Key Points Discussed:

• Hot New Home Market:
  • Subdivisions are selling out faster than they can be built.
  • Speculative sales have reached record highs, with homes sold before construction starts.
• What Builders, Realtors, and Buyers Are Seeing:
  • Builders are offering homes for sale that aren’t even built.
  • Realtors working with builder-sellers are managing contracts for speculative homes.
  • Buyers are navigating uncertainty when considering not-yet-built homes.
• Escalation Clauses and Price Increases:
  • Contracts may include clauses that allow price adjustments for increased costs (e.g., lumber, labor).
  • Builders often have opt-out clauses, enabling them to cancel contracts if prices rise.
• Buyer Risks:
  • Buyers may unintentionally serve as financial leverage for builders, helping fund other projects.
  • The lack of a set price creates significant financial risk.
• Real-Life Example:
  • A family contracted a home for $170,000 but faced multiple price increases, reaching $220,000.
  • Their lender wouldn’t approve the higher amount, leaving them unable to proceed.
  • They incurred extra costs, including increased rental fees, due to project delays.
• Advice for Buyers:
  • Consider waiting for homes to be completed to avoid escalation surprises.
  • Explore resale options to avoid the uncertainties of speculative home buying.

We Want to Hear From You:

• Are you a builder or realtor navigating this speculative market?
• As a buyer, have you faced challenges purchasing a not-yet-built home?
• Share your experiences and thoughts in the comments!

Tune in to understand the complexities of this booming yet risky new home sales market.