Selling a New Home Pre-Construction

[Joshua Stewart]

Hi Developers, I have my eyes on three adjoining lots. There are several examples in the city where an investor bought a lot, had the custom design completed, and then marketed/sold at the "completed" price point - but construction did not begin until the sale.

So for instance from one real example, the lot was bought for $875k and the final sale price to the end homeowner was $3.75 million. The homeowner pays for the construction rather than the developer.

It almost seems too good to be true, but doesn't seem to be rare.

Has anyone had success - or lack of success - following this method? Is it possible/legal to market this while still being in the due diligence period before closing on the sale? A form of quasi-wholesaling.

Thanks in advance for all the continued wisdom and insight from all of you!

[Greg Dickerson]

@Joshua Stewart yes this is done everyday all over the country by national, regional and local builders. It is called proposed construction or some even call them air houses. You need to own or control the lot or get approval from the owner to market a lot and house package especially if it's going to be listed in the MLS. Unless you are a builder or realtor you can't really monetize this strategy as the house needs to be built so the 3.75 million you referenced sounds like a big money maker but the house probably cost 2.5 million or more to build and likely took more than a year. If you can negotiate a really good price on the lot you may be able to assign the lot contract to a builder but chances are slim you will be able to do anything with these deals.