When a developer or architect chooses a large plot of land, he will generally segment it and go through the process of changing it into individual lots. The developer needs to put in streets, utilities (usually underground utilities), and green areas within the individual lots.
In Mexico, any housing development needs to have green areas by law. However, some are just by the design of the developer. The green areas could be parks and playgrounds for the kids, even sports. Depending on the project and size, there could also be a gym or golf course on some projects.
How soon are the pre-construction homes sold?
First, the master developer finds a lot. Secondly, he will sell some of the lots to other developers who will buy the individual lots and then build their models of homes.
After that, the developer could have 10, 20, or 50 lots. Then, he would build one or two, maybe three or five different show homes. Finally, when the show homes are built, the sales team will be able to show the buyer the different options. The way it feels like, what it looks like, how big it is.
Therefore, depending on what the buyer likes, he’ll first choose one of the existing lots and then select a model of a home that fits nicely. Thus, the buyer will be purchasing a home that isn’t even built.
Evidently, the important thing here for a buyer is to be certain that the developer, the seller, does have the common areas completed if they are included in the development. That the roads are constructed, and the utilities go right up to the lot. Also, he has to verify that electricity exists. This will make the construction more manageable and less risky because everything is complete.
In that case, the developer can go right to work. In a week, they can start the construction of the house. Hence, the payment plan is essential, and it will show what the seller is offering. Usually, they’ll come in with maybe a 20% down and payments upon construction advances. However, it depends on the amount of money for your down payment. The more money you put down, sometimes you get to negotiate a little bit more of a discount on the overall price.
Are there any risks when buying pre-const
There are risks, for sure. I’m going to give you three examples. Number one, you have John Smith, and he is selling a house down in Mexico. Number two, a developer has a house completed, and he’s selling a brand new house. Finally, the developer is selling a house in option three, but it is not even built.
Obviously, in option one the risks are a lot less when you compare these three options because you see exactly what you’re going to get. You can see if anything needs repair, so you pay for what you’re getting.
Now, option two is similar to the first option, except that you are buying a brand new house. You have a little more risk because maybe some hidden flaws haven’t come to light. Consequently, that’s a bit of a risk in there too.
In comparison, you’re buying an idea in your head in option three. You’re buying a piece of paper with a design. So that’s risky because one of the things that may happen is that the developer runs out of money. He is not able to complete the house. What do you do then?
Or maybe while constructing, they run out of one of the materials, and they have to replace it, and it’s not what you had envisioned. You are risking buying into a vision in your head that is not something you can touch and feel.
The Convenience of Buying Pre-Construction in Mexico
While there are risks, there are also advantages. The main advantage is that you can design the house precisely to your dream. Therefore, if you like a three times large walk-in closet, you can design it to your dreams and taste. You can modify what you don’t like.
Commonly, the developer offers extra discounts. For instance, when working with a developer, he has 50 units to sell, so everybody’s anxious to get the ball rolling. If you’re the first or one of the first buyers, you are taking on more risk.
In the beginning, the developer may still be building the pavements of the roads. The park isn’t done yet, so you, the buyer, are taking on significant risks. The delivery date is going further into the future. Therefore, you’re able to negotiate more discounts.
Clearly, other factors also give the seller his negotiation power. Some of them are his history, how many projects he has done, the success rate of those other projects, and his experience. Obviously, that’s less risk for the buyer, but it also takes a little of the negotiation span.
Discounts in Pre-construction
As a developer, you have different moments when you can invite investors and end-user buyers. Let me explain. The developer finds land. He has a project developing in his head and on paper. Thus, from right then, they have to secure the purchase of the land, so they have a variety of choices. They can go to the bank to get a loan or have enough cash. Maybe they already have a small group of partners.
Usually, once they secure the land, they have the plans on paper. They’ve already submitted them to the municipality in the state, but there are times when you can come in as an investor. They might open it up to what I call the off-the-plan investors. It isn’t so much that you’re buying the house, or it might be, but you’re coming in more as a partner in this venture.
The second price list that is common would then be friends and family. It usually comes after the permits from the city municipality have already been released. Therefore, the developers are now ready. They have their permits now. They’re actually ready to break ground to start everything. I would call that stage: friends and family prices.
Discounts According to the Stage of the Sales.
Here the developer already has the permits for the construction, and special discounts apply here because you’re still at the very beginning. You’re the first to be able to reserve a lot. You may choose the lot next to the lake or the pond with the most incredible view. Right next to a golf course with the most beautiful scenery.
The third discount is the first price list. There are also different stages. The first price list could be that you’re, in fact, the first end-user, and your money is going more towards a purchase of a lot or a house. I am going to make this up a little bit. Some developers make this first price list where, let’s say, you get a 15% discount.
Then the first 20 units sold, the buyers can receive a 20% discount. After that, maybe from unit 21 to 50, the deal is only 10%off. Eventually, from 50 to 100, it could just be a 5% discount. Finally, anything above that, you buy straight with the standard price list.
Other Benefits of Buying Pre-Construction in Mexico
Some developers offer that they design the house from scratch, anything you want, a customized home. Suppose you want to change the number of bedrooms or the kind and number of garage doors. And from there, the buyer participates in everything.
There’s also another semi-customized home. There, the developer has five models, but inside each model, maybe you have the liberty to make some choices as a buyer. Perhaps you can choose the kind of floors, the kind of kitchen. You have the advantage that you get some cost savings, and you might be able to get the price savings as well.
The third option is to choose the house, the already complete model, you get the keys, and there are no risks. You see what you get.
Contact one of our Top Mexico Real Estate representatives and find out which pre-construction projects we have available. And remember…We Make it Happen.