Pre construction Lotteries… still?

April 6th, 2006 by Kenric

This morning I venture over to a new Toll_Brothers community in North Scottsdale. I saw these homes on the internet last week and was thinking, “Hmmm, they are beautiful homes and only $1M?”. Yeah, I can’t believe I thought ONLY $1 million. So I pull into the trailer they have set up and am greeted by a new salesperson.

It sounded alot like last year… We have no lots currently available but some are scheduled to be released in a few weeks. There is a 700 person waiting list. You need to put down $5,000 to get on to the waiting list. At contract time you need to put down $60,000 and the build time is 18 months.

Wow, with all this bubble talk and Toll Brothers has a waiting list. Go figure. Anyway, I go look at the community model and notice that in the Mesquite Collection they only sold or released 5 lots! No wonder people are waiting. He said that the list was the longest on the Mesquite also, but he could say that about everything.

I look at all the floor plans and elevations and I’m thinking that I like the Venado the best. At $1.1M for 4200sf, it comes out to $276/sf. Add upgrades and a lot premium and it will probably end up around $310/sf. That doesn’t sound very appealing actually. I’m going to have to run some comps to see what the selling prices are.

My gut feeling is that these homes are priced slightly below market right now. They are slightly cheaper than resales in the area and they are next to DC Ranch which is a community with many celebrity homes. I think that the strong demand shown by the waiting list makes this a desirable community to live in. Who knows what 18 months will bring? Is it worth a $60,000 risk? I’m thinking of partnering up with two people and only risking $20k each. This would be a strikeout or homerun. If it’s in between we would walk. Of course if we close, I would plan to live in the home once completed, I’m not gonna pass up living in a home like this! I could stay in it for one year and then try to sell it.

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