Bought, then built
Purchasing a newly built home is like preparing for a championship ballgame: Buyers strategize on how to win top placement on a waiting list; they pore over scads of home plans, handicapping their chances of getting the ones they want; and they keep a wary eye on their most elusive foe -- prices that often rise during the purchase transaction period.
Aldwin Quinto knows the drill. The 25-year-old first-time buyer tugged at a smoke and paced, waiting to hear his name called at a KB Home release of 18 condos in Rancho Cucamonga two weeks ago. He and his fiancee, Nicole Mushill, joined 31 other buyers and their families gathered under a big tent to find out who would get first crack at the units. The couple had failed to make the cut at four previous new-home rollouts with other builders.
“We always seem to lose at these,” Quinto said. “We’re just trying to beat the rush.”
Unlike the building boom of the 1980s, when buyers could simply drive to one of a spate of developments and put a down payment on a completed house, builders today do not begin construction until they have firm purchase commitments, in order to protect themselves from being stuck with unsold homes, said Rich Ambrose, Southern California vice president of the California Building Industry Assn.
“In times like these, with such an undersupply, buying a new home is frustrating,” said Michael Hixson, a Newport Beach consultant to new-home builders. “An equitable solution to sell homes is challenging. It’s stressful for everyone.”
Getting on a waiting list means knowing the strategies that home builders employ to cull eligible buyers. Pardee Homes, for example, compiles a list of potential buyers, ranking them according to the date of their credit approval.
Pardee customers who want to remain on the list must show up for each phase that opens. They get a notice one week before a release of homes; if they decline an available home, their names are moved to the list for the following phase opening, when they can try again. Prices usually rise, however, between releases.
While some builders rank potential buyers based on their creditworthiness, others use a lottery system. Some require that wait-listed buyers -- sometimes numbering in the hundreds -- show up for every release, while others invite only a handful.
Centex Homes uses their website to register potential buyers, who get financial approval through an online questionnaire. They’re assigned a number on a waiting list and, based on their number, are invited to a phase release.
“It’s a roller coaster,” said Michael Sindy, 26, who got the condo unit he sought at KB Home’s recent Rancho Cucamonga condo release. “It’s nerve-racking. The best part is knowing that later we can sell it for much more than we got it for.”
Quinto and Mushill can finally relax.
After an excruciating 45 minutes of watching happy buyers march off to the KB Home sales office to select from the pool of two- and three-bedroom condos -- priced from $285,000 to $395,000 -- the couple’s names were called. They selected the unit they’d hoped for, a two-bedroom condo for $324,000. Now they have to become familiar with the details of the purchase contract.
Matt Rasmussen and his fiancee, Kate McCullough, both 26, weren’t sure until the last minute whether they would get a KB condo. They arrived knowing neither their place on the waiting list nor the prices of the units, which were revealed that morning. The couple were limited in what they could afford.
At the end of the morning, they and two other sets of buyers were left vying for the two remaining units.
Rasmussen and McCullough waited while the party before them chose between the two units, only one of which the couple could afford. By luck, they got the one they wanted.
“We were sweating it to the last minute,” Rasmussen said. “If we hadn’t gotten it, we would have had to buy a mobile home farther out in the desert.”
