For the first time Â“want-to-beÂ” homeowner, purchasing an unfinished new home maybe just the answer. With mortgage interest rates still at record lows, there has not been a better time to purchase a home in decades. However, home prices have dramatically risen over the past several years, and even with low interest rates, for some the dream of owing oneÂ’s own home has still remained out of reach.
Purchasing an unfinished home can save tens of thousands of dollars, thus enabling some prospective homeowners the opportunity to buy a house that they may not have otherwise afforded. Unfinished homes are particularly attractive to young couples with no children and who have limited financial resources. The unfinished home concept allows the young couple to grow/finish the home as their family and financial resources do. In addition, if the new homeowners are willing to put in sweat equity they can save significantly on finishing the home.
Typically an unfinished home has a completed kitchen, living room, bath, and at least one bedroom. This is pretty much required by mortgage lenders and building inspectors as the home would otherwise be considered unacceptable for living standards. In many two story unfinished homes, the entire upstairs maybe left unfinished.
When purchasing an unfinished home there are a few items to consider first, such as; what is the expected timeline for finishing the house, what is the expected completed floor plan and who will complete it. All these questions should be answered prior to signing a Purchase and Sales agreement. For example, if more bedrooms will be required prior to when the homeowner anticipates finishing the home, then an unfinished home purchase may not be the right solution. Secondly, ask the builder/prior homeowner for a copy of the floor plan of the completed home. Usually a builder/prior homeowner has these, and it will help immensely when the time comes to complete the unfinished space. Changes to these floor plans are typically feasible, however, it is important to talk with the building inspector prior to beginning the project. Also, in the case of new construction, you may want to negotiate with the builder to complete a portion of the unfinished area, such as the rough framing, electric or plumbing. Finally, you need to determine who will complete the work and assess how much, if any, sweat equity you are willing to contribute. In either case, building permits will need to be pulled prior to any work.
Purchasing an unfinished home can be the means to fulfilling the American dream. For many, it is also a way to buy a larger home, once completed. For others, it enables them to not sacrifice quality in their initial home purchase. Whatever the reason, the purchase of an unfinished home has traditionally been an excellent investment.