RISMEDIA, January 14, 2010—(MCT)—First came foreclosures, then short sales. Now we are seeing more half-finished homes for sale: bare-stud, bare-yard houses abandoned by their builders and left to languish on the market.
Purchasing a partially-built home is nothing new; during the housing boom, many new-home contracts were signed before even a slab had been poured. The difference now is that the builder might no longer be around to finish the job, particularly if it’s a house started by a custom builder who subsequently lost clients, financing, or its entire business.
“If I had known three years ago that my business would be based on selling short sales, foreclosures and half-built houses, I would not have believed you,” said Kelly Price, a veteran real estate broker based in Winter Park, Fla. She is trying to sell three partly-built houses for banks that took possession of them from a builder or owner in financial trouble.
Officials in Orange County, Fla., say they aren’t sure how many partly built homes are in such limbo because in March 2009, they gave builders a one-year extension on their building permits. Also, builders often deliberately delay work on new homes, putting off completion until the new year for tax purposes.
Nationally, the percentage of incomplete houses among new homes listed for sale rose this year from 39% in January to 43% as of October, according to the U.S. census. Though those numbers included homes under contract and still under construction, they also included unfinished homes abandoned by builders and placed on the market by banks.
One of the houses listed by Kelly Price & Co. is about a half-mile past the guarded gates of Lake Nona Country Club, in southeast Orlando. The ivory-colored, Tuscan-style fortress looks as though its subcontractors left for lunch one day and never returned. Near the entry, a worker’s face mask dangles from a nail at the entrance to what was to be the underground wine cellar. Light shines through designer windows onto bare plyboard floors. The master suite—complete with the framework for a two-story closet—is bare except for a drafting table. And the table is bare, too, because the blueprints recently disappeared from the former work site. The custom-built kitchen and bathroom cabinets are stored in a Seminole County warehouse to ensure they don’t disappear as well.
In the center of the property’s residential compound is a concrete hole—the beginnings of a courtyard pool that was to feature a hot tub and concrete bridge. Most of the walls around the pool are painted ivory, but some still have a raw, stucco finish. Piles of clay-colored, barrel-roof tiles are stacked behind the guest house, which overlooks the golf course and a retention pond. A weathered wooden worktable still sits on the guest-house patio. Throughout the property, hand-hewn doors, beams and banisters, some with elaborate carvings of lizards on them, hint at the architect’s uncompleted vision.
“I’ve never seen anything like this,” said Price, a certified distressed-property expert. “It’s kind of like finish your own castle. You have to bring your own vision.”
Price has had the property listed for months at $1.3 million, or $118 a square foot. Though it’s difficult to find a comparable sale to assess the partially-built home’s value, the five closest sales in Lake Nona Country Club during the past year fetched $311 to $758 a square foot. Price said she has presented all offers from prospective buyers to the bank that owns the house, but so far it hasn’t accepted any of them. Such sales can take time, she noted. Kelly Price & Co. has a similar house listed for sale in Winter Park for $1.7 million, and it has been on the market through various real estate companies for years.
Many more small, custom-home builders have had to walk away from projects than have large, production-home builders, said Jim Lewis, president of Charles Wayne Consulting in Maitland. Still, several sizable homebuilding companies with financial problems have left clusters of partially-built houses across Central Florida since the bursting of the housing bubble. In some cases, other builders have stepped in to complete the work on those homes. Lewis noted that prospective home buyers should take some precautions when considering the purchase of a half-built home.
“The new owner is certainly buying a lot of unknowns and would have to get someone in there—a construction type—and see what remains to be completed and, in some cases, to repair the damage that has been done because the house has not been completed,” Lewis said. Such houses typically aren’t heated or cooled, so if they are carpeted, they could have mold problems. If roof shingles are not all in place, the structure may have some wood rot.
Buying an incomplete construction project is not for everyone, Price said. Buyers who haven’t had a house built for them before may be leery of such an undertaking, and out-of-town buyers may conclude they don’t have the right kind of local contacts to get the work finished correctly.
Price said she wasn’t sure about the kinds of liens on file against the Lake Nona home, but she noted that any buyer would have to pay them or negotiate with the bank. She advised buyers to fully explore a property’s title before purchasing an incomplete house—and be doubly cautious about liens involving the Internal Revenue Service, because those can be difficult to clear. Looking beyond the complications, though, Price said “shell” homes can be a bargain. “I just want people to know that there are opportunities out there,” she said.
(c) 2009, The Orlando Sentinel (Fla.).
Distributed by McClatchy-Tribune Information Services.