"Before we could talk about the answer, we needed to pull the pieces apart because it is hard to find the right answer when you are juggling multiple ideas at once."
"In a hot market, you're more likely to wait until near completion, when costs are known and you've captured as much market appreciation as possible."
"Builders sometimes discover their pro forma results are more dependent on options than they assumed and whether options account for a significant share of the return, that assumption deserves closer scrutiny."
"If you're a California builder with a fixed product set floor plans, fixed mix, fixed streetscape, you're not offering room options beyond minor changes, so your option revenue comes from finishes."
Determining the right balance between specifications and pre-sales involves analyzing various factors. Key considerations include the ability to sell homes, controlling costs, and understanding profit sources. Builders must assess their projected profits from base houses, options, and lot premiums. In different market conditions, strategies may vary; for instance, in a hot market, builders may wait until completion to maximize profits. Additionally, fixed product offerings can limit option sales, necessitating a focus on finishes to enhance revenue.
Read at www.housingwire.com
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