Buying a home currently being renovated

8 years ago

I am in the process of seriously considering purchasing a home which is owned by a local builder. He purchased the home basically left the bones of the house and is doing a complete renovation from plumbing, electrical, roofing, whole new outdoor space, kitchen etc. I am concerned that corners may be cut once the contract is signed since it is a "done deal". I am also not sure of all the questions I should be preliminary asking in regards to finishes, timelines etc. I am being warned by friends and family to stay away and that this would be a major headache and I would come to regret. Any guidance on this would be great!!

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Comments (9)

User
8 years ago
Good luck with your decision. Personally, I would never buy a flip. I might buy a home that prior owners rehabbed with the intent to stay. I would buy a house to rehab myself. There are just too many ways to hide shortcuts...
User
8 years ago
What's difference between a flipper vs a builder? They all build houses to sell for profit. I would not mind to purchase houses from a flipper if s/he has good products and reputation.
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Every time I try to open that link, my computer freezes up. Anyways, I remember reading a long time ago on House Hunters that the rules said you already had to be under contract for the home, so it should be no secret it is totally staged. Lately, it seems they never pick the homes DH and I like. Recently saw an HH International for Nepal. Wow, that was really educational. I also like House Hunters Renovation where they buy the home, but then they actually do the renovations suggested. Although I nearly cried when one couple tore out beautiful parquet floors because they were "dated" and put in traditional hardwoods. Another cool version was Island Hunters, for those who just a simple home won't do. Seriously, these people were looking at private islands.. Mindblowing. If you do appear on the shows and they do renovations, I think you get a 1099 for the value of any work done.
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Why did you initially view your current house?
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We wanted to move from the family home to one with an HOA and some maintenance provided. Kids are about finished with schooling, and we were in an older home with detached garage, large trees, and with lots of upkeep. But we are decades away from retiring. My in laws had moved the year before to a place that was all retirees, and not a walkable neighborhood. Other than that we liked their floor plan and overall home size a lot. So I had a list in my phone of new house requirements. Walkable neighborhood, outdoor patio space large enough for at least 10 people, attached garage, main level living, and lock and leave maintenance. Space to get by yourself in the house, and good natural light. We had looked at some houses that were close to our in law's subdivision, but didn't meet all the requirements. But this gave us an idea of prices and the amount of updating that would be needed if we bought something 20-30 years old. Some friends got married and moved their combined family to a home a few miles away that was new construction and maintenance provided. This showed us what that would be like and how much that would cost. So we know what the in law's 20-30 year old home prices were, and the new construction prices. Then we found the neighborhood we are in. Very close to the in laws. 20-30 year old homes, but a shady beautiful walkable neighborhood. Our house was a total re-do. Needed new paint, flooring, HVAC, and kitchen updates. But we knew that would still be far less than the new construction area. We never would have looked at it based on the listing pictures unless we had already done this market research and figured out what we wanted. The listing and the home in the condition we purchased were full of clutter and outdated everything. Fortunately we could see beyond that, and knew that it would be worth the additional expense to do the fix ups it needed right away. So we initially viewed it due to its location, size, price, and layout.
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Builder of New Home Wants a CMA of Current Home? Is this a common ask?
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Buying a home contigent on selling a home is essentially a contract saying “I might buy your home, if all the stars line up.” Contingencies are an OUT to a contract, and home sell contingencies are the worst kind because the seller has little control over the domino effect the buyer has placed them in, yet the seller will be the one who bears the burden of the deal falling apart. This is magnified with a new home build because builders always have sunk costs even before the first shovel hits the ground, permit fees, soil tests, engineering fees, staff time, etc. Thousands are at risk, I am surprised a CMA is all that was requested. Additional requests to play the contingency game could be non-refundable deposit (skin in the game on your part), approval for your marketing plan, list price, and price changes as needed to get the home sold, etc. Never met a home seller that didn’t proclaim for certain their home would sell right away at the price they want, yet the number of listings that don’t sell and expire is pretty high. As for the argument that the builder can just sell the new home if you can’t perform, it will likely be at best sold for cost, or even a loss. If you could buy a $500,000 new home where someone else got to pick everything, or a $500,000 home where you get to pick everything, which one would you choose? Your builder sounds naive if all they are asking for is a CMA.
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I am currently doing my kitchen renovation.
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Comments (13)
Giant fail on the kitchen designer’s end. That required custom steel supports to be engineered during the design phase, well before the $1.98 worst educated counter fabricators in history ever showed up to template. A professional designer was really involved in that???? Doubtful. That is a HUGE life safety risk as is. HUGE. The counter installers need to remove that ASAP, and the island needs to be completely redesigned by someone with a clue. Hire an experienced kitcgen designer and get ready to spend about 5-15K more to make just that island work. Except it doesn’t and cannot, no how, no way. Math doesn’t lie. Abandon that whole island plus attached quartz table. There isn’t room for it anyway. Your clearances are way way too small. Among the *numerous* other major design issues with this. Too numerous to list. That is terrible design, and criminally irresponsible. Seriously. It could KILL someone. It is malpractice if a “pro” actually thought that ”design” would work. You need to hit them with a claim against their errors and omissions insurance ASAP and have the whole kitchen redesigned and rebuilt, by an actual kitchen designer. Every time I click back to view it, I just see more and more issues. Ugh.
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rrah
8 years ago
I would not necessarily stay away from this house, but I would think of it in the same way I would think of new construction. Any offer would be written in a way similar to new construction contracts. I would want to specify what will be finished, the quality of finishing and/or specific products that will be used.

I would suggest you spend a little time on the Building a House forum. There are numerous discussions on contracts for new builds.
Brianna G
Original Author
8 years ago
Thanks all for your comments! It has been a hard decision when the neighborhood we love is comprised of older homes and then be presented with this option.
weedyacres
8 years ago
What rrah said. Act like it's a new home and specify the products and finishes that will be used. Require inspections along the way and a final one when complete.
cpartist
8 years ago
What rrah said. I have learned so much from the building a home forum.
chispa
8 years ago
I'm suprised the flipper marketed the house before the flip was finished. A friend is a builder and usually does a flip every year too. He lives in the town he does flips in, so his reputation is very important to him and it shows in his projects, BUT he never markets a flip before it is done as he simply doesn't want to deal with the choices/changes/headaches/timeline of a buyer.

I would expect to pay more to have a builder alter his finishes/fixtures and be subject to buyer inspections on a planned flip. Anything can be negotiated and the builder might be happy with not having the risk of having to carry an unsold flip for months. Get a good lawyer to protect your interests in this transaction, and things should work out with a win/win for everyone.
nosoccermom
8 years ago
Treat it like anew home build, i.e. including the specs in the contract. Can you look at previous flips by the same builder?
nickel_kg
8 years ago
We bought a house in mid-rennovation, and it worked well for us. The builder's reputation was excellent and we saw quite a few examples of his good workmanship around the neighborhood. It was fun to be able to influence the final floorplan (bathrooms were shifted around) and and choose the finishes and colors, etc. We were also able to save the original wood windows, which the builder had intended to discard. But it took about 8 months from the date we closed, to the day the house was habitable. Do you have the time that your house might require to complete its transformation?

Buying a home currently being renovated

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Buying a home currently being renovated

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