Sometimes an owner who wants to sell a piece of land will "hook up" with a builder who demonstrates with plans and a drawing what could be built on the property, and they price the combination as "a pre-sale". However the land owner is not making any improvements. He is simply offering that house and that builder as an option for people who don't want to do the legwork to find their own plans and builder. The option is still open however for the buyer to deal directly with the landowner with their own plans and builder, and then the "pre-sale" turns into a vacant land purchase.
This is done because it is easier to sell a "new home" than a piece of vacant land. It also gets more eyes looking at it on the internet if you show a home with "reasonable facsimile" photos of interior finishes vs listing it in the vacant land section of the mls where it will get many fewer views. So at times "pre-sale" it is a marketing strategy.
You ask: "Are they going to build it without a buyer lined up?"
If it is part of a major development and the builder can afford to do it as a "spec" house, then yes. But then it turns from a "pre-sale" to a "spec house", built on the speculation that the builder will recoup the monies he has put into it. Often they still hope to sell it at half way into the process at which point you will see verbiage like "still time to choose your colors!". It gets risky when the builder is choosing their own granite colors, cabinet colors, hardwood floor vs carpet areas, tile selections. Even on a spec house they like the buyer to be in the process before the millwork style, exterior color and personal taste items are put into the house.
Another reason they prefer "pre-sale" to "spec" is the buyer usually has to pay for all upgrades they choose on a non-refundable basis. Without this the builder has to either stick with Plain Jane finishes or fork out the extra bucks for upgrades hoping the house will sell for more if he does, which is not usually the case. If the buyer is in the room at the point of upgrades, it is not uncommon for the buyer vs the builder to pay for the extra flooring changes, lighting upgrades, even accent paint colors out of pocket during the process.
So even if the presale is permitted and started before a buyer commits, it is the builders hope that the buyer will enter into a contract to purchase long before it turns from a pre-sale into a spec house without the buyer's input of choices and the buyer's money paying for his choices..
ARDELL DellaLoggia
Sound Realty
