The Pros and Cons of Buying New or Used Real Estate
See what the differences in price, parking space, property tax, condominium, size, finish, warranty, leisure area and payment method tend to be.
Property under construction: there are advantages and disadvantages compared to used ones
Belo Horizonte – The real estate market offers a wide range of options, both in relation to old properties and new housing models. When approaching the subject, the consultant and adviser of the Minas Gerais Real Estate Market Chamber (CMI/MG), Kênio de Souza Pereira, highlights aspects that should be considered before making a final decision.
Souza Pereira, who is also director of Caixa Imobiliária – Netimóveis, recalls that society, concepts, materials and architecture have evolved. "In the 60s, there were few families with more than one vehicle, and apartments with leisure areas, courts, swimming pool, etc. were rare."
“Nowadays, apartments with four bedrooms, three or more parking spaces and a leisure area with various equipment are common. Therefore, nothing better than analyzing all the variables carefully”, he says, and emphasizes that a good practice is to count on the help of a specialized consultancy in the real estate area.
To help with the reflections he suggests as essential, prior to the purchase decision, the lawyer listed in topics the advantages and disadvantages present in new and old properties, as follows.
Value: Old properties are sold for a lower value than new ones, and this difference makes the acquisition easier. There is also the possibility of the buyer, with the money he has at his disposal, to acquire an old property with dimensions larger than a new one. On the other hand, acquiring a property that is new or under construction from a construction company makes installment payments or financing easier.
Size: Old buildings offer, among their advantages, the fact that they generally have larger rooms, considering that in the past couples had more children and, due to the custom of the time - living in houses, the buildings were built with more apartments broader than the current ones. For example, a three-bedroom apartment was built between 1970 and 1980, with an internal area ranging from 115 m2 to 130 m2, whereas today the dimension is around 75 m2 to 105 m2.
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Finishing: Among the advantages of acquiring a newly built apartment is the fact that the finish (floor, paint, ceramics), the hydraulic installations and the electrical network are new and, theoretically, in perfect condition and in accordance with the updated concept of use space. Already in old properties, the finishes are. Generally outdated. Most rooms have parquet or plank floors. Granite, marble or porcelain are currently used. The same problem occurs with the finishing of the bathrooms, service area and kitchen.
Customization: It is rare for the buyer to choose the floor and wall coverings for the new property, unless it is under construction, and through agreements with the builder. But, if you buy an old property at a lower price, due to need of renovation, it will be a good opportunity to update the look in order to adapt it to the residents' tastes.
Guarantee: The new property has an irreducible legal guarantee of five years, against structural defects and construction defects, imposed by the Civil Code on the Construction Company. On the other hand, the old property has no guarantee, as the buyer receives it in its current state.
Garage: Another advantage of acquiring properties in new condominiums is that they offer services and infrastructure superior to the old ones. An example is the greater number of parking spaces per apartment. Due to the reduced number of cars in circulation for three or four decades, many among the condominiums did not even have parking spaces. Still, in other condominiums built at that time, the number of parking spaces did not correspond to the units. Today, this fact motivates conflicts and even lawsuits, which result in wear and even the change of place of residence, by those seeking tranquility.
Neighborhood: It is important to know who your neighbors will be. In a new building, the buyer has no way of knowing, and thus is at greater risk of having surprises. For those who buy old property it's different. In this case, it is perfectly possible to verify who your neighbors will be, thus being better able to assess how your social life will be. Thus, factors such as neighborhood, physical structure and financial availability are interspersed at the time of the important and pleasurable decision to purchase a property.
Leisure: The new condominiums offer an obviously more modern structure. Before, in condominiums, the so-called leisure space was limited to the sports court and the ballroom, then it evolved into a playground and swimming pool. Currently, the most sophisticated condominiums also offer: sauna, gym (which is sometimes so complete that it even offers (personal training), gourmet space, home theater, swimming pool with lap and thermal, tennis court, cable internet, circuit indoor tv and some other services similar to those offered by an apart hotel.
Negotiation: When buying a new property there is a greater possibility of negotiating the value. The construction company has flexibility with payment, it has greater bargaining power. On the other hand, the owner of a used property, mainly because most of the times he sells his property to buy another one, does not have conditions to make the price more flexible or the form of payment in the long term.
Swap: As for the possibility of the buyer offering his property of lower value, as part of payment for another good, it is easier to make the exchange – or part of the payment in goods with a construction company that sells a new property, as it has cash for assume a stock of units.
IPTU and Condominium Fee: When it comes to old property, the buyer knows for sure how much it will cost with condominium fees and Urban Property Tax (IPTU). In a new property or under construction, the buyer will rarely know for sure what the amounts of these monthly disbursements will be. When the building is old, it is necessary to consider the possibility of unexpected costs, caused by renovation of elevators, change of facade coating or even with employee terminations.