Q&A: Is buying a shell of a new home a bargain?
Plainview NY. Thursday June 5 2008. Exterior view of single-family home for New Construction Column. 60 Floral Drive West. Newsday Photo Alan Raia Credit: NEWSDAY / ALAN RAIA/Newsday / Alan Raia
Q: For the past year, I have been looking at a home in my neighborhood that went into foreclosure. It is now being sold by the bank. I have seen the property, and its current condition is just a framed-out shell. But my family and I immediately fell in love with it. It was new construction, and the builders ran out of money to complete the work. Is this a good idea?
A: While the price seems cheap, it's only a deal if it is the right home for you at the right price, on the right terms and at the right time for you.
Here are a couple of things you should consider. First of all, what it will cost to finish the home? That includes whatever framing, roofing, plumbing and electrical work that remains to be done, as well as finishes to the home. You may think the price for the land and the current framing is a good deal, but you may find that the cost to finish the home will break your budget.
Secondly, if you do find the time, labor and money to finish the home, will you be able to afford to live in and maintain the home? People often find a "bargain" in real estate but forget to consider the costs that come with a large home, including higher utility, maintenance and insurance costs, and larger property tax bills.
You should make sure that you don't overextend yourself in this project. You need to make sure you've considered all of your options and obligations for the years to come.
If, after considering all that, you still want to press ahead, I'd spend some time chatting with lenders who can help you figure out if there's a way you can make this work out. More importantly, be sure to work with the lender to figure out whether owning this home will fit your long-term financial obligations and budget.
If you find that owning the home meets your long term financial goals then you'll want to talk to some local banks in your area that keep loans in their portfolios and that may be willing to give you a loan.
Ilyce R. Glink's latest book is "Buy, Close, Move In!" Distrobuted by Tribune Media Services.
Need some real estate advice? E-mail your questions to realestate@newsday.com.
