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Old 10-16-2013, 01:04 PM
 
150 posts, read 856,617 times
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Hi, my husband and I are strongly considering having a house built (and I've been doing a lot of research, reading books, looked at hundreds of floor plans, made my own floor plans, etc.). We'd like to buy an existing home since it is easier, but we just haven't found one we like that has the amount of land we want (at least 1/2 acre) in the area we want to be in that is within our price range. We've been looking for over a year, and about 4 months into the process I decided we need to consider building and knowing nothing about it, I started gathering all the info I could. There's a specific neighborhood with a couple of lots available that I'd love to get into, although we're open to that general area not just that subdivision. My question is, should we buy the land first and then have a builder build on it, or is it better and cheaper to have the builder buy the lot and then us buy the entire "package" from the builder? The problem with having a builder buy the land is that we still need to find the right builder, and who knows how long the lots will remain available (the one I really wanted just sold recently and it wasn't even on the market). We just started working with a realtor who knows a lot about the local builders, and he said we should have the builder buy the land and build on it (so that the builder can get the construction loan at a lower interest rate), but this is contrary to what I've researched online and I thought I'd be the one getting the construction loan and paying the builder as we go anyway right? We have a tight budget so I want to make sure we do this the best way possible and cost-effectively. I've looked at new home communities too but most of the ones in my area have small lots (.3 acres or less) or are over 45 minutes from work. Thanks.
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Old 10-16-2013, 01:08 PM
 
Location: Ocala, FL
3,532 posts, read 6,409,671 times
Reputation: 3197
What is your question ?? Hard to understand your post as written.
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Old 10-16-2013, 01:25 PM
 
Location: The Triad (NC)
29,704 posts, read 64,661,043 times
Reputation: 34604
Quote:
Originally Posted by Nadjalou View Post
We'd like to buy an existing home since it is easier, but we just haven't found one we like...
Have you found the affordable, buildable piece of land that suits all that you want?

Quote:
There's a specific neighborhood with a couple of lots available that I'd love to get into
...should we buy the land first and then have a builder build on it, or ...?
Is that even an option? Most developers have strong tie-ins with their builders and their designs.

The rest of your Q is a coin toss on the quality/time factors but is still far more about the contract legalities
than the real estate itself. Ask your family attorney for his recommendation on a RE lawyer.
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Old 10-16-2013, 02:21 PM
 
150 posts, read 856,617 times
Reputation: 152
Sorry, my thread was a bit lengthy, but my main question was basically should we buy the land first and then build on it, or have the builder buy the lot and build on it and then buy the "land-home" package from the builder? The subdivision is established and the builder who built most of the existing homes is out of business. It is my understanding that we can pick any builder. The lots have been selling for pretty reasonable prices - $35-40K for over an acre lot in Wendell, NC and the subdivision is nice with homes ranging from 1700-3500 sq ft. I have been planning to buy the lot and then build later once I find the right builder and decide on a floor plan that suits the lot, but a realtor recently told me it is better to have the builder buy the lot and build on it.
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Old 10-16-2013, 02:25 PM
 
Location: Ocala, FL
3,532 posts, read 6,409,671 times
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Thanks for the abridged recap. Much easier for folks to understand.
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Old 10-16-2013, 04:00 PM
 
Location: NC
6,987 posts, read 8,613,984 times
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If you buy the land first, you will need to either pay cash, or find some entity to loan you the money for the lot. You will not be able to obtain a mortgage on the lot until a house exists on it. Once the house is built, you would apply to obtain a mortgage. So, much depends on whether you can buy the lot with cash, or obtain some sort of short term bank loan before building a house.
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Old 10-16-2013, 04:17 PM
 
1,757 posts, read 1,453,427 times
Reputation: 1514
Default Cost diference ?

Quote:
Originally Posted by Nadjalou View Post
Hi, my husband and I are strongly considering having a house built (and I've been doing a lot of research, reading books, looked at hundreds of floor plans, made my own floor plans, etc.). We'd like to buy an existing home since it is easier, but we just haven't found one we like that has the amount of land we want (at least 1/2 acre) in the area we want to be in that is within our price range. We've been looking for over a year, and about 4 months into the process I decided we need to consider building and knowing nothing about it, I started gathering all the info I could. There's a specific neighborhood with a couple of lots available that I'd love to get into, although we're open to that general area not just that subdivision. My question is, should we buy the land first and then have a builder build on it, or is it better and cheaper to have the builder buy the lot and then us buy the entire "package" from the builder? The problem with having a builder buy the land is that we still need to find the right builder, and who knows how long the lots will remain available (the one I really wanted just sold recently and it wasn't even on the market). We just started working with a realtor who knows a lot about the local builders, and he said we should have the builder buy the land and build on it (so that the builder can get the construction loan at a lower interest rate), but this is contrary to what I've researched online and I thought I'd be the one getting the construction loan and paying the builder as we go anyway right? We have a tight budget so I want to make sure we do this the best way possible and cost-effectively. I've looked at new home communities too but most of the ones in my area have small lots (.3 acres or less) or are over 45 minutes from work. Thanks.
Most people are ignorant and can't act as their own contractor although some may dispute this.

Anyway, I am asking this forum, generally, what does a contractor make (percentage of a home buyer's payments to him) over his costs on the price of a home including site preparation without the cost of the lot.

In a subdivision, the developer will want to tie land and building up in one price, and then try to stay involved if possible in providing HOA services, while passing the costs of bonded items like streets, sidewalks, green areas, storm drainage facilities on to you.
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Old 10-16-2013, 07:22 PM
 
3,438 posts, read 4,865,640 times
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Quote:
Originally Posted by Mistermobile View Post
Most people are ignorant and can't act as their own contractor although some may dispute this.

Anyway, I am asking this forum, generally, what does a contractor make (percentage of a home buyer's payments to him) over his costs on the price of a home including site preparation without the cost of the lot.

In a subdivision, the developer will want to tie land and building up in one price, and then try to stay involved if possible in providing HOA services, while passing the costs of bonded items like streets, sidewalks, green areas, storm drainage facilities on to you.
Your first sentence comes across as quite condescending.
( probably intentionally )

The problem with being your own general contractor is that you are only building one home and are only using that plumbing, roofing, electrical, masonary, contractor on a one time deal.

Thus you have no clout to get them to show up when you would like them to or need them to.
The general contractor who has a former working relation ( and future working relation) does have clout and a phone call that he needs the plumbing company out tomorrow will get them there tomorrow.

Even if it means leaving the self general contractor " high and dry" for a few days or a week or so.

Be a little more careful before you throw that " ignorant " label around.
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Old 10-16-2013, 09:11 PM
 
Location: Cary, NC
34,484 posts, read 60,055,075 times
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Quote:
Originally Posted by luv4horses View Post
If you buy the land first, you will need to either pay cash, or find some entity to loan you the money for the lot. You will not be able to obtain a mortgage on the lot until a house exists on it. Once the house is built, you would apply to obtain a mortgage. So, much depends on whether you can buy the lot with cash, or obtain some sort of short term bank loan before building a house.
Actually, land loans are available, but not very "consumer friendly." Large down payment, short term with balloon, high rate.

The real issue is to get a good appraisal on land. So, the buyer wraps up cash in the lot, and when going for financing/building, the appraiser credits the land as valued at 50% of what the buyer paid.
So, the cash is gone, and the value is not recognized, and the buyer can't come out of pocket enough to build that dream loveshack.

This is definitely more of a lending/construction loan question than it is anything else.
OP needs solid lender guidance, from someone who has experience helping borrowers with similar projects.
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Old 10-17-2013, 08:10 AM
 
1,757 posts, read 1,453,427 times
Reputation: 1514
Default Point taken but here's what I mean

Quote:
Originally Posted by Teddy52 View Post
Your first sentence comes across as quite condescending.
( probably intentionally )

The problem with being your own general contractor is that you are only building one home and are only using that plumbing, roofing, electrical, masonary, contractor on a one time deal.

Thus you have no clout to get them to show up when you would like them to or need them to.
The general contractor who has a former working relation ( and future working relation) does have clout and a phone call that he needs the plumbing company out tomorrow will get them there tomorrow.

Even if it means leaving the self general contractor " high and dry" for a few days or a week or so.

Be a little more careful before you throw that " ignorant " label around.

When I said ignorant I didn't mean stupid. Can the average person know when a super adequate french drain or a poured slip slab foundation with a floating basement floor should be used on extreme wet lots. I toured a new home for sale and the builder had zipped a channel right across the concrete basement floor to allow a stream to flow through. I toured a competition home for sale with a bump out for an overhang in the family room so poorly built that the walls didn't close up in the corner. I could see the yard outsider. And on and on with less obvious but serious building flaws that are way beyond punch list items. The average guy needs a clerk of the works or someone knowledgeable to check on every phase of the job. Relying on the township inspectors just doesn't get it.
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