Selling a Spec Home without a realtor

Land & New Construction
7yFollow

Selling a Spec Home without a realtor

Caitlin Spratling
Member since 2018 · 6 posts · 3 votes

Hey all,

We are building our first spec homes (a set of townhomes) but we would like to sell them without a realtor to make them worth our while. What is the best way to go about doing this? I'm not asking for paperwork needs, I am more thinking along the lines of how the deal will work. We would like to have buyers lined up before the completion of the townhomes but I am unsure of a few things:

1. will the buyer be able to get a loan to purchase an incomplete townhome? Would they be able to get a construction loan? or will we have to wait to finalize a sale until after the townhomes are completed? 

2. What would be an appropriate amount of money to ask for earnest money? Can it be non-refundable? I don't want someone to waste our time or make paint color choices and then back out with no penalty.

3. Any other tips on how I should go about doing this? We live in Montana so we do not need to involve a real estate attorney in our transactions.

Thank you so much in advance!

1Reply
28 views

Most Popular Reply

Danny Kay
Developer · Atlanta, GA · Member since 2008 · 148 posts · 34 votes
7y

1. They can go through underwriting, but a traditional mortgage will need a CO in place to close. Have one or two 'preferred lenders' to send buyers to.

2.  5% non-refundable builder deposit (meaning it sits in your bank account, not escrow). This is typical, but can vary.

3. Check with you home builders association, a lot of times they have contracts you can use. You can also hire a one of the hands off brokerages to get the home on the MLS for a low flat fee. Lastly, don't under estimate the value of a good agent.

1Reply
See this reply in the discussion

6 Replies

Jump to latestLatest
  • Greg Dickerson
    Developer · Charlottesville, VA · Member since 2018 · 4k+ posts · 4k+ votes
    7y

    @Caitlin Spratling 

    Yes the buyers can get a loan in place and close as soon as you get the CO. You need to finish the units in order for them to close. You should talk with a couple of mortgage lenders and connect the potential buyers with them to get prequalified if they haven’t started the process yet. 

    Earnest money is typically 3%-10% of the purchase price depending on price point and demand. Yes I would get a nonrefundable deposit if they want to customize the unit so that you can repaint if the deal falls through.

    Just make sure you have any of the disclosure paperwork if that’s required in your state. I would use an attorney to handle the closing even if not required just to make sure you’re protected. 

    Keep in mind you’re going to have to warrantee the house you should look into your state laws regarding warranty’s. 

    1Reply
  • Paul Sofia
    Lender · Charlotte, NC · Member since 2016 · 371 posts · 172 votes
    7y

    I don't know of any lender that would allow a construction loan during construction.  Needs to be done prior.  Are you looking to do a spec home or are you in fact trying to sell a speculative investment to someone else with their resources?

    0Reply
  • Danny Kay
    Developer · Atlanta, GA · Member since 2008 · 148 posts · 34 votes
    7y

    1. They can go through underwriting, but a traditional mortgage will need a CO in place to close. Have one or two 'preferred lenders' to send buyers to.

    2.  5% non-refundable builder deposit (meaning it sits in your bank account, not escrow). This is typical, but can vary.

    3. Check with you home builders association, a lot of times they have contracts you can use. You can also hire a one of the hands off brokerages to get the home on the MLS for a low flat fee. Lastly, don't under estimate the value of a good agent.

    1Reply
  • Caitlin Spratling
    OP
    Member since 2018 · 6 posts · 3 votes
    7y

    Thank you all for your thoughts and advice, I so appreciate it!

    0Reply
  • Danny Kay
    Developer · Atlanta, GA · Member since 2008 · 148 posts · 34 votes
    7y
    Originally posted by @Caitlin Spratling:

    Thank you all for your thoughts and advice, I so appreciate it!

     Share some info on your project when you are ready. Love to see it!

    0Reply
  • Lucero Sanchez
    Contractor · Queen Creek, AZ · Member since 2014 · 155 posts · 37 votes
    6y
    0Reply
Join the conversationCreate a free account to reply, vote on answers and follow this thread.
Log InJoin for Free