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......what percentage of the actual construction cost is a developer of a small neighborhood of let's say 10 semi- custom( 9ft ceilings; cement plank siding; detached two car garage; hardwoods; moldings;great closet space and built ins; gas fireplace; oversized kitchen with gas stove, granite, pantry; porches; laundry; foyer; stick built raised (with a crawl space underneath) homes w/ 1900 - 2300 sq. ft. of living space likely to ask for a selling price over and above his costs? If he (rather he bank because the contractor is being foreclosed on) is asking $400k per home and the lots are about .1 acre, was his contruction loan for $200k? I need to get an idea of how much the bank needs to recoup, so if I decide to make an offer, it won't be too much.
The developer is not necessarily the builder. The developer is the one who purchases the land and then gets the lots ready for sale. Out here in Oregon it typically $30-$35k per lot that is developed. Then the developers usually sell to the builders.
Construction costs vary greatly depending on quality of materials and quality of the craftsmanship. You say hardwoods, but there are many different types of hardwoods.
If you like the property just submit an offer. They will let you know if it is a short sale or not.
The developer is not necessarily the builder. The developer is the one who purchases the land and then gets the lots ready for sale. Out here in Oregon it typically $30-$35k per lot that is developed. Then the developers usually sell to the builders.
Construction costs vary greatly depending on quality of materials and quality of the craftsmanship. You say hardwoods, but there are many different types of hardwoods.
If you like the property just submit an offer. They will let you know if it is a short sale or not.
I'm not talking about subcontractors. You know what I mean. I'm trying to figure out the mark up on the costs and what the bank may have loaned out on the property if it is now in foreclosure. ( I already know there are about 5 or six homes that have been forclosed on. The builder filed for bankruptcy.) Isn't there a rule of thumb (like perhaps a 100% mark up over costs or more)?
Regardless of the cost to the builder, the list/sale price should still be within the market. So the question is not what the profit margin is, but rather what the most likely cost was to build the house.
There are 2 things you can do. 1) Get an appraisal done for Market Value (especially if you are in a declining market) and Cost Approach; or 2) Google Construction Estimator, come up with your own cost and take it from there.
......what percentage of the actual construction cost is a developer of a small neighborhood of let's say 10 semi- custom( 9ft ceilings; cement plank siding; detached two car garage; hardwoods; moldings;great closet space and built ins; gas fireplace; oversized kitchen with gas stove, granite, pantry; porches; laundry; foyer; stick built raised (with a crawl space underneath) homes w/ 1900 - 2300 sq. ft. of living space likely to ask for a selling price over and above his costs? If he (rather he bank because the contractor is being foreclosed on) is asking $400k per home and the lots are about .1 acre, was his contruction loan for $200k? I need to get an idea of how much the bank needs to recoup, so if I decide to make an offer, it won't be too much.
you obviously like this place and want to get it for the lowest possible price. there are a whole host of factors to decide on before making an offer. in the nation as a whole and for various reasons there has been a sharp fall in demand for properties and a sharp rise in supply and it is predicted that this will be the case for sometime. there are however pockets here and there where the opposite is true.
in your case you have to get comps. ie look at similar places that have recently sold and look at similar places on the market. you also need to consider how long properties are sitting on the market before they sell and consider how desperate the seller is to get rid of the place. the level of inventory in the area is also another important factor because it might give you some indication as to how much competition you will be getting from other buyers. i would probably also try to get a feel for how sticky local bank managers are with loans and for the outlook for the local job market.
then make sure that all your ducks are in order and offer accordingly.
Each builder is going to vary widely on their profit margin.
I am pretty sure that 100% mark up is well above what most builders make per house.
I agree. Most builders are barely breaking even at this point, which is why every time you ask for some "upgrade" or change work order, they up the price by about 25%. Builders recover much of their cost on upgrades. I'm not a builder but we did build recently and our builder complained all the way to closing about how he was losing $. He paid 280,000 for the "teardown lot", spent severa thousand improving it/clearing it, several thousand on utilities hook-ups with a nightmare trail of permits, etc.... This is all before the hole was dug. They say the average home with finer appointments is about 150-200 per sq. ft. to build. We paid the 150/sq.ft. and got the triple crown moldings, granite throughout, cherry floors, beautiful built-ins in mudroom, family room, 9 ft. english basement and the list goes on and on. Definately the appointments of a home that should have been on the 200/sq.ft. amrk. It's 4 bd/31/2 ba w/3,400 sq. ft. and another 1,800 unfinished basement with rough-in full bath. A great deal and certainly NOT a very big profit, if any, for the builder.
Most builders use subcontractors for most or all of the work, especially national builders like Beazer or Ryland. 25 percent profit would be extremely high even if everything is done in-house.
Emily, you are trying to find out what the bank has in the property so you can make an offer close to that. But here's the rub.. the bank KNOWS the market value and they have really, really deep pockets!! No, they aren't in the business of real estate, nor are they in the business of losing money : ) Get a good agent to help you figure out what the market value is, then go in with an offer a % under that (if you feel that is fair).. and see what happens!!
good luck, shelly
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