Purchasing new house in new neighborhood. Risky?

Asked by Jack, 30047 Sun Mar 16, 2008

Ive been looking at purchasing a new house in a new neighborhood. I have been told of horror stories such as the builder cannot sell all the houses, ends up leaving it as a ghostown. Ive also heard things like a new developer might come in and buy the land and start building townhouses within the same neighborhood, therefore decreasing the value of the house.

Are there certain things i can look for in a NEW neighborhood that will help me avoid situations like this?

Im particularly interested in Westchester Place in snellville. seems like many lots are 'under contract' but im starting to wonder if that could be a 'scam' and to trick people in thinking the neighborhood is actually selling.

i just have a lot on my mind and dont want to make a huge mistake on purchasing a new home in a new neighborhood.

i would love to hear all suggestions and comments!

thanks in advance.

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Sarah Propes, Agent, Snellville, GA
Sun Mar 16, 2008
Out of curiosity I checked on FMLS for Westchester Place and found that the builder has only two homes listed in MLS. You had mentioned that there were several lots under contract, and those will not show in our system. If you are not in a hurry to buy I would take inventory of what you see and check again in another 30 days to see how it has progressed. It would be unethical and unlikely that a builer would put up "under contract" signs without a contract. The question is when they are going to start building.
I am familar with this area and would not be concerned of it not being "built out". There is demand in this part of town and Snellville has seen very little new construction compared to it's neighboring towns of Loganville and Grayson.
I must suggest since you are looking at new construction to be sure to work with a Realtor to represent your best interest. The agent will also be able to give you some more detailed information about the statistics of new homes in that area and how they are selling.
Best of Luck to You!
Web Reference:  http://www.sarahpropes.com
0 votes
Lee Adkins, Agent, Roswell, GA
Mon Mar 17, 2008
Jack -
New construction properties are not generally listed in FMLS. As the others mentioned, they will list one or two as "examples," but then have others on hand. Since they are not listed, they will not show up as pending or sold in FMLS.

Buying new construction is a bit of different ball game. The onsite agents are very nice and seem to give you "fact like," information, but ultimately they are representing the builder. From your description, it sounds like building hasn't begun yet. Yet another "buyer beware."

Also, you may want to find out if they are building different phases. While it CAN be cheaper to buy a lot pre-sale, you might want to wait until some are built and buy pre-sale in the second phase if that's a possibility.

A new home purchase can be a complex transaction and you would be well advised to use a buyer's agent to help you navigate the process. You should absolutely have an inspection done once the property is complete - AND leave yourself a window in the contract to negotiate any repairs. Check on what warranties are offered, if they are transferrable if you sell, etc. etc. - too many other things to mention.

Another thing to be cautious with is using their financing - while they can offer you great rates, be sure that they are truly comparable to a third-party, reputable lender. They will offer you all kinds of incentives for using their financing - paying closing costs, free upgrades to name a few.

While you could certainly lose money by buying in a neighborhood before it's built, you are more likely to lose money - or be put in a bad place - by just signing on the dotted line with the builder's agent.

I know this sounds like a self-serving answer, but it makes sense to have someone representing you and the builder ends up paying your agent's fee.

Best of luck to you!
Web Reference:  http://www.leeadkins.net
1 vote
William M "M…, Agent, Suwanee, GA
Mon Mar 17, 2008
Good Morning Jack. Like Sarah, I checked to see what FMLS had to say about the community. She is correct that there are only 2 homes listed in FMLS. Homes that are Under Contract will show as Pending Sale, and none are showing so either they are not reporting the sales to FMLS or they are playing games. Another thing for you to think about in the purchase of you home is schools. This community is located in the Shiloh High School cluster. You may do yourself a favor and look on the other side of 78 to be in the Brookwood or Parkview clusters or even go a little bit further out to be in the South Gwinnett or Grayson clusters.

I live in the area and would be happy to assist you with your purchase. Feel free to contact me anytime.
1 vote
Jack, Home Buyer, 30047
Sun Mar 16, 2008
thank you for all the responses!
0 votes
Linda Ginex, Agent, Newport Beach, CA
Sun Mar 16, 2008
Don't know your area but since no one else has answered yet, in short, it is risky. As a Realtor, I myself would really think twice about buying new construction in a declining market seeing as some of the above scenerios are very real and have happened all over the US, including several building sites here on the coast. Sometimes it is better to by in a long standing desirable neighborhood than placing your money on a wildcard. However, if you really love this home and the location and would'nt mind if one of the above scenerios actually took place after you bought, then go for it. But seeing that you already are having some rightfully so major reservations about the whole thing you may have your answer right there. Follow your gut and you will make the right move for you.
0 votes
;, , Riverhead, NY
Sun Mar 16, 2008
Jack, if the builder is large (publicly held) check out their stock (and accompanying recent stories). If they're small, I'd be knocking doors. People that have closed recently will have a hindsight view that may be quite valuable. While many areas will be sustainable, enough may not be, to make it worth the gamble of new construction- if you are intent on new, try to locate a subdivision that is nearing completion (all amenties in, a few houses remaining) instead of one that presents a question mark.
The concerns that you mention are legitimate concerns in this market.
Web Reference:  http://optionsrealty.com
0 votes
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