As the Housing Market Changes, Builders Court Presale Investors | Real Estate Journal

As the Housing Market Changes, Builders Court Presale Investors

By June Fletcher

Question: What's the market like in Myrtle Beach, S.C.? Do you have anything on pre-construction investing?
-- Matt Ratliff, Radcliff, Ky.

Matt: Pre-construction investing is like MySpace.com, gold-capped teeth and Brangelina.

They're all just so last year.

After all, it was only last summer when buyers were practically breaking down builders' doors trying to write contracts whenever a "for sale" sign appeared on an empty lot. With price-appreciation rates running at double-digits in many parts of the country, investors knew that in nine months or a year, when the project was finished, they could flip the unit to a new buyer at a sweet profit.

The frenzy became so intense that many builders wound up competing in the later stages of selling their project with their own early buyers. So they started putting clauses in their contracts mandating that buyers who wanted out while the builder was still selling would have to pay a penalty, or sell their units back to the builder at the original price.

Oh, how the world has changed...