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Buying half-constructed house

17 years ago

As one of our possible choices we are looking at a house that is about 70% complete - it has second floor mostly done, maybe some re-painting needed, one bath to complete installation of shower and some tile work. First floor only in frame with electric wiring and not completed duct work. Peopel live in this house..... I spoke with the owner-builder. He said that second floor passed all inspections except the finals. Fisrt floor did not pass inspections for frame and rough ins for mechanical, electrical, plumbing. When I called Fairfax county (VA) they said that according to their recostrd the only thing left on this house is to pass finals. At the same time when I do record search on this house, it shows as a residence renovated in 2008.

I am lost. The deal seems to be reallly good - this is short sale and our contract is winning. The price is what I would pay in this area for just piece of land with a small dwelling worth demolition. I would say that this house would probably require $50K to complete, I allow for accidents and other unexpoaected stuff... so let's say $100K to compelte.

But I need to udnerstand what i am buying and whetehr it is something funky or it is just a good deal? What do I need to look for?

My plan is to go talk to the owner, request all insepctions, permits, and blueprints, request architects info and all contarctors info. Then go to Fairfax county, meet with the inspector and ask him to explain the status of this house. Maybe get with a lawyer??

Any suggestions and "watch for" ideas would be GREATLY appreciated!

Comments (11)

  • 17 years ago

    I think my concern would be over the things that you cant see. The foundation work and whatever electrical, plumbing and insulation has been covered by sheet rock. Foofing, window flashing, foundation drainage, etc. Beyond that I would probably hire a plumber, electrician, etc to inspect the house and give me an idea whether it was built properly and an estimate of what it would cost to finish. I would not trust that job to a home inspector or muni bldg inspector.

    I also dont think an attorney is going to be of much use under the circumstances. If these people are living in an unfinished house and selling it short ... it's not likely that they have deep enough pockets to be able to pay any judgements that you got against them. Might be a great deal at the right price, but you are taking a risk. Good luck.

  • 17 years ago

    O/B usually take a LOT of pictures while building. Ask to see those pictures. How in the world did they get a CO to move in???

  • 17 years ago

    OP here. I would ask about the pictures and i do have 3 people names (electrical, plumber and mech) to go and take a look at it. We also had a friend -GC, he checked the house on the uality - he said "the builder was building like for himslef, pretty good m,aterials and quaility of work - very even floors, very seemless joints, reveals around the doors are perfect, etc). I do not think they have CO, it is very strange how they filed for this house to be permitted - when I call county, they say it is all done except finil inspections. When I talk to the owner, he said that only secodn floor was done up to finals, and first floor needs framing and rough ins. When I look at the docs on the fairfax county website, it does not state "new house" or something like that, it more refers to the building as "addition" and the year of the house is still considered 1954.
    Can someone get inspections by floor?
    Can you build somehow that you leave a piece of foundation of the old house and a piece of wall of the old house and consider ENTIRE house as addition?
    Is that true that I will have to complete the hosue with the prior electrical/plumber/mechanical vendors if they started the house? I was told that if I change the electrician in the middle of the project I will ahve to pay second round of permit fees?

    I am going to get all copies of all inspections and docs and blueprints. We are not in rush to accept the contract, but we do want to do our due diligence, maybe it is a deal, maybe somehting to run away.
    Any help and suggetsions would be MUCH appreciated

  • 17 years ago

    OP here. I would ask about the pictures and i do have 3 people names (electrical, plumber and mech) to go and take a look at it. We also had a friend -GC, he checked the house on the uality - he said "the builder was building like for himslef, pretty good m,aterials and quaility of work - very even floors, very seemless joints, reveals around the doors are perfect, etc). I do not think they have CO, it is very strange how they filed for this house to be permitted - when I call county, they say it is all done except finil inspections. When I talk to the owner, he said that only secodn floor was done up to finals, and first floor needs framing and rough ins. When I look at the docs on the fairfax county website, it does not state "new house" or something like that, it more refers to the building as "addition" and the year of the house is still considered 1954.
    Can someone get inspections by floor?
    Can you build somehow that you leave a piece of foundation of the old house and a piece of wall of the old house and consider ENTIRE house as addition?
    Is that true that I will have to complete the hosue with the prior electrical/plumber/mechanical vendors if they started the house? I was told that if I change the electrician in the middle of the project I will ahve to pay second round of permit fees?

    I am going to get all copies of all inspections and docs and blueprints. We are not in rush to accept the contract, but we do want to do our due diligence, maybe it is a deal, maybe somehting to run away.
    Any help and suggetsions would be MUCH appreciated

  • 17 years ago

    RUN. Waaaayyy too much of a quagmire to immerse yourself into.

  • 17 years ago

    live wire oak, do you think it will take MORE money to finish this house (we really loved the layout) vs demilition and building a new one from scratch? The sale price int he area we are looking at is exaclty the same between buying a lot with a small dwelling to demolish vs this half-constructd home.

  • 17 years ago

    in reality, if the house is as cheap as you say, what is your concern? If you put 100 into it and found out it needed another 25, would that make the house unaffordable? Builders generally don't do their best work on homes they live in and they are always for sale. Get a good home inspection and move forward. There are no guarantees in real estate and at least with a half done house you can see basic structure, with a finished home you cannot.

    Good luck

  • 17 years ago

    I'm sort of thinking the same as bellamay, not the opinion re quality, but about seeing what you are getting...

    Depending on the exact location, and how much you are paying for the "as is", it sounds as though you could finish it and if desired, re-sell for a rather nice profit. IMO, the as-is price really sounds better than fair [cost-of-land], since most people won't touch partially completed -- for all the reasons listed above. Go to the courthouse to get details on assessments of this and houses in the immediate neighborhood. Careful regarding "immediate", that often does not mean across-the-street if the street is divided highway. Also check the 10-year plan (roads are being widened everywhere and Fairfax does practice right-of-domain, and ask the clerks for ideas about where else to look in order to guess at what the neighborhood will be like in 5 years.

    If you can buy and finish this place, and end up with a total cost that is about 20% below market value of neighboring houses -- and you're willing to deal with the headaches of finishing a build-- I'd say GO FOR IT!

    I would consult a lawyer regarding prior contracts and liens on the house... and NOT buy anything that wasn't completely clear and free. And then talk to your insurance agent about coverage in case any of the prior contractors try to dun you anyway.

    Re Fairfax's stance on re-modelling... on 2nd thought I won't give an opinion... but I will tell about a house in Fairfax County which had a large 2-story addition put onto one end; and within a year, a large 2-story structure adjoined the other stucture, replacing the original ranch-style building. Not even the foundation was left of the ranch-style (I watched the demolition). Yep, considered a remodel and another remodel. Also considered that the value went from about $350K to $6.5K. That's a true-life example, but you yourself should not expect better than just average neighborhood value, and obtain that value at no more than 80% expenditure.

  • 17 years ago

    codes are for legal minimum safety.
    you may want another set of eyes to trouble
    shoot and point out areas that may cause problems.
    reviewing the hvac equipment choices layout and install
    would also be a good idea.
    if you proceed with purchasing the home it would be
    a good time to work on the efficiency of the home
    to achieve a healthy affordable home.
    best of luck..and be careful.

  • 17 years ago

    Hire a structural engineer to review the house, not an inspector...

  • 17 years ago

    Everyone seems to have good advice.

    Just another comment, houses in that condition sometimes are unmortgagable in current state at least in a true conventional mortage sense. Maybe the bank would finance these as a construction loan or a land purchase.

    In my area, something like that would be cash or "other" financing as it doesn't have a kitchen, or a CO. Generally wiwth the knock downs you could get a regular mortgage as it may be old and falling apart, but still has the elements that make it a house.

    RE agent/flipper bought a house in my area like that, electrician started a remodel, ran out of cash, and couldn't pay the mortgage, was forced to sell. there was no functional kitchen, was down to the studs, had only partially working electric and plumbing. The flipper bought for less than the cost of land in the area as he could pay cash, and getting a mortage on that was not possible.