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TX Homebuilder
Dyn-o-mite!


Joined: 09 Feb 2009
Posts: 276
Location: Houston Metro

Contingency H-T-S Buyers
PostPosted: Mon Jun 20, 2011 6:16 pm Reply with quoteBack to top

It doesn't seem like it's been five years since the peak of the housing boom. I assume 2006 will be the year that every year is compared to for another twenty years.

A lender friend of mine recently told me construction money is so plentiful they are reducing loan fees to stay competitive. They are even cautiously loosening the grip on spec money to builders with a history of getting thier specs sold.

This is obviously a sign the lenders are starting to trust the market.

In 2006 we would start a new home for a buyer with a home to sell as long as we were confident their current home was listed at proper market value.
The market was so good we would often end up moving the buyer to a completed spec because their curent home sold well before their new home was complete.

What are home builders in your area doing with their H-T-S contingency home buying prospects?
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N.TexHomes4Sale
Dud?


Joined: 23 Jun 2011
Posts: 1
Location: Ft. Worth, TX.

Home to sell contingencies...
PostPosted: Thu Jun 23, 2011 5:45 pm Reply with quoteBack to top

I got into the business in 2006 and from my perspective... it's not hard to beleive that we are 5 years out from "the good old days". They have been 5 exhausting and very frustrating years, but I'm still in the biz out of love for this industry.

As for contingent buyers with homes to sell... in many cases, we still build 'em. The company I represent is not known as an "inventory builder" so it benefits us to start homes for buyers with contingencies because very few other builders will, and because it's our only source of inventory for the last two years at least.

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ashley.rigg
Dud?


Joined: 26 Oct 2011
Posts: 1

Re: Contingency H-T-S Buyers
PostPosted: Wed Oct 26, 2011 7:15 am Reply with quoteBack to top

It has been some frustrating years, but things might change soon. We just need to think and be positive always.

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NewHomeDallas
Dyn-o-mite!


Joined: 05 Jan 2009
Posts: 404

Re: Contingency H-T-S Buyers
PostPosted: Thu Oct 27, 2011 9:25 pm Reply with quoteBack to top

Are you dreaming? Things won't get better until the inventory of foreclosed homes drops significanly, which is at least five years away. The industry is building at a rate of 315,000 new homes a year; a rate that won't sustain the industry.

I had lunch the other day with two very successful real estate agents. These are agents that sold an average of 10 homes per year each for me when I was onsite. I asked them when was the last time they sold a builder's new home. One said, "About two years ago. Why would I sell a $300,000 new home and wait to close and get paid when I can show a number of foreclosed homes that are the same size in similar locations for $150,000-$200,000 and get paid in about six weeks?" And the other said, "I don't sell builder's homes anymore. The last one had serious problems and the builder went out of business. They sold the lots to a cheap builder and even now, the community is half empty."
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TX Homebuilder
Dyn-o-mite!


Joined: 09 Feb 2009
Posts: 276
Location: Houston Metro

Facts vs Gossip
PostPosted: Fri Oct 28, 2011 5:16 pm Reply with quoteBack to top

Depending on NHD's definition of "get better", he is correct. Foreclosures will continue to affect new home sales.

When it comes to whether homebuyers choose resale homes or new homes the "differential" is always the trump card. When the price difference between new and resale is large, buyers purchase resale; when it's minimal buyers purchase new. Obviously, foreclosures are holding resale prices down while cost of materials has been steady to increasing, forcing new home prices up or profits down.

However, I strongly disagree with the statements of the "two successful real estate agents".

1. It is highly unlikely you will buy a $300K home in Houston for $150K-$200K. I have investors looking for these deals and for the most part they don't exist.

2. Close a foreclosure sale in six weeks? As NHD said "are you dreaming?". Most foreclosures are taking three months to close due to lender mismanagement, ignorant asset managers and loads of title defects.

Occasionally I see what appears to be a deal too good to pass up. These deals are seldom what they appear to be on the surface.

The fact is, most "foreclosed homes" available in MLS are priced at 90%-100% of Appraisal District value.

According to MLS statistics for homes sold Y-T-D between $200K and $300K,
foreclosed homes sold for 97% of list price while new homes sold for 94% of list price. The difference is the original list price. New homes in this price range are listing for an average of $15.00 more per sq ft than comparable foreclosed homes. That's about 20% more.

As long as the differential remains near 20% new home sales will suffer.

But, when it comes to hours of work per sale/closing, new home sales cost Realtors less than half the hours foreclosure sales cost.
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TX Homebuilder
Dyn-o-mite!


Joined: 09 Feb 2009
Posts: 276
Location: Houston Metro

Facts vs Gossip
PostPosted: Fri Oct 28, 2011 5:17 pm Reply with quoteBack to top

Depending on NHD's definition of "get better", he is correct. Foreclosures will continue to affect new home sales.

When it comes to whether homebuyers choose resale homes or new homes the "differential" is always the trump card. When the price difference between new and resale is large, buyers purchase resale; when it's minimal buyers purchase new. Obviously, foreclosures are holding resale prices down while cost of materials has been steady to increasing, forcing new home prices up or profits down.

However, I strongly disagree with the statements of the "two successful real estate agents".

1. It is highly unlikely you will buy a $300K home in Houston for $150K-$200K. I have investors looking for these deals and for the most part they don't exist.

2. Close a foreclosure sale in six weeks? As NHD said "are you dreaming?". Most foreclosures are taking three months to close due to lender mismanagement, ignorant asset managers and loads of title defects.

Occasionally I see what appears to be a deal too good to pass up. These deals are seldom what they appear to be on the surface.

The fact is, most "foreclosed homes" available in MLS are priced at 90%-100% of Appraisal District value.

According to MLS statistics for homes sold Y-T-D between $200K and $300K,
foreclosed homes sold for 97% of list price while new homes sold for 94% of list price. The difference is the original list price. New homes in this price range are listing for an average of $15.00 more per sq ft than comparable foreclosed homes. That's about 20% more.

As long as the differential remains near 20% new home sales will suffer.

But, when it comes to hours of work per sale/closing, new home sales cost Realtors less than half the hours foreclosure sales cost.
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