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Buying a new home in Colorado Springs? Make sure and understand lot premiums

New Homes in Colorado Springs and lot premiums go hand in hand

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I’ve helped a couple of buyers recently purchase new homes in the Colorado Springs area, and it’s reminded me how little lot premiums are undrstood.  Let’s start with some of the basicNew homes built in Colorado springs

What is a lot premium?

When developers and builders put together the lots in a subdivision, there are some lots that buyers may consider more desirable than other lots.  As an example, a larger lot or a lot that backs up to an open space may be more desirable.  Or a lot in a cul-de-sac may also be considered more desirable.    Some buyers may be willing to pay more for these lots.  In my opinion, the extra cost is very subjective, definitely can vary immensely from subdivision to subdivision; and by different builders.   But if the lots with no lot premium back up to a busy road, or face a busy road, I would definitely recommend to a buyer to pay a lot premium to get a more desirable lot.

How do I find out about the lot premiums?

Most builders are very good about having a layout of all of the lots available to build on in a particular subidivision, and what the lot premiums are for the “prime lots”.   Builders are also very good at advertising low prices, similar to what new car lots do.   The entry level price advertised is typically for the lowest priced home with no upgrades to the house on a lot with no lot premium.  It’s the “bare-bones” model.

Will a buyer recoup the extra cost for a lot premium?

This is definitely THE question, and it would be interesting to get an appraiser’s opinion on this.  I think it all depends on the lot premium and the desirability of the lot.  If it’s only a $10,000 lot premium, it’s not that hard to recoup because of the beautiful view of the mountains or backing up to open space.  But if it’s a $40,000 lot premium because it’s on a larger lot, I’m just not convinced that the buyer will recoup the cost when they go to resale at a future date.  The house may sale faster because it’s on a great lot, but in my opinion  there is no guarantee that the value will be that much higher.

Can lot premiums be negotiated?

No easy answer to this question.  But my philosophy is that it doesn’t hurt to ask.  All they can say is no.

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For even more information, contact Kathy Torline by calling or texting 719-287-1049, or email [email protected]

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