to put in a pool.  Then there are the maintenance costs that also need to be considered. A small pool that is easy to maintain may be the best option.
  • Garages are important selling points. If you can also provide additional space for plumbing and laundry, the value is increased further. This is a low-cost improvement.
  • Security is a major selling point. Perimeter walling, palisade and electric fencing immediately push up the value of your property. Furthermore, American shutters, which double up as security bars, add cosmetic appeal as well as security.

The biggest mistake homeowners make when they are renovating is to use “builders” off the street or to trust the builder to do a great job. Even the fact that a builder is NHBRC registered is no guarantee! Do yourself a favour, get interim quality inspections done by a home inspector before you make interim or final payments. It’s not expensive!

Get a FREE Quote NOW!

 Inspected Once, Inspected Right!®

SEE WHERE I INSPECT IN GAUTENG!

THE HOME DETECTIVE » renovation cost

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