Buying an Unfinished Home: 4 Tips and Tricks for Potential Buyers

Posted by Justin Havre on Tuesday, June 13th, 2017 at 2:29pm.

Buying an Unfinished Home While Navigating RisksWhen preparing to buy a home, sometimes it's possible to find properties that were started but never completed. If one seems perfect, take your time to investigate what halted its progress, to make sure purchasing it is a wise investment. These four questions help to figure out the condition of a property, and what it will take to finish it.

Why Is the Home Unfinished?

The first question you should ask provides a necessary sanity check to the whole process. Sometimes homes are sold when they are incomplete, and there are a variety of reasons for it. It may be that the owners ran out of money for the kind of upgrade they planned to do, or they were unable to secure additional funding after construction had begun. In other cases, there may be serious problems with the structure or property. Find out about the current status of the process for building or renovating the home, and where it stalled. If contractors found that they could not finish construction as designed because of a flaw in the property, it is possible that you will not be able to overcome this obstacle.

Who Will Finish It?

When looking at a partially-finished home, there are two ways that to examine the steps needed to finish the structure. The first involves the process to finish the home as originally designed. The second concerns actions needed to undo faulty construction or installation, or to remedy problems with the structure or property. Have a very clear idea in mind of what is wanted from the home, so as to keep from being too invested in construction and then changing directions. Talk to the former contractors and get new bids from other contractors, so you can decide who will complete the work.

Can You Get a Loan to Finish It?

Although a lot of people may choose to finance home renovations personally instead of getting a loan, this may not necessarily work for buyers who need to buy the home and then finish construction. The type of loan you need may depend on the condition of the home itself. If the home is new and is not ready for occupancy, you might need to apply for a loan that provides you with funding to complete construction, despite the fact that you cannot yet live in it. If the home is ready to occupy but is engaged in some minor or moderate construction, you may be able to get a more traditional mortgage loan with extra funding for renovation.

How Long Will It Take to Complete?

Of course, all of these changes are predicated on the assumption that you can invest the time and effort it takes to get the home finished. Take a detailed plan of your renovation expectations and get estimates on timing from contractors who specialize in each task you need done. Make sure to factor in scheduling constraints such as holidays, the busy season and winter weather conditions. Provide plenty of time for things to take longer than expected, because delays are common and many parts of the project are dependent on others.

Unfinished homes often come at a bargain, which is one of the reasons they can be tempting to buy. With the answers to these four questions, you can decide if buying an unfinished home is a good choice for you.

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