As land values have dropped to a fraction of what they once were, many builders believe this as an opportune time to make some strategic moves to tie up choice parcels. Big Builder Online surveyed its readers recently about sealing land deals and the credit crunch affecting banks' appetites for acquisition and development lending.
The majority of respondents--71.4%--said they are planning to enter into land transactions in the next six months; however, 21.4% said it isn't in their future, and 7.1% of the respondents are still undecided.
When asked how willing their banks are to lend for A&D, the respondents were split down the middle: half of the respondents said somewhat willing, and the other half said unwilling.
One respondent who said somewhat willing noted: "Banks may offer financing for REO/note deals with a proven track record and adequate skin."
According to the majority of respondents--37.7% and 57.1%--developers are very willing and somewhat willing, respectively, to find alternative ways for builders to tie up land. Only 7.1% of the respondents said they are finding developers to be unwilling.
Waiving takedown schedules and reducing deposit and earnest money amounts are the top two concessions respondents said developers are making right now to get deals done. The other top concessions include using a model home in lieu of deposit or earnest money and giving builders lots in exchange for a portion of the proceeds of sale.