This article is for you if you are considering purchasing a Northern Virginia new construction home.
I will take you through buying a new construction lot, from finding out how offers are accepted to making the offer, how we structured the offer, and if we were successful.
Part One: Blind Bid System in new Construction
This article will focus on what I have experienced when dealing with a new construction community and the information I learned after spending some time in the sales office.
The Toll Brothers Arden community in Great Falls, Virginia, is a popular community that skyrocketed in price throughout the pandemic.
Base prices for homes have gone up over $500,000 in the past two years. Some options have increased to 200%.
This desirable community has an excellent school system and location; it's a great neighborhood.
I am not sure why these homes were priced as low as they were in the first place.
Arden releases two lots per month and uses a blind bid system for the more popular lots.
A blind bid system is when offers are submitted without knowing if other bids have been submitted. Buyers also do not know the price and terms the seller will accept.
This system that Toll Brothers is using is flawed.
Toll Brothers sets a base price. They release that information and send buyers something similar to a Google Doc asking how much above the base price they are willing to pay for the lot and what they want to build.
Because it is a blind bid system, the buyers do not know how many offers have been submitted.
We are unaware of how the selection process unfolds. Is it based on the lot offer? Is it based on what you will build? We have no idea.
I'm afraid I have to disagree with this process. Nonetheless, as an agent, I have to make the deal happen for my client to the best of my ability.
I strategize with my clients to have a successful outcome. We determine how much over the base prices make sense. Every situation is different.
The sales team will not share any information with agents, making this process more difficult. I respect that they are not allowed to divulge information to agents, but I continue to dig for as much of it as possible.
I currently have a client building in the neighborhood, so I have spent a lot of time at Arden in the last few weeks. I pop in the sales office frequently on different days during different times to try and catch a sales manager to have a conversation.
I empathize with their situation. It's hard for the sales team; they are here every day and have nothing to sell other than the one day a month they can release two lots. They have hundreds of interested people but don't know who is genuinely interested or qualified. They are doing their best in the challenging situation they are in.
Information comes out naturally during a face-to-face conversation - information that would not come out during a phone call.
Part Two: What I Found Out
I learned quite a bit during my visit to Arden.
Unfortunately, I did not get as many direct answers to my questions as I had hoped.
I asked many plus or minus questions, such as plus or minus five, plus or minus 10.
During my conversation with the sales manager, I asked how many recent cost estimates had been done. They had done four in the last two days.
Regarding foot traffic, May through July was below average, but it has picked up significantly in the last month.
I spent about half an hour with the sales manager discussing foot traffic, cost estimates, and offers.
As a broker, I see everything happening on the ground, and I don't believe there will be a considerable demand to blindly compete in this environment - not for a home that does not deliver for a year.
People who can afford these homes, which cost around 3 million dollars, have many options.
What makes this community different and drives the value in Arden is that it is an actual neighborhood. And it is more challenging to get into an area of similar homes that are three million dollars and above; they are few and far between.
Stay tuned for Part Three!
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