the market in the small rural town of centerville has been very hot. values are leveling off but single family residences remain scarce . a potential buyer asks about the advisability of buying some farmland outside of town to develop into single family lots for sale to builders. she has noticed several builders already getting ready for new subdivisions by preparing new lots . how might a broker best advise this potential buyer. a) he should suggest to this potential buyer that her timing is perfect. The slowing residential market will give her a chance to get the lots ready and she can probably pre-sell some to builders and raise some cash. Since strong markets usually last a decade or more, she should line up her financing and get started. b) in a cycle like the one described, builders always play "follow the leader". The builders obviously will sell their new homes quickly and a broker should encourage this potential buyer to go ahead with her plan to she can be ready to profit by providing the next round of lots. c) He should advise that the current shortage will likely continue to drive prices up and make the potential buyers plan feasible. As the prices rise, the price of surrounding land will fall because of the encroachment of the suburban neighborhoods. Land is much cheaper than developed lots so there is plenty of room for her profit. The broker may even encorage the buyer to earn a profit by contrbuting some of the commission to the project.
the market in the small rural town of centerville has been very hot. values are leveling off but single family residences remain scarce . a potential buyer asks about the advisability of buying some farmland outside of town to develop into single family lots for sale to builders. she has noticed several builders already getting ready for new subdivisions by preparing new lots . how might a broker best advise this potential buyer.
a) he should suggest to this potential buyer that her timing is perfect. The slowing residential market will give her a chance to get the lots ready and she can probably pre-sell some to builders and raise some cash. Since strong markets usually last a decade or more, she should line up her financing and get started.
b) in a cycle like the one described, builders always play "follow the leader". The builders obviously will sell their new homes quickly and a broker should encourage this potential buyer to go ahead with her plan to she can be ready to profit by providing the next round of lots.
c) He should advise that the current shortage will likely continue to drive prices up and make the potential buyers plan feasible. As the prices rise, the price of surrounding land will fall because of the encroachment of the suburban neighborhoods. Land is much cheaper than developed lots so there is plenty of room for her profit. The broker may even encorage the buyer to earn a profit by contrbuting some of the commission to the project.
d) He should advise this potential buyer that development of land is risky and complex. It will take time and considerable money to prodduce satisfactory lots with zoning and other measures. The market shows signs of slowing so the market is a risk. The buyer may be better by other investment opportunity in real estate.
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