Expert: liznarr - 1/12/2005

Question
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Hi again.  Actually, it is the homes not yet built, with the same ammenities as the ones already built and ready to move into that are about $5000 less expensive.  One would think the prices would go up like you said on homes not yet built.  But it is the ready to move into homes that are higher priced.  That is what doesn't make sense to me.

Thank you,
Joanne Turner

Followup To
Question -
Why does there seem to be such a huge difference in price between a new home that is ready to move into vs. one as yet not construction?  I'm finding this no matter what the price range, with no extra ammenities. Thank you for your expertise.
Answer -
Hi Joanne,

Sorry for the delay in getting back to you.  I was out of town for several days and did not note on the site that I was on “vacation.”

As to your question regarding pricing differences for a new home ready to move into vs a home not yet constructed, one reason could be that a builder is quoting for not only some possible recent material increases, but also anticipated material increases.  Labor costs could also play a similar role here.

If you are seeing this trend in a subdivision that is “taking off like gang busters,” builders always know when they have a winner.  As more homes are constructed in a hot new subdivision, builders may increase the pricing for the homes … just because they know they can get it.

Some questions for you to consider:  

1.   Are you getting quotes for a custom building job?  If so, the selections you make (hardwood vs carpeting, all brick vs vinyl, solid surface counter tops vs laminated counter tops), could be increasing the price.  Also, many builders will give higher quotes for constructing a home in a location where they do not have other homes being built (added expense for sending subcontractors an extra distance possibly).

2.   Are you comparing similar homes built by the same builder?

In the greater metropolitan and outlying areas where I live and work, I do not find huge pricing differences to be the case for new homes ready to move into vs another similar new home yet to be constructed.

As a last resort, if you are noting such huge differences, I would sit down with one or more of the builders in question and simply ask, Why?  If the explanations you receive seem plausible, you might have your answer.  You can generally tell from direct eye contact and body language if you are not getting truthful responses.

I hope the above will be helpful to you.  Good luck to you, and write again if you have additional questions.

Regards,
Elizabeth Narr


Answer
Hi Joanne,

Thanks for clarifying your earlier question.  Yes, what you are describing -- the SAME home with the SAME amenities, not yet built,  and priced $5,000 LESS than an identical new home already built -- seems to be “backwards.”

Unless one of the following applies, (1) There are “extras” in the existing home which are NOT in the home yet to be built,  (2) Material and labor prices were exorbitant for the existing home, or (3) The existing home is on a premium lot and priced higher than the lot the NEW home would be built on, I do not have an answer for you.  This would be a question you should address with the builder.

Regards,
Elizabeth Narr