In some parts of Sydney, builders are selling unfinished homes so buyers can complete it to their taste.
Anna Porter, Suburbanite Director, Property Commentator and Valuer warns buyers need to beware as new owners will still need to spend a fair bit of coin to finish the project.
The new trend has been perceived as a win-win as it is meeting rampant demand and still giving builders a hefty profit for unfinished works.
But buyers need to be warned about this trend, as they can get themselves in to trouble with a number of things.
Porter shares it can be difficult to get a bank valuation of unfinished works if they are getting finance.
“The valuation may be lower than what they paid or the lender many not actually lend on half a house,” she warns.
“It’s very common in rampant times to have a valuation come in lower than the sale price, and that’s usually with complete housing stock, let alone a construction site,”
“There’s also the issue of insurances. Buyer’s need to be sure the warranties and insurances come with the house and that they can still get cover while the project is under construction.”
Porter also warns on the quality of works.
“If history has told us anything it’s that Sydney has their fair share of dodgy builders,” shares Porter.
“You wouldn’t want to continue to build the home only to find out half way through that the structure was all wrong or there was defects in the foundation,”
“It’s more important than ever to have a private building inspector assess the works before you commit to the purchase.”
There is also no secret that building costs have increased as much as 35% in some areas recently.
“With material shortages an unpopular issue across the industry, the price of building has skyrocketed in recent times,” says Porter.
“You must budget to finish off the project properly and ensure you don’t leave yourself short.”
Anna reflects on a recent building site sale in Annandale which sold for $4.6 million.
She shares that even with its luxury home DA approval, the cost of completing the home which was bought with no roof, bare beams and mounds of rubble could cost up to another $1 million.