Buying Unfinished Home Could be Your Answer to Obtaining the American Dream

A Low Cost Alternative for Buying Your First Home

By Mark J. Donovan




When my wife and I first were married we were anxious to buy our first home. However, home prices were going up just about everyday. Houses would go on the market one day, and were gone the next. And in some cases homes just listed would have simultaneous multiple offers. It was also a time when home builders were furiously building and raising the prices just as fast as existing homes for sale. After a month of fruitless searching for a home we could afford, we met a builder who offered to build an unfinished home for us in his new housing development. Initially we were unsure about what he meant.

We wanted a home we could immediately move into and we needed financing. No bank would offer a loan on an unfinished home was our immediate thought.

Nevertheless we decided to listen more to what he had to offer. As we talked, the builder described how he would build us a finished house with the exception of the upstairs. The home’s first floor would have a completely finished kitchen, bedroom, bathroom, and dining room. The upstairs, however, would be left unfinished. The exterior walls would be insulated, but there would be no interior framed walls, plumbing, or electricity. I should clarify, the unfinished upstairs had the rough plumbing for a tub, and the vent stack, and the rough electric feed to power a single light bulb in the upstairs. Otherwise it was unfinished.

The builder went on to explain that the town would give occupancy permits to unfinished homes constructed to this level, and that as long as we had an occupancy permit banks would lend us money. Being a do it yourself guy I became increasingly intrigued. Particular so, when he gave us a price for the home. The home was priced about 35% less than if it was entirely finished. I quickly figured I could finish it for about half of what he would have charged me for a completely finished house. We originally bought this house as just a basic colonial with an unfinished upstairs.

So after sleeping on the idea of buying an unfinished home for a night we decided to take the plunge and buy our first home. Four months later we moved into our new custom built, unfinished home. We were ecstatic the day we moved in. Six months later I finished the upstairs and we moved into our new master bedroom. In addition, the finished upstairs had two other bedrooms and a full bath.

As I had figured, I was able to finish the upstairs for about half the cost of what the builder would have charged me to do it. Albeit, I did everything from framing the walls, doing all of the electric and plumbing (with permits I might add), installing, taping and mudding the drywall, and all the finish carpentry. Yes, it was a lot of work, but it was exciting and well worth it. In the end we sold the home three years later and sold the home for about 25% more than what we paid for it, including the costs of finishing the upstairs.

The concept of buying an unfinished home was such a positive experience that we immediately turned around and bought another unfinished home. The second time, however, I subcontracted out the plumbing and drywall work. Our family was growing and I needed to complete the project quicker.

New Home Construction Bid Sheet

So if you are in the market for a new home and are on a tight budget, or don’t want to have a huge mortgage, consider purchasing an unfinished home. You can save some serious money going this route if you choose to finish the home yourself, or at least a good portion of it. If, however, you elect to subcontract out all the work chances are you won’t save much, if any. Not unless you are a ruthless negotiator and can get the subcontractors to charge you rates as if you’re a general contractor that frequently gives them business.

I will also add that buying an unfinished home and then finishing it on your own takes a lot of time and work. And it is also a bit disruptive to your home. In both my cases there was a door at the top of the stairway that I could close when I was working in the upstairs. This helped to mitigate the amount of dirt and dust on the first floor.

When electing to buy an unfinished home there are a few important items to think about before signing the purchase and sales agreement. First, understand clearly what will be completed in the home-to-be-built.


Second, understand clearly what the total cost of the unfinished home will be and make sure it is included in the P&S. Third, make sure you understand the partial payment schedule, which is typical for every custom home building project. Lastly, make sure your family can comfortably live in the unfinished home until the upstairs is finished. For example, if you have three children and a spouse, living in a one bedroom home will be very tight.

To conclude, buying an unfinished home is a great way to achieve the American dream. It can also be the solution for buying into a larger home, once you’ve finished the upstairs. Lastly, it allows new homeowners to not sacrifice quality over quantity. They can get the upgrades to the first level of the home now, and do the same on the upstairs as they finish it and have more capital to work with.


For help on building a home addition, see HomeAdditionPlus.com’s Home Addition Bid Sheets. Our Home Addition Bid Sheets provide you with the knowledge and information on how to plan a home addition project, and what to look for when hiring contractors. They also include detailed cost breakdown tables and spreadsheets for estimating your own new home addition building costs.

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