The economy isn’t in great shape… that’s not breaking news. Many people are facing difficult times these days. Many have been affected by the current economic state. It is not unusual for home-builders to walk away from their projects. Some of those projects are still in progress. The builder may run out of cash, leaving another party with a bag of goods. A bank is usually involved when a builder abandons a house that is not finished. The bank then ends up buying the property.
Is This House Brand New?
The bank is trying to decide what to do with the property while it remains in an incomplete state for some time, sometimes for a very long time. And this…interruption…in the construction cycle can be the cause of significant issues that could manifest themselves at a later time. Any potential buyer should understand these types of issues.
Why would there be problems?
You say the home looks great. The carpet is brand new, the appliances are new, and there has been some landscaping. From a cosmetic standpoint, the home looks great. How would you know if the house wasn’t finished in time? Sometimes, home inspector in Raleigh NC, I discover issues during a Home Inspection. These properties are often in distress or have been foreclosed. We are increasingly being hired by banks. We have been asked by banks to provide them with a perspective on the condition of the house, as well as details about the process to finish the construction and market the property for sale. Sometimes, the bank works directly with a General Contractor for the completion of the construction. Sometimes, the property is sold as-is to another builder, who completes the construction.
However, it is possible to suffer serious consequences if a home has been abandoned after it was built. The extent of potential ramifications depends on the stage at which the home was completed when it was taken down. A house that has been left exposed to the elements for a prolonged period of time after it has been framed poses the greatest risk. A house is usually framed, which is the construction of the basic wall, floor and roof structure. The exterior walls are then covered with house-wrap material, while the roof is protected by asphalt-impregnated roof paper. The wood framing members can bow and warp if the house is left open without being dried in. This could lead to a variety of problems later. Metal components that are not normally exposed to the elements can rust quickly. The house can be weather-tight after it has been dried in, but the roof will remain protected during installation of the final roof covering (shingles, metal or other). Finish wall cladding (siding or brick veneer) is also required. These types of materials are not meant to be exposed to the elements for extended periods of time. They typically have a useful life span of 30 to 90 days. If left unprotected, they will quickly deteriorate due to exposure to wind, rain and snow. The effects of a house that has been left in a dry-in state for a prolonged period will be similar to if it was not dried in.
We often find that the equipment installed, such as heating and air conditioning systems, is older than their age. The age of installed equipment, such as heating and air conditioning systems, is often not proportional to the home’s age. Sometimes, the equipment is older than the home. In some cases, it can be as much as 2 to 3 years. Although the equipment may have been properly installed and functioning as intended, it is not new and has already started its journey to failure. You would expect new equipment to be delivered with a new home.
What can a home buyer do to make sure they are fully informed about the history and finishes of their home? These are some things you can include in your due diligence plan to help reduce your risk.
- Ask the seller/builder specific questions. Ask when the building permit was issued by the Authority Having Jurisdiction. Ask when the Certificate of Occupancy was issued. Ask if the builder was involved in the construction. Builders are well aware of the importance of complete disclosure. They also understand the legal implications of not disclosing information about their final product. But it doesn’t hurt to ask, and you can expect straight-forward answers.
- To ensure that they can service your home during the warranty period, you should determine the financial situation of the builder. Ask the builder for written warranty details. It is important to ensure that you are able and willing to provide standard and customized customer service, as well any contractually required, after the sale.
- A professional, qualified agent can represent you. They are well-trained to help you do your research and understand the process. Numerous professional agents have advanced designations, e.g. The GREEN designation of National Association of Realtors (NAR), and the Certified New Home Sales Professional designation of National Association of Home Builders. These advanced designations show that Realtors are more knowledgeable about construction and new homes.
