Home Buying Trend: Builders Buy Homes to Build New Construction on Existing Lots

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When you are selling your house does it really matter who buys it?  And what they do with it once they purchased your home?  Well, yes – it does matter.  Many buyers are actually builders that are seeking the perfect location or lot to be able to build a new home on the premises.  As more and more of these types of buyers enter the scene, sellers are increasingly asking how and why those buyers being builders has an impact on the sale.

The main reason sellers will benefit from advance knowledge of builders’ intentions to build on their property after tearing down the existing home is that it would alter the level of preparation done prior to the sale.  For most conventional sales, homeowners usually spend money to spruce up the back yard, enhance curb appeal with some landscaping, and repair things that need attention in the home plus make some cosmetic changes.  If a home is being bought with the intention to demolish it then there is no real reason to make the home more saleable thus saving the sellers a significant amount of money.

There are several reasons that a homeowner would benefit from selling to a builder:

No Property Inspections

Since the builder does not plan to use the structure in any way, most of the time there are no home inspections done on the property.  Unlike traditional sales where an inspection clues the buyers in on any potential pitfalls with the home, a builder is unconcerned with most types of problems that show up in a home inspection.  The benefit to the seller that knows a builder is vying for their property is less hassle at the negotiation table where buyers in a conventional transaction might have expected sizable credits for repairs.

No Dealing With Mortgage Companies

Most of the time builders engage in cash-based transactions.  This translates to no mortgage contingencies and fewer hang-ups or hold ups that would normally arise as part of the normal mortgage process.  For example, obtaining an appraisal or even the process of the buyer getting approved for a mortgage.  The absence of these, and other, parts of the sale ends up in a faster sale altogether.

Flexibility With Closing Dates

Usually builders are very flexible when it comes to closing dates and they are willing to work around homeowners’ schedules. This allows the seller to have some control of when they vacate the premises.  The entire time the home remains under contract, offering them the security of knowing the sale is done.  

How To Tell If Your Home Would Appeal to a Builder

Depending on what the buyer is looking for in terms of lot size, location and even neighborhood – builders will assess the figures and decide whether it is worth their while to build new construction on the property.  If there is significant value to the end user (that is the person that will end up living in the home) then sellers will likely be able to obtain a higher selling price for the home if they sell it to potential homeowners.

Builders will typically not be interested in homes that have updated kitchens and bathrooms, appealing amenities and nice features.  If your home has a strong aesthetic and functional appeal to begin with, then it would be more beneficial to invest in preparing for the sale as described above.  Unkempt, outdated homes will be attractive purchases to builders.

To find out how your property fares in all this, contact me today so we can assess your property and determine whether you would get top dollar by selling to end users or builders.

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