Q: We’ve been looking at a new townhouse development for almost a year. Now the bank owns the development with the remaining unsold units. We keep going back, so I think my wife really likes it.
What do I need to know about this kind of property and what resources are there to help us be prepared home buyers if we decide to buy? How flexible is the lender in this situation?
The community we’re interested in is new community and not fully developed yet.
A: Whether you are a first time home buyer or not you need to ask quite a number of questions before buying a home in a new development these days. Here are some new home buying tips you should think about.
The questions you need to answer centers on what the new home property’s actual value is, whether the appraiser can prove their value to a lender and whether the new development that currently exists is sufficiently developed for you to move into that townhouse.
The biggest issue to consider is what these townhomes are worth. Have any other townhomes sold in the new development? How recently have any of the homes sold? Can you establish value with other townhomes in that development with similar developments nearby?
If the property won’t appraise out in value, you won’t be able to buy the home in that new development. If the new developments is so new and not yet fully developed, you’re taking a big risk. I’d find out a lot more about the value of the property (and what values homes there are appraising for these days) before making an offer.
You also run the risk that buying a new home in a new development that has not been completed might never get fully built or developed or it may take many years to come before the development is completed. Are you willing to buy a new home in a new development and live there when it is only partially finished and it may take five or ten years before it truly feels like a built up community? Will you be able to sell to someone else if nothing more is done to the development?
Buying in a partially completed development even if the new home is in a new development has inherent risks and you could regret having made the purchase unless you understand those risks and know what you are getting into.
Especially if you are a first time home buyer, make sure you find a real estate agent to assist you who has worked regularly in this area and with property of this size and price during the last 5 to 10 years.