What is fair cost plus percentage for new construction? (Sarasota: sales, real estate market)

[loves2read]

Looking to build in area that is still fairly “hot” in FL
Zip 34275 south of Sarasota FL
Development in 3 sections—this is in first section—about 60 out of 120 lots
Says they have 10 under contract—but platting has not happened and no lots have actually been sold

This contractor in business over 20 yrs—does commercial, condos, and homes
Can’t find any serious claims against company on file

[scorpio516]

It depends.

I'd say anywhere from $350 to $800 / sf

[K'ledgeBldr]

This is not rocket science to find-

https://www.realtor.com/realestatean...0was%20%24605K.

Which of course includes land- which you implied in the OP. I’m not about to say if it’s “fair” or not- but RE had been riding extremely high this year until the Fed increased the interest rate. There are several areas of the country that have seen reductions in asking prices up to 40%. Of course the question remains- were the owners that desperate to sell; or was the house that overpriced?

[Trying941]

Originally Posted by loves2read

Looking to build in area that is still fairly “hot” in FL
Zip 34275 south of Sarasota FL
Development in 3 sections—this is in first section—about 60 out of 120 lots
Says they have 10 under contract—but platting has not happened and no lots have actually been sold

This contractor in business over 20 yrs—does commercial, condos, and homes
Can’t find any serious claims against company on file

Cost plus percentage contracts are very dangerous in time likes these with labor and supply shortages. Essentially, you are giving the builder every incentive to use costly labor and buy supplies when expensive, not cheap. Much better would be to set at cost plus fixed profit.

Profit margin is tricky too. At the moment, it is high but it is likely to fall over the next few months. Builders are busy with deals made over the last year, but new contracts are a lot fewer now.

The real estate market here for existing homes is going up still, as there is a housing shortage and people with immediate needs. But, new construction is not going up.

If you can wait three months or more, you will likely be better off than now. Personally, I would at least wait for platting and actual sales.

[MattMN]

I just got a flier from a realtor about recent sales in a DRHorton neighborhood in 34275. All homes are less than 5 years old, but most are probably resales and not new construction. The last 16 sold, between 8/5 and 3/11/22 vary between $282/sqft - $372/sqft. Different models, finishes, pools, etc, give a wide range. Hope that helps you.

[Sunshine Rules]

Builders in zip code 34275 sold 67 new construction homes thru the MLS in the past 6 months. Obviously that does not include sales to buyers directly thru the builder. However, it does give you a good idea as to where prices are at this time.

The range for price/sq ft was $255 to $426 -- but those in the $426 range were million dollar plus homes. Leaving those out, the high end for an "average" new construction home in this zip code was $ 351/sq ft. So very close to the statistics Matt quoted.

Sales prices ranged from 97.2% to 115.5% of the list price on those sales, with an average of 100.6%.


Pending sales prices/sq ft range from $303 to $375.

A number of area builders are also now offering buyer incentives once again. Credits towards closing costs and lower fixed rate mortgages for the most part.



Says they have 10 under contract—but platting has not happened and no lots have actually been sold

As a buyer I would be very cautious regarding a builder wanting me to go under contract for a new construction home if the platting has not been completed as yet. I've been doing this for over 20 years and can't think of a single reputable builder that puts pre-sales ahead of the basic steps to plot/ survey the land for development and sales.

I think I may know where this subdivision in question is located. They were talking about pre-sales and not having the lots officially plotted a YEAR ago. There should have been substantial progress between then and now unless something else is going on, such as financing issues, legal issues, etc. If it were me, I would want to have a lot more questions answered satisfactorily before putting down deposit money.