Q: Dear Steve,
I'm buying a model home from what I think is a reputable builder. What are some of the benefits and risks of this? Also, the company said during negotiations that it needs to use the model for six more months for marketing purposes. In turn, they'll pay our mortgage for that time. But I'm a little worried that if the company goes bankrupt, I'll lose my down payment.
-- M.M.

A: Dear M.M.,
First off, you are buying a used home — not a new one. Even if it was open only 18 months, some areas of model homes endure much more intense use than do most conventionally occupied homes over the same period. Be sure to consider these tips:

1. Insist on wear-and-tear credits
Your model likely saw greater-than-normal use of air-conditioning and heating systems for touring comfort and unusually heavy wear patterns on flooring from hundreds of people who were, unlike most homeowners, always wearing their shoes. So unless you're buying "as-is," you should insist on credits for all wear and tear, and maybe even a repainting or new carpeting.

2. Check the date on the warranty
Make sure the home warranty on those structural and workmanship elements will be effective from the date of purchase, not the date of construction. Moreover, models are sometimes built hastily to jump-start sales in a subdivision, so you should have it inspected in case there are hidden construction defects.

3. Plenty of room to negotiate
Those issues aside, there are many positives to buying a model home. Models are typically larger than average homes and are always equipped with extras such as custom build-ins, better exterior walkways, tasteful landscaping and more expensive carpeting — items already written off by builders as marketing costs. So don't be too awed by all those throw-ins because they have already been written off. There's probably a lot more room for negotiations than you think — especially in this market.

4. Consider renting it to the builder
If you are worried about your down payment and the solvency of the company, I suggest you insist on a purchase-leaseback arrangement in which you buy the home outright now. In this kind of deal, you accept a monthly "rent payment" from the builder for that six months while the builder also pays the interest, insurance, taxes, maintenance and utilities. You may also benefit from the tax advantages of being a "landlord" for that period.

5. Put everything in writing
Make sure you get all this — the financials and (or) refinancing arrangements, agreed-to repairs, what's to remain with the home, closing costs, etc. — in explicit detail on your sales contract before you sign on the dotted lines.

By Steve McLinden, Bankrate.com