This is meant to explain the type of builder who is trying to keep busy by tying his project up early. This applies more in a market that is not as hot like now. So, some smaller to medium sized builders struggle because of an inability to find a lot (let alone afford the price). It would be my attempt in knowing some of these smaller reputable builders, to refer to you.
Now, this has been my level of interest as a realtor- in foreseeing an ability to hook up buyers with greater value. And this is what I believe to be a plain fact, that while most buyers may not be able to 'believe' until they can see it, it is nonetheless often the greatest return on the buyers money to seize the pricing on a house when it is in its infancy, rather than in its winding up phase (when the carpet is going in).
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The builders “experience” is not one of completion, like the sense of completion that the buyer feels when the house is done. The builder does not have time, but is rather interested in securing his next project or he will be forced by stagnation, out of business. But this is the dilemma he faces, that of being a part-timer instead of a full-timer. So, he faces a dilemma, and that is- missed opportunity.
In getting it sold later on along the way, he risks a new home that does not sell fast enough, which could leave him in a financial struggle (the interest and monthly payments are "killing" him). He could avoid this if he had it sold earlier in the process. He would then be able to make his money work for him in tying up that next piece of rare land and building on it. For him, it might be weighing the number of homes he can go through by yoking his subs, against the gain made from higher prices on a lesser number of homes. Even in a hot market, he still faces opportunity cost with lost production, when a house is not liquid or sold, enabling a new project to begin.
Does the average home owner see the bigger piece in all this? And that bigger piece is this. What will happen if his production stops? Those sub relationships will suffer or they will go somewhere where it is more steady and reliable. Worse yet, you get stuck with subs that are OK with part time work; these are usually not doing the quality work. In other words, the whole profession relies on continual work. The reality is that most builders can not string themselves across more than two projects intersecting from the time one ends to the other one beginning. Therefore, the builder who is thinking and planning ahead will try to have the project sold as early as he can before it is completed. The builder is often trying to be the marketer and builder. A third party or the MLS and realtors often get involved to keep the stream of cash transaction flowing, so the builder can keep busy. I am merely proposing, either through the MLS or through internet placement at reduced intermediary fees to be the go-between in representing and coordinating both the language the builder uses with the language of a buyer, what he/she/they like and prefer.
What the Buyer would need to know in order to participate in the picture is this: Will that builder be giving me a lower price should I buy early?
Generally speaking, you will get a price based on current market value and a little better deal as the incentive. But here is the other benefit to the buyer. Generally speaking real estate values are going up. So, if the house takes 6 months to complete, any appreciation that comes as a result over the time, gets transferred when the construction loan is rolled into the new conventional loan. An appraisal is done on the finished product and any added value goes to the Buyer, not the builder. Whether the appraisal is par with the current selling market or not, still leaves the Buyer holding that equity, should they sell that home. Not only has the house appreciated in value, by the time it is finished, it would still be expected to appreciate better than a resale older home.
What has happened in the market is that the builder has been used to his home selling and being able to move onto the next one. Now, that is not happening now, so the builder is forced to see how going through less homes can doubly impact his business. Yet, we still have a bit of greed or stubbornness or mere survival instincts on the part of builders to hang onto the higher priced home to offset the less number of homes gone though. A compromise can be reached by getting homes pre-sold, letting go of the greed piece, giving the buyer better chances at securing a new home for less, and ultimately freeing the builder up to be put back to work and ultimately make more than if he hadn't built as many homes with the help of his subs. Now, does that make sense to buyer and builder alike?
But it is a win for the builder because he's going onto his next project, knowing full well he has subs that can produce and that he will have an income coming in and a pay check at his next completion. This is called peace of mind for the builder AND this is called a piece of the pie for the buyer.
And so I am getting to the question I wanted to ask you. Would you be interested in getting involved with new construction if you knew that your realtor was invested in protecting and helping you get the best bang for your buck? Call the number below if you are. Sometimes I will even have the better bulding lots that the builder and I have painstakingly found at the lower prices in order to build within the necessary arrangements, permissions and go ahead from YOU... the Buyer.
Also see our: New Homes in St George Utah for other related education on...