How to sell a house during preconstruction

[Sarah Lorenz]

We are planning to move into new construction soon (my husband has a builder’s license), and as opposed to building a spec house and waiting until it is finished to sell, I have heard that some builders/investors will market the house prior to construction, get a purchase agreement, and then have the client fund the project. We would own the property. I’m looking for any advice from others who have done this. I suspect it may be difficult to get a bank to fund a construction loan with a builder who does not have a long track record. I’m also wondering what might be a typical down payment with a purchase agreement, and any other advice anyone can offer.

[Greg Dickerson]

Hi Sarah,

I have built hundreds of spec homes and i never list until it's almost complete. If you sell too early it becomes a custom home situation and can really slow down the process and if the buyer doesn't close you can be left holding the property for a while. If your husband has never built a house ground up you definitely do not want to end up in a custom situation. 

As for lenders some banks will lend on the first one if not you can hire a GC to be the contractor of record and the GC can coach you and your husband through your first project. I highly recommend hiring a GC to help you on the first one.