Over the last two years, we have seen several Spring Texas home builders including Kimball Hill Homes, David Powers, Royce Homes, and Newmark Homes go out of business.
Did the builders inefficiently manage their inventory and that was the cause of their demise? Or was the drying up of the credit markets the cause? Who knows what the exact cause was but I suspect it was a combination of inefficient inventory management and the tightening of the credit markets.
The demise of the builders has created a new type of foreclosure homes, a brand new, never been lived in foreclosure. This is a far cry from the typical foreclosure home on the Spring Texas real estate market which needs paint, carpet, yard care and some tender loving care.
So buying a new construction foreclosed home sounds like it may be the best of both worlds. You get a brand new home not needing any repairs and hopefully at a discounted foreclosure price.
But before you get too excited, let me explain what the main difference is between buying a new construction home from the builder and buying a new construction home from the bank. The main difference is the warranty coverage provided.
A builder will provide a 1 year or 2 year so called “bumper to bumper” warranty and a 10 year structural warranty. A bank will provide NO warranty. Now, you probably will be able to get the bank to agree to pay for a 1 year home warranty but the coverage is significantly less than the coverage provided by the builder since it does not cover structural items and although nominal there is a charge for all service calls.
So is buying a new construction foreclosure home instead of a new construction home from the builder for you? It all depends upon the level of risk you are willing to assume. If the final sales price is below market value, then yes it may be worth the additional risk and cost you will be assuming from an inferior warranty.
The photo to the top right is a partially completed David Powers home in the Lakes of Cypress Forest subdivision that is now bank owned.
Jesse and Shanna Perez
We have had the privilege to work with the amazing Jill Wente twice in the past 4... read moreJesse and Shanna Perez
We have had the privilege to work with the amazing Jill Wente twice in the past 4 years. If you want to work with someone who is very knowledgeable in the realty business and beyond that, look no further. From day one she was ready to help us and answer any questions that we had. You can see her passion and professionalism as soon as you meet her. Everything is perfect, from the photos to the staging of our home and even the fliers that she had made showcasing our home is perfect. She goes above and beyond. So if you want your house to get sold and want it done right, I'd recommend Jill Wente everytime. Anyone can put a house on the market, few can get it sold earlier than expected. She had a contract on both of our homes we sold within days of being on the market. Thank you Jill for being the best at what you do. read less