When a builder buys finished lots without the guidance of a real estate agent, there will be a great chance for that builder to “take it on the chin.” Builders, who think they know the market without consulting with a seasoned agent, are riding for a fall.
The market is constantly changing. Within the past year, we have seen the buyers’ market from the previous year become an extreme sellers’ market. The market changed again within a few months and more properties seemed to be lingering. The price of those properties had a lot to do with that change.
Sellers saw bidding wars, and they all thought they could recoup some of their lost equity from the market tanking. They recouped some, but when the prices continued to rise, the brakes came on quickly. The market then became a level market, until sellers became wise to this pricing game.
Those who need to sell are pricing properly. The market is now in great need of fresh inventory. Listings in our marketplace are scarce to find. There is one month of listings remaining in our town at this time.
New construction is selling, but only if the builder prices properly. Pricing for the current market is the only way a sale will happen. The problem arises when the builder has paid too much for the land. That factor will be offset by the profit the builder will be losing, whether he believes it or not. The market will dictate the sale price, and the equity in the home will make up for the extra money paid on the front end when the lot was purchased for more than the market did bear.
Builders who do not consult with a real estate agent, well versed in this phase of real estate, are risking their potential profit. After the fact, it doesn’t matter what the builder NEEDS to get. He’ll get what the market will allow him and not more. Do we never learn from our mistakes?
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