Buying in Bulk

The success of the Costco chain of stores has proven that buying in bulk makes sense to a lot of us. From retail sales to real estate, the bulk purchase concept is logically sound.

Builders who negotiate a purchase of all or a portion of a subdivision may find that the bulk sale is beneficial, allowing for a better purchase price, among other things. We see these types of transactions more and more as residential development evolves to a separation of development from home building.

Builders who buy super-pads or finished lots can file for a public report before the acquisition has been completed, adding another layer of efficiency to this type of buying. There are a few things to address in the documentation in order to get the best results:

  • incremental take-downs work, but the take-down schedule must include an outside date (calendar date) for the last take- down.
    • Documents that don’t include an outside calendar date will result in deficiencies and delays at DRE.
  • The outside date will allow the DRE to pinpoint an expiration date for the public report
  • Having the outside date be conservative and at least one year out will allow you to obtain a full-term preliminary (pink) and/or conditional (yellow) report
  • At least one lot must be acquired in order to obtain a final (white) public report, called a “Limited Term” Public Report. This report will expire 30 days after the outside date, and can be converted to a full-term report with no additional DRE fees
  • The take-down schedule should be tied to the marketing phasing schedule to avoid delays or complications in HOA budgeting.

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