| Help for BTBuilder | © BuildTopia 2009 |
Core Lot Price vs. Lot Premium. Discover when to utilize the two to fit your business needs.
What Is It? The Lot Premium is a dollar value that the user/developer may add to each lot/unit within the project.
Where Is It Applied? The premium is applied at the lot/unit level and, therefore, the premium value may differ from lot/unit to lot/unit. Note: A Lot Premium does not have to be added to each lot/unit.
Why Use It? This is usually done to indicate the “added” value that some lots/units represent, such as premium location or larger size.
What Is It? The Core Lot Price is a dollar value that the user/developer assigns to all lots/units within the project.
Where Is It Applied? The Core Lot Price is applied at the project level and, therefore, does not differ from lot/unit to lot/unit. Note: If used, the Core Lot Price is available for each lot/unit, but may not be separated out in the purchase price within BuildTopia. The user would manage the decision of whether to “apply” the Core Lot Price by how the sales contract(s) are generated. A single “house+lot” contract is used when embedding lot price in the base house. Two contracts are used when separating the lot price from the base house – (1) a “lot only” contract and (2) a “house construction” contract.
Why Use It? When financing a home purchase, all buyers pay a transfer fee. In states with high transfer fees, it is advantageous to the buyer to purchase the lot and the house separately, as it reduces the purchase amount on which the transfer fee is calculated (see example below). So some builders/developers will use the Core Lot Price to allow the home purchase to be more affordable for a buyer. In addition, another advantage to the user/developer is that by selling the lot and home construction separately, the buyer is responsible for securing the construction financing, which eliminates this “burden” from the user. In essence, the user may be able to build more homes within a given time period because all of the “burden” of securing construction financing rests with the buyer. Even when the user is responsible for the construction financing, it is advantageous to use core lot pricing because, as it did with the buyer, it reduces the purchase amount on which the transfer tax is calculated.
Scenario. The buyer is purchasing Base House A on Lot 101. In both examples below, the user is applying a $50,000 lot premium because Lot 101 is either larger or in a more desirable location.
|
|
Example One illustrates the pricing when a Core Lot Price is not applied, rather the lot price is embedded within the Base House Price. |
Example Two illustrates when a Core Lot Price is applied and is separated from the Base House Price ON the contract. |
|||
|
|
Example One “No Core Lot Price” Single Sales Contracts |
Example Two “Applying Core Lot Price” Two Sales Contracts |
|||
|
|
In BT |
On Contract |
In BT |
On Contract |
|
|
Base House Price |
450,000 |
450,000 |
450,000* |
350,000* |
|
|
Core Lot Price |
N/A |
N/A |
100,000** |
100,000** |
|
|
Lot Premium |
50,000 |
50,000 |
50,000** |
50,000** |
|
|
Total Price |
500,000 |
500,000 |
500,000 |
500,000 |
|
|
Transfer Fee (1%) |
13,050 |
10,150 |
|||
*Contract One
**Contract Two
|
Contact Customer Support: 1-800-411-2020 Option 4 or support@buildtopia.com |