New Construction on a Bad Lot Could Lead to Foreclosure

Real Estate Agent with Keller Williams Realty Louisville East (502) 664-7827

Many sellers wonder why their house isn’t selling even though their neighbor’s houses sell for more money and faster. These houses often have inferior lots.

  • Postage stamp size lots surrounded by larger lots.
  • Unusable or dangerous sloping backyards.
  • Houses that back up to massive buzzing electrical transformers, that didn’t exist when the neighborhood was under development.
  • Driveways that are nearly impossible to navigate.
  • Lots that excessively retain water.
  • Houses that have virtually no road frontage, compared to neighbors who have ample road frontage.
  • Houses that have dismal views compared to their neighbors who have spectacular views.
  • Houses on narrow and winding streets that the waste management trucks refuse to enter, causing the owners to trek hundreds of yards with full garbage cans to the garbage pickup area.
  • Houses with such a steep climb to the front door that families with children or elderly buyers would never be interested in purchasing.

I witness these problems all the time

Buying A House Before It Was Built

Many of the sellers selected the house and the lot on paper. The houses weren’t built yet, or the neighboring houses weren’t built yet. By the time the house was built and the buyer realized what they had and where, it was too late.

Oh No! Surprise, Surprise!

I’ve been in sellers’ homes where they said they didn’t realize how small and unusable their lot was until the neighboring houses sprung up around them.

The list could go on here, but surely the Realtors and end-consumers reading this can add their own horror stories.

Appraisals Often Don't Reflect How An Inferior Lot Diminishes The Value Of The Home

No matter what the house appraised for when the buyers financed the home, when the house gets resold the new buyers will have a clear ideas of the deficiencies. The difference in value could be the difference between reselling the house and clearing the mortgage, or being unable to sell the house and being “upside down” or “underwater.” This situation could often lead to foreclosure or a short sale.

The lesson before buying new construction: Work with a reliable Realtor who can see the future of the developed lot.

The lesson after being stuck with an “unsellable” house that is worth less the mortgage amount: Work with a Realtor who specializes in short sales. In a short sale, the lender lets the house sell for true market value even if market value is SHORT of what is owed. In an ideal short sale, the lender forgives the difference.

Here are some photos of the backyard of a house that I successfully sold as short sale. Dozens of buyers turned down the house because the backyard was unusable, dangerous, and no ability for kids to play. One buyer even noted that they couldn’t even imagine having a pet dog with that backyard. Notice the built-in tripping hazards embedded in the concrete retaining blocks.


Posted by



Dave Halpern, Realtor

The Dave Halpern Real Estate Group

Keller Williams Realty Louisville East


(502) 664-7827



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Comments (3)

Barbara Le Pine
ADVANTAGE REAL ESTATE, serving Lincoln County - Newport, OR
Your agent for the Central Oregon Coast!

Dave, this was a well written and interesting post, I see houses like this and wonder if anyone was paying attention to the slope of the lot when designing the yards and retaining wall.This type of problem makes the older houses more attractive, they knew how to make a neighborhood livable.

May 23, 2011 05:04 PM
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker


Very good points. Many consumers will only buy new from builders and keep moving farther and farther out, until the commute is unbearable.


May 24, 2011 12:58 AM
Michelle Gibson
Hansen Real Estate Group Inc. - Wellington, FL

Dave - Location, location, location!  I always tell my clients you can't change the lot, but you can change the paint.

May 24, 2011 08:32 AM