Question from a reader:
Jim, I’m interested to hear the thoughts of Realtors on how best* to market lots in a new/proposed residential subdivision. The methods being employed in Fluvanna and Louisa at present are:
(1) Make all lots available for sale to anyone (via standard marketing tools, i.e., MLS, print ads, etc.)…Simply market the hell out the thing in every way possible. Of course there should be architectural standards for the subdivision, but basically sell any/all lots to anyone for the desired price. They can sit on it, build, resell it, or whatever.
Pros: faster lot absorption, higher lot price potential
Cons: speculators purchasing lots and sitting on them, undesirable heterogeneity in home styles, market-level sales commissions
(2) Require buyers to use one or more pre-selected builders…In several instances, I’m seeing developers hire listing agents to sell lots, while requiring buyers to use a pre-selected builder(s). The developer pays the listing agent a minimal commission (1%) on the lot sales, while the agent gets a market (6%) commission on the sale of the home. While not necessary, I’ve observed a limited approach to marketing the lots from agents in this model. I’m not sure why, but they seem to focus more on the sale of the home than the lot.
Pros: minimal sales commissions
Cons: buyers may not want to use pre-selected builders, slower absorption
(3) Sell all lots to one or more builders …assuming the desired price and absorption can be negotiated, and the builder is not some startup guy who could fold if a single home doesn’t sell, this is probably the best situation for developers.
Pros: no sales commissions, predetermined absorption
Cons: small builders may back out, price discount likely
*Best, in this context, is how best to maximize value/return on the development of the subdivision. That is, how best to sell lots as quickly as possible at the highest price possible.
I’d like your thoughts, and hopefully thoughts from readers of your blog.
I’d like to expand on this a little bit more and include buyers – what are your expectations when buying new construction?
Interested in Learning More?
I have been been representing buyers and sellers in Charlottesville, Albemarle, and Central Virginia since 2001. Get local insight born of experience.
Dig Deeper
Always Read Covenants and Restrictions
You never know what you're going to find when you dig into Covenants and Restrictions. "1. No shop, store, trailer, temporary living structure, factory, hospital, asylum, institution, tourist home or business house of any kind, and no apartment house shall be erected or maintained on…
Revisiting the “0 to 5 Buyer is Gone” Post – 15 years later
Revisiting the “0-5 Buyer Is Gone” Theory We’re in a different market now. Some of the people who bought between 2021 and 2024 are trying to sell — and the ones who bought new construction, now competing against new construction, are having a hard time.…
A Charlottesville e-bike Success Story
I have an e-bike. I love my e-bike. I ride it to meetings all over the City of Charlottesville instead of driving my car. e-bikes are great. A friend got an e-bike. He loves his e-bike. He has a different perspective, and I asked him…
Flipping the Switch, Part 3: ADUs, Zoning, and the Practical Guide
Flipping the Switch, Part 3: ADUs, Zoning, and the Practical Guide Part 1 covered the data. Part 2 covered the design. This week: the regulatory landscape, the ADU reality check, and the practical checklist. The ADU Conversation Has Changed When I wrote about this in…