Interested in an unfinished house

[Bashful Unicorn]

Originally Posted by 1200RT

We purchased (and have since sold) a home that was around this completion percentage. Some real pros and cons, so YMMV depending on what you're trying to accomplish.


- How do we gauge the room for negotiation for an early offer like this?
In my experience, negotiation on sale price will be limited on new builds - if the project is in a development, they wont want to set a prescient, and they also have a general guide for how much they need to make on the project. That said, you should be able to negotiate for things like upgraded finishes, appliances, window coverings, etc.

- What should we be mindful of when considering an unfinished house (e.g. to make sure all of the work will be completed in a timely and satisfactory manner)?
In new construction, you want to do a pre-drywall inspection if at all possible. So i'd recommend an inspection before you sign docs. This will give you an idea of the quality of the build. I'd also highly recommend working with a realtor who understands new construction.

Edit - i'd also be curious if the house was built on spec or if it was a project that someone walked away from. I'm always cautious w/ spec homes.

Thank you for your reply! It's a local builder and the house is definitely not built on specs. We have seen more than 10 new builds so far, this one really stands out in terms of attention to details. It's not possible to do a pre-drywall inspection anymore, but do you think it's possible to involve an inspector before putting in an offer? We're really not sure how it works, and we'll probably talk to an attorney tomorrow - will really appreciate if you could pass some names via dm, either inspector or attorney. Thank you for any help!

[Bashful Unicorn]

Originally Posted by Strannik33

I would never buy an unfinished house. Too many potential problems, e.g.:
- If the builder goes belly-up before the house is finished, what are you going to do?
- I presume the new houses anywhere are being snapped up, so how come this one is still available?
- How do you know what exactly has been completed and what has not? Not every component is easy to see.

If you insist on buying this house, you should engage several professionals, such as a buyer's broker, a RE attorney, a home inspector. As with any new construction, your agreement should stipulate that the final moneys will be paid upon the final completion and a satisfactory-- to you -- final inspection, and what should happen if you are dissatisfied. Prepare for surprises.

Thanks for your reply! All the concerns you pointed out are completely valid - we are only considering since the supply is so short in the housing market, and this one happens to be in the location we like and offer the overall package we are looking for.

It's like a hidden gem when we found it - we took a wrong turn the other day and saw the house sitting on the end of the cul-de-sac. It's not listed yet but our agent got us a showing. It seems both the seller's agent and builder are not in a rush to get it listed, but our agent encourage us to take action sooner than later (she anticipate that they'll have it listed once they realize the market is at its historical high).

At this stage, we certainly wanna poke more info out of them, but simply don't know where to start. We haven't even told our buyer's agent that we're so into it. We'll probably talk to an attorney tomorrow - would really appreciate if you could pass along some names via dm. Thanks again!

[Dabaomb]

Originally Posted by Bashful Unicorn

It's like a hidden gem when we found it - we took a wrong turn the other day and saw the house sitting on the end of the cul-de-sac. It's not listed yet but our agent got us a showing. It seems both the seller's agent and builder are not in a rush to get it listed, but our agent encourage us to take action sooner than later (she anticipate that they'll have it listed once they realize the market is at its historical high).

Is the builder living under a rock? How do they not know that the housing market is at an astronomical high?

[1200RT]

Lots of feedback in here from folks who have probably never purchased new construction, so take that with a grain of salt.

What does your realtor say? S/he will likely be the best source of info and recommendations, especially for reputation of builder and inspection recommendations. Just because drywall is up, doesn't mean you cant get an inspection. As I said, make your realtor has new construction experience, it makes all the difference.

[mike0421]

Originally Posted by Bashful Unicorn

Thanks for pointing out all the concerns - we really appreciate the help! At this stage, we're still debating whether we should express interest in this house. When you talk about licensed professionals, are you referring to attorneys and inspectors? Do people usually involve them and request title commitment before putting in offer (this may be a dumb questions, pls bear with me)? Also, we would really appreciate if you could pass some names via dm. Thanks again for any help!

When I write licensed professional, I meant your realtor. Also, what type of financing are you going for, or is it a cash offer?

[Bashful Unicorn]

Originally Posted by 1200RT

Lots of feedback in here from folks who have probably never purchased new construction, so take that with a grain of salt.

What does your realtor say? S/he will likely be the best source of info and recommendations, especially for reputation of builder and inspection recommendations. Just because drywall is up, doesn't mean you cant get an inspection. As I said, make your realtor has new construction experience, it makes all the difference.

Our realtor went to the showing with us and checked the material and appliances they used, as well as everything in the utility room. She's been in the industry for more than 20 years and there are quite a few new construction transactions in her public sales/purchase history. She seems pretty satisfied with the quality of the build and encouraged us to take action. We trust her but also understand there can be conflict of interest. Do you think we should propose to get inspectors involved before putting in an offer? We don't wanna offend the builder in the same time.

[Bashful Unicorn]

Originally Posted by mike0421

When I write licensed professional, I meant your realtor. Also, what type of financing are you going for, or is it a cash offer?

Our realtor went to the showing with us, checked on everything and seemed to be pretty satisfied. Just like what I mentioned in the reply above, we trust her experience with new builds but also hope to get some objective views here. We'll probably put 20% down - any difference when it comes to deciding whether to take an unfinished new build? Thanks for any advice!

[1200RT]

Originally Posted by Bashful Unicorn

Our realtor went to the showing with us and checked the material and appliances they used, as well as everything in the utility room. She's been in the industry for more than 20 years and there are quite a few new construction transactions in her public sales/purchase history. She seems pretty satisfied with the quality of the build and encouraged us to take action. We trust her but also understand there can be conflict of interest. Do you think we should propose to get inspectors involved before putting in an offer? We don't wanna offend the builder in the same time.

I think this has already been answered. Its industry standard to do a pre-pour inspection and pre-drywall inspection on new construction homes. So, there isn't a builder in the world that would (should) object to an inspection at any phase of the project. If they do, run. As a side note, realtors, while great, are not inspectors. Since your realtor hasn't recommend an inspector yet, I'm guessing they dont have a ton of new construction experience in their "20 years". I say all this after buying and selling 4 new build houses/condos (albeit not in NJ).

https://www.nachi.org/valueofconstru...ctions2006.htm
https://www.nachi.org/pre-drywall-inspections.htm

Not to be too pointed ... But:

Originally Posted by 1200RT

Lots of feedback in here from folks who have probably never purchased new construction, so take that with a grain of salt.

What does your realtor say? S/he will likely be the best source of info and recommendations, especially for reputation of builder and inspection recommendations. Just because drywall is up, doesn't mean you cant get an inspection. As I said, make your realtor has new construction experience, it makes all the difference.

Originally Posted by 1200RT

We purchased (and have since sold) a home that was around this completion percentage. Some real pros and cons, so YMMV depending on what you're trying to accomplish.


- How do we gauge the room for negotiation for an early offer like this?
In my experience, negotiation on sale price will be limited on new builds - if the project is in a development, they wont want to set a prescient, and they also have a general guide for how much they need to make on the project. That said, you should be able to negotiate for things like upgraded finishes, appliances, window coverings, etc.

- What should we be mindful of when considering an unfinished house (e.g. to make sure all of the work will be completed in a timely and satisfactory manner)?
***In new construction, you want to do a pre-drywall inspection if at all possible. So i'd recommend an inspection before you sign docs***. This will give you an idea of the quality of the build. I'd also highly recommend working with a realtor who understands new construction.

Edit - i'd also be curious if the house was built on spec or if it was a project that someone walked away from. I'm always cautious w/ spec homes.

[lancers]

Sounds like an accident waiting to happen. It can't be the only suitable house.