Selling Unfinished New Construction Home

Selling an unfinished new construction home can present unique challenges and risks. Here are key things to watch out for to protect yourself and ensure a smooth transaction—whether you're the builder, purchaser, or agent:
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Construction & Permit Considerations
1. Permits & Inspections:

• Ensure all required permits have been pulled and are current.
• Confirm the home has passed all inspections up to its current phase (e.g.,foundation, framing, plumbing rough-in).

2. Zoning & Code Compliance:

• Verify the property complies with local zoning regulations and building codes.
• Ensure there are no violations or stop-work orders.

Financing & Appraisal Issues
3. Financing Limitations:

• Many lenders won’t finance an unfinished home through traditional
• mortgage products.
• Cash buyers or construction-to-permanent loans may be required.

4. Appraisal Complications:

• It can be difficult to appraise the value of an incomplete home.
• Consider getting a construction cost breakdown and list of materials already purchased to assist appraisers.

Legal & Contractual Protections
5. Unfinished Systems and Finishes

• Note unfinished systems (HVAC, plumbing, electrical) and incomplete finishes (drywall, flooring, fixtures).

6. Builder Warranty / No Warranty:

• Be clear whether the home includes any builder warranty or is sold with no warranty.
• If the new owner will be responsible for completing construction, clarify that no performance warranty applies to future work.

7. Liens or Contractor Disputes:

• Check for any mechanic’s liens or unpaid contractor/vendor balances.
• Ensure the title is clear of construction-related encumbrances.

8. Liability

• Make sure the property is “reasonably safe” before allowing potential buyers into the property.
• If concerned that the property is not “reasonably safe”, insist that any person wishing to enter the property despite unfinished state signs a blanket disclosure such as a hold harmless agreement.
• Do not allow persons on the property unless the owner or owner’s agent accompanies and leads the prospective buyer.

In summary, when representing a seller with an unfinished new construction home, it’s critical to approach the listing with diligence and clarity. Ensure all permits and inspections are accounted for, be upfront about what’s completed versus what remains, and educate your seller on financing limitations that may affect buyer eligibility. Address any potential safety concerns before showings and use proper disclosures to protect all parties involved. By setting realistic expectations and staying proactive, you position yourself as a knowledgeable advisor and help ensure a smooth and professional transaction from listing to close.