Demand is so outstripping supply in the sunniest, snowiest and wealthiest destinations that buyers are paying for dirt.

Agents Selling Imagination

The rush to buy luxury and second-home properties in much sought-after destinations has depleted inventories.  The result?  Buyers are agreeing to buy dirt and wait a couple of years (or more) before they can see “their” house.

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A recent survey by HomeLight, a San Francisco-based real estate referral company, found that in the prior 12 months, one out of every five buyers in the US bought a home sight unseen.

This sight-unseen market is so frenzied that some buyers are looking for ways to sell their “position in line to buy” a “future” house to another buyer also wanting an opportunity to own a home-to-be-built.

Nelson Reichert, sales director of Acre Villas in San Jose del Cabo on the bottom of Mexico’s Baja Peninsula, said, “In this market, there is clearly more demand than supply.  Once people understand that fact, they are a lot more open to the idea that the only way (to buy a luxury or second home) is to get what they want pre-construction.”

“Buying into the Future”

Reichert continued.  “Buying on faith is all about credibility and trust.  Branded offerings make it a lot easier for people to feel secure in the process…If people trust that the product will be delivered – as described, in the timelines established – they can generally get their heads wrapped around (buying a home that is yet to exist.)”

John Fair, managing director at The Strand, a new private development under construction in Turks and Caicos, agrees.  Fair said that people not only have to get used to buying into the future, they have to expect it. Fair noted that The Strand has waiting lists for properties ranging from two-bedroom villas priced at $2.45M, three-bedroom homes priced at $3M, and grand homes priced at $10M.

Reselling/Flipping To-Be-Built Homes

This luxury/second-home market in hot, wealthy locations is now experiencing owners of yet-to-be built properties flipping or reselling their only imagined houses to other buyers willing to wait and imagine.

Myles Newell, a principal with Waypoint Resort Real Estate who leads the sales at The Residences at the St. Regis Los Cabos, said, “…if the project is sold out or the (to-be-built) property does not compete with their current offerings…the developer will grant this assignability.”  Newell said that 3-D renderings and animation enable developers and flipping owners to show highly motivated, “can’t wait” buyers life-like presentations of what they are buying.”

Ryan Winegar, sales manager with Quivira Los Cabos, a luxury home development connected to the Quivira Golf Club, said, “I can’t speak for homes with other developers, but in the case of the properties within the developments I promote, (flipping) can absolutely happen…(with a contract clause) giving the client the right to transfer their contractual obligation to anyone for a small percentage of their purchase price.”

Winegar believes with certainty “…that now more than ever opportunistic investors are looking at this option as yet another reason to buy in the present market…” yet-to-be-built homes.

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