A partner and I came up with a strategy and want to vet it out / see if anyone has attempted before...
The idea is to reach out to real estate agents in my area (Long Island) that have listings of vacant lots (many in high end neighborhoods here due to Sandy). The goal would be to get the agent to change their listing from a vacant lot to a "new home to be built" listing. The price would also be listed at the price for the new home (example, the lot listing would probably be around $200k, but the listing would be increased to lets say $800k) . I would get blueprints and a general contractor with construction pricing lined up.
So buyer would purchase at the $800k price, I would take $200k and give to the agent plus commission on the $800k as incentive, then pay the general contractor the approx $500k cost upon completion and the different (give or take $100k would be profit for me.
Obviously this easier said than done and I am using VERY rough numbers here, but can anyone offer input on the overall CONCEPT of the plan ?
Thanks in advance
So, in this scenario, there’s your $100,000 profit, the GC’s $80,000-$120,000 fee and the agents’ $42,000 commissions. That leaves roughly $560,000 for construction costs. Will that be enough to build a home that competes with other 800k listings?
Thanks for your reply Scott.
To be competitive I need to build a modern, approx 3000 sq ft, 4 bed 2 bath home. In your professional opinion without knowing my specific market do you think that’s feasible ?
Do you do see any other issues? Do you think the listing agent can/would do this with the incentive of dramatically increasing his commission? Are “to be built” house hard to sell ? (Should be noted on Long Island there is very little new construction and the home supply is avg +30 yrs old)
Can anyone help ?
I like the idea Frank, did you ever move forward with this?