1)Very commonly a builder will hold an inventory of lots which buyers can choose on, and of course build with that builder on those lots.
2)You may come across a model home in a neighborhood where that particular builder is building but does not own any lots in that neighborhood. However the lots in this neighborhood can be reserved to a certain list of builders. More common now that 10 years ago since builders don't have to carry a large number of lots. Many builders went out of business during the downturn of the housing market simply because the cost to carry their lot inventory was too much to bare.
3)This scenario is much more common for acreage parcels, in the general metro area anyway, and these are lots that are simply for sale, you bring your own builder. The lots closer in to the metro are generally tied up by builders and developers with an approved builder list.
Now! Depending on which scenario you come across financing will also vary. Commonly you can find a lot with a builder who will have their own construction financing, you're required to pay earnest money at any variable amount, typically 5%. If you buy a lot and bring a builder you may need to acquire construction financing and taking draws from that loan until final close when you would essentially refinance with a new loan.
There are a lot of variables and I apologize for missing some of the detail. I spend a lot of time searching for lots and work with custom builders so feel freed to bounce any questions off of me that you have :)
Yes. If you buy a lot and have a home built on it, you can have one loan for the entire project. Now, getting there may take various routes. If the lot is already builder owned, this will be the simplist. If you find your own lot, have to get plans approved and go through a lengthy process, you may end up starting with a lot loan but later wrapping that into an all-in-one construction loan.
Talk to some local lenders to see what you qualify for and to understand these products.
You can either find a builder that you prefer and see what lots they have available to choose from, or seek out a lot that you like with a real estate agent and then find a builder that will build on it. Depends on what your preferences are. I have worked with clients that are partial to a builder and want to start there and I have worked with clients that would prefer to seek out their dream lot and then choose a builder. I recommend always having a trusted agent to represent you that can help you begin the process and have your best interest in mind at all times. I hope that helps:)
Best of luck!
To break it all down.
1. Choose the lot.
2. Find out who owns it. If it is a builder, you will likely have to work with that builder. If it isn't, then you need to interview builders, or have plans drawn and have builders bid on the project. Don't underestimate the power (and savings) of having someone draw out the plans and have builders compete for the project.
3. Once you have this information in hand, find a loan officer to help with the project. This step may move to position #2 if you need to tie up the lot before planning the house and choosing the builder.
4. I can't underscore enough that an agent can be very helpful in your search as well as some can be very helpful in your building process. Most builders have money built in for a buyer's agent that they will put in their pocket if you don't have one. Find an agent who understands the building process and new construction though, a resale agent bumbling around in new construction might end up costing you more money than they save you.
Coldwell Banker Burnet
licensed MN Real Estate Broker