Buying a home is enough of a stress without worrying about whether your builder is being upfront, but-especially in this market-builders may have incentive to keep things from you.
During the recession, a lot of builders have gone bankrupt. Remember, if the developer goes belly-up before the development is sold out, you run the risk that the bank will sell a portion of the development to a developer who will put up less expensive homes, cutting your future appreciation and perhaps depreciating your property from the price you paid.
Here are five things your builder may be hesitant to disclose:
- If I don't sell to you, I might run out of cash. The developer might promise you an amazing deal. But what he won't tell you is the company is short on funds to get the project completed. If the developer has to carry the property for two extra years before selling it, his profit might evaporate. That makes the developer desperate to offer you a great deal (good for you now), but they might have been skimping on everything else (bad for you down the line).
- You may have trouble financing your property. Before you make your offer, ask to meet with the head of the homeowner's association. You don't want to buy in a community where homeowners are already behind in paying dues, or you may have trouble financing your property.
- You future neighbors can tell you whether I'm good at building homes. One of the best ways to find out is a developer's homes stand the test of time is to chat with people who live in houses he has already completed.
- It's easy to spend more than you should on options and extras. You don't want to spend so much you wind up owning the most expensive and upgraded house on the block. Figure out what your budget is ahead of time, and then choose the options that will ass the most value long term.
- Your property may not appraise out. Before you sign the application to purchase the property, count the foreclosures in the subdivision. If there are more than a few, they could drag down the true value of your home so that it is worth less than what you're prepared to pay for it.