New Construction
Why do builder prices go up between phases, and what is a lot premium?
By Steve Lockhart
The short answer
Almost no community opens all at once. Builders sell in phases, and each new phase typically carries higher prices than the last.
Full answer
Almost no community opens all at once. Builders sell in phases, and each new phase typically carries higher prices than the last. Early phases are priced to build momentum and compensate the buyers who live through construction. As phases sell and demand is proven, prices rise, and the last phases often sell for the most.
A lot premium is the additional price attached to a specific site beyond the base: more for a view lot, a cul de sac, a larger yard, or a home backing to open space, and sometimes less for an interior lot, a smaller yard, or one near a busy street. Site prices are set by desirability and the builder publishes them on the price sheet.
The practical advice: prices almost never come down between phases, so waiting for a deal usually means paying more later. If the community fits and the lot works, deciding early has value. And when you compare lots, compare the walk-in total, base plus lot plus upgrades, because a premium lot is only worth its premium to a buyer who values it.
Go a little deeper
Frequently asked
Questions people often follow up on
Should I wait for prices to drop in a later phase?
Do not count on it. Builders typically raise prices as phases sell, and waiting almost always means paying more for the same or lesser inventory. If the home and lot fit your budget and needs now, the risk of waiting is usually higher than the risk of buying.
Is a lot premium negotiable?
Occasionally, especially toward the end of a phase or when a premium lot makes a home harder to sell, but during strong demand the builder holds the sheet. Negotiation energy is often better spent on incentives and upgrades than on the lot premium, though we always ask.
What kinds of lots carry the highest premiums?
Generally the ones that are rare and desirable: views of mountains or open space, corner or cul de sac positions, larger yards, and homes that back to parks or washes. The premium reflects what the builder expects future buyers to pay for the same position, so what looks expensive now may resell well later.
The Lockhart Method
The Lockhart Method
Your Home | My Strategy | Proven Results
My strategy: price the phase and the lot together before comparing to resale. I show you the phase pricing history, what the same lot type sells for in finished phases nearby, and the walk-in total on each candidate, so you buy position with your eyes open, not because a deadline is blinking.
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