Has anyone ever bought a partially finished house?

basil92008November 21, 2010

Like those ads on real estate websites that say "act soon, pick all your finishes", etc.?

I drove by a house today that the exterior walls are just being finished. I talked to the real estate agent and she wants to meet up to tell me about all the options I can pick.

The price, the lot, the neighborhood, and the floor plan seem right (with small changes to the last). We are trying to move out of our 1 bedroom condo before our first is born, so a little bit of a time crunch.

Anyone care to share experiences? Any warnings with this sort of arrangement? How much customization can I expect? I am hoping to be able to choose flooring, cabinets, appliances, etc.

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You could probably get a better deal on all of the foreclosed houses out there.

    Bookmark   November 21, 2010 at 10:00PM
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Uh, thanks. But that's not really what we're looking for. And besides, the real estate market didn't really crash here, so there aren't that many around.

    Bookmark   November 21, 2010 at 10:34PM
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That is the way most tract homes are sold. The level of customization depends on the builder. Some will customize to your heart's, and wallet's desire. Others have a very small list (1 brand carpet, you can choose from 3 colors). It totally depends. Generally speaking, you get a better "deal" not buying new construction.

There are so many things to look out for. Is the builder solvent? Will the neighborhood get finished? Has the road been accepted by the town? What is the warranty? Even though it is new construction I would still get an inspection contingency (as well as an appraisal contingency, but that is obvious).

I know that some people think there are wonderful foreclosed homes on every block. Where I am there are very few as well. If you want to be in a certain section of town (or even a certain town), you would be in for a long wait around here. I don't know of a single one in this town (I checked online, there are 2 "in default"). While my BIL in Florida had several on his street.

    Bookmark   November 21, 2010 at 11:21PM
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Thanks, Sue!

It's not really what I would think of as a "tract" home, though I guess I don't really know the definition of that...there are only 6 lots in the development and 3 have been constructed and are occupied. They are all different plans. This one is being built as a "model home" for the builder but obviously he will sell whenever.

Of course another option is to buy a lot and build a house but at this point I don't think it could start until spring.

How does one look into the solvency of particular builders?

    Bookmark   November 22, 2010 at 6:42AM
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Many spec homes are purchased like that - in fact, some builders wait as long as possible to put in the finishes to allow some customization. We considered one a while back and were able to do a fair amount of customization if we had decided to purchase. He had a certain grade of granite we could chose - no exotics but lots of "standard" choices, we were able to switch the cabinets from stained to painted with no upcharge, etc. If I remember correctly, there was a carpet allowance which was adequate but we would have probably upgraded the master to a wool carpet. We decided at the last minute not to buy it though.

There was one builder who changed his name several times during the process. That is a REALLY bad sign :)!

    Bookmark   November 22, 2010 at 8:06AM
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"That is the way most tract homes are sold."

Maybe in your location, but not in mine.

The builders do not even start until the have a buyer.

    Bookmark   November 22, 2010 at 8:53AM
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Is it necessary to use a realtor? Can't you deal directly with the builder? (*Somebody* has to pay the realtor's commission. Although technically the seller does, he will probably fold that into the price he charges you for the house.)

I'm a little concerned that you are trying to make a very substantial purchase while pressed for time. It's not impossible to buy and move AFTER the baby arrives! How long do you expect to stay in whatever home you buy? (YEARS, I hope!) This house may suit you just fine. I'm not saying you shouldn't buy it. You might pretend it's now 2015; how well do you like this house/neighborhood/schools now?

    Bookmark   November 22, 2010 at 10:20AM
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I agree with checking out the builder thoroughly. Your RE lawyer should be able to help. (A few hundred dollars for a lawyer is definitely worth it compared to the investment you'll make on a house.) Sadly some people have been early buyers in developments that never got finished, so they're alone or close to it in big fields with unfinished roads.

One thing to consider is what the area will be like after your baby is born. Are there sidewalks where you can walk with a stroller? Will you be dodging construction trucks, and will there be construction noise nearby? The construction could, hopefully, only last a year or so if all the other lots get sold, but could be longer.

You have probably done this already, but just in case... check out the schools. If there is alot of new construction in the area, sometimes the schools have a hard time keeping up with capacity.

As far as your original question, buying a home during the building phase is fairly common both for subdivisions and high end in-fill or tear down building. Make sure your allowances are all spelled out and check out the grade of material that comes as the baseline. Things like nice lighting vs. builder grade lighting, plush carpet vs. low end carpet, etc. can make a big difference in price.

    Bookmark   November 22, 2010 at 12:37PM
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Since there are only 6 lots in this sub, how close are other subs? Will your child be able to play with other children in the neighborhood, or will you constantly be transporting him/her to more distant homes for play dates?

Also, check elementary school boundaries. Ours went down the street in front of us, and another was a street and a half in another direction. My kids had no one anywhere close to play with. (When you're little, you usually don't get to know kids a couple of blocks away on a different street.) I listed my place 2 years after I moved there, but the economy was such, that I couldn't sell and was stuck there for years.

My son's favorite people to play with lived 5 miles away at the opposite end of his elementary boundary. Needless to say, he did not get over there often, and he did not have any friends outside of school all during elementary. I put my daughter in private school, and transported her several miles any time she wanted to play. I would definitely do things differently if I had it to do over.


    Bookmark   November 22, 2010 at 4:06PM
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Thanks all!

You have given me a lot to think about...from what I can understand, the school system is supposed to be one of the best in the metro area. But I don't find that the ways of objectively measuring school quality to be very useful anyway.

In terms of other children to play with...the new development is in an older, more established area. I don't know if the people that live in those houses will have children the same age or not...in any case, who knows if they would still be living there if they did!

    Bookmark   November 22, 2010 at 6:58PM
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Does this builder have a good reputation? If they are just now finishing the exterior, you should be able to check that the windows are being flashed correctly and be able to see plumbing, electrical and HVAC ductwork -- before the wallboard goes on. That's all to the good! Can you specify the HVAC equipment? Got central vac in place? (These are more important in the long run than the 'finishes' or lighting fixtures.)

You do need a RE lawyer to inspect the contract and protect you -- different pitfalls here than if you were buying an existing house.

    Bookmark   November 23, 2010 at 11:26AM
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All good things to think about! I don't know if we know enough about construction to know if things are being done correctly? Maybe we should check one of those "dummies" books out from the library. Any recommendations?

I haven't asked about central vac, but my husband is anti-central vac (and he does the vacuuming!), so I guess that won't matter.

    Bookmark   November 23, 2010 at 5:00PM
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You could hire an outside person to inspect the construction. Someone NOT from the same area would be good. 'Waranties' are not considered very useful. Besides, you want to avoid a construction problem, not have to try to get it fixed.

I don't know anyone who does not LOVE the greater suction and less mess you get with a central vac. (See the thread in this forum.) I only brought it up because it is so easy to install before the walls are closed.

    Bookmark   November 24, 2010 at 11:46AM
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Back to your original question, I bought a new construction house back in 1995 that was not quite complete. If I recall correctly, the drywall was up but that was about it. I was able to choose cabinets, flooring, light fixtures, paint, etc. I also made a minor modification that added a wall that extended the galley kitchen and had an exterior door open outwards rather than inwards to provide more space in the eating area. My point is to ask for what you want. The builder may or may not let you do it and you'll have to pay for it, but ask the question. Now that I've completed my own custom contruction I realize how negotiable everything is (or should be).

    Bookmark   November 29, 2010 at 12:39AM
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We did this several years ago, and it worked out ok for us, but just barely. Make sure that there is no chance for a construction lien to attach to the house after the closing--make sure that the title insuance company deletes the construciton lien exception from the title insurance policy and make the builder provide all of the lien waivers that the title insurance company needs to do that. As I said, we lucked out, but our builder went bankrupt soon after we closed and the person who bought the partially completed house down the road wasn't as lucky and construciton liens did attach to their house after the closing so they ended up paying for lots and lots of things twice. They did get a big digger out of the bankruptcy--just what they wanted--but they paid thousands and thousands of dollars extra for that house (One thing I remember is that it was two story brick colonial and they had to pay for the brick and the installation of the brick twice!). The only other thing would be to make sure that you get a homeowner's warranty as most (but not all!) defects will become appararent within a year of construction. We had several problems from shoddy, but hidden, construciton/plumbing/wiring elements that became appparent within the first few years after we purchased the house but our builder was already bankrupt--we had to get a back hoe and plumber out to our house on Christmas eve one year because they didn't use galvanized fittings (I think that's the term) to bring the water into the house so the fittings rusted and got holes in them flooding the basement, etc. 5 houses in our subdivison that were built by the same builder had this same problem--just not on Christmas Ever. And then there was the . . . . If you are involved in construction early, you can watch what the builder is doing. But if you get involved when the walls are in, lots of defects may be covered up.

    Bookmark   November 29, 2010 at 1:44PM
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Get lien released from all contractors for all materials use. Go to the building dept, to make sure all permits were pulled, and they house meet code requirements. Run everything thru your lawyer. We had friends that did spec houses in CA and there were 2 we would trust but others we would not let on the property. Make sure all are licensed bonded and insured. There are places to check to find out.Unless you are knowlegable about building, materials, construction, you would be better buying a house that is complete.

    Bookmark   December 1, 2010 at 6:05PM
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