Posted by BillW on November 27, 2001 at 18:50:32:
Gerald,
Here are a few things to think about if you’re doing this:
PROS:
- You get to select the lot you want.
- Sometimes, they will sell the beginning of a project at low prices to attract customers.
- If there is a HIGH demand, the price will go up before you take delivery. (This will depend on where you are and local market conditions.) ((Lots of good stories on this one.))
- If you can wait until the end of the project, the builder MIGHT sell the last few at a discount to clear inventory. (Won’t work in a strong market.)
CONS:
- Builder might go broke and never finish the subdivision. Seen it, lotsa times.
- In a weak or flat market, prices won’t go up at all.
- If it’s a big subdivision, or one in multiple phases, you won’t be able to resell until it’s done, unless you take a loss. The builder will have plenty of brand new houses available for your potential customers at a lower price than yours.
- If there are lots of other subdivisions around, sales prices may be flat if you’re not in a strong market.
TO SUM IT UP:
- Only buy if there is a STRONG market, unless you plan to live there for years.
- Check out the builder VERY carefully. Make sure they have a reputation for completing their subdivision projects, not only on time, but without problems. Look at the larger builders, like Pulte, Kaufman & Broad, Lennar, and so on, depending on where you live. Beware of small time, foreign builders with big flashy cars. When they rip you off, they are real hard to find. (For a look at how this happens, look up articles in the Milwaukee Journal about the Shah fiasco in Oak Creek, Wisconsin in the last year or two.)
*Try to be in early or late, depending on your needs.
Without knowing where you are or what specifically you’re trying to accomplish, that’s about all I can think of at the moment.
Good luck to you,
BillW.