La Jolla · Seller guides · Process

Selling your home to a builder

Short answer: Some buyers want your land more than your house. A builder may plan to remodel, tear down or build new. These sales often take longer, because the builder needs time to check the lot and the rules. Read the study period, the deposit and the permit terms slowly.

Maybe a builder has knocked on your door. Or maybe you think your lot is worth more than the house on it. Either way, selling to a builder works a little differently. Here’s how, in plain words.

I’m Weston Clark, Founding Member of the Dickinson-Clark Team at Compass. I help sellers in La Jolla and coastal San Diego compare builder offers with regular buyer offers, side by side. You can talk about fees with Weston directly. This form does not give a commission quote.

Talk to Weston Jump to FAQ What is my home worth?

Related: New construction · Coastal rules · Remodel rules · Historic review · Guides · La Jolla · Pricing your home · Selling off-market · Home marketing plan

Who buys homes to rebuild

A builder buyer is someone who buys a home mainly for the land. It might be a small local builder, a larger company, or a person who wants to build their own new home.

They may plan to:

• Remodel the home in a big way
• Tear it down and build new
• Add a second unit, like an ADU, which is a small extra home on the same lot

Some builders reach out before you list. Others make offers once a home is for sale. Either way, you don’t have to answer right away.

What a builder checks first

Builders look at what they could build, not just what’s there now. Here’s what they often study:

• Zoning, which is the City’s rules for what can be built on a lot, and how big
• Setbacks, which are how far a building must sit from the lot lines
• Slope, soil and drainage, which can change what it costs to build
• History review. Older homes may need a City review before some permits. See my historic review guide.
• Coastal rules. Much of La Jolla sits in the coastal zone, which is the area near the ocean with extra state rules.

My remodel rules guide covers more of the City side.

Coastal permits, in plain words

Building near the coast often needs a coastal development permit, which is a state permit for work in the coastal zone. California law says “any person … wishing to perform or undertake any development in the coastal zone … shall obtain a coastal development permit.”

This matters to you as a seller because it can add time. A builder may want time to learn what they could get approved before they commit. My coastal rules guide covers how this works.

Contract terms to read slowly

Builder offers often have terms that regular buyer offers don’t. Here’s what I read slowly with you:

• Study period. This is the time the builder gets to check the lot before the deal is firm. Longer periods mean more waiting for you.
• Contingencies. A contingency is a condition that lets the buyer back out if something isn’t met. My contingencies guide explains them.
• Deposit. This is the money the buyer puts down to show they’re serious. When it can be released to you matters.
• Permit terms. Some builders ask to wait until they get permits. That can take a long time.
• Assignment. This means the buyer can hand the contract to someone else. Ask who you’d end up selling to.
• Access. Builders may want to test soil or survey the lot. Agree on when, and who fixes any damage.
• Staying after the sale. If you need time to move, a rent-back lets you stay for a set time after the sale.

A cash offer with a short study period isn’t the same as one with long permit terms. My cash offer guide covers what “cash” does and doesn’t mean.

What still applies

• Disclosures. You still owe the buyer disclosures, which are forms that tell them what you know about the home. My disclosures guide covers them.
• Work without permits. Builders often ask about it. My unpermitted work guide explains how to handle it.
• As-is sales. A sale where you don’t make repairs still has rules. See my as-is sale guide.
• Taxes. Selling land or a home can bring up capital gains, which is tax on profit. Some owners look at a 1031 exchange, which lets some investors put off that tax. See my capital gains and 1031 exchange guides, and talk with a tax pro.

How I help you compare offers

• A side-by-side look at a builder offer and a regular buyer offer
• A plain read of the study period, deposit and permit terms
• A seller net sheet, which is an estimate of what you’d take home
• Help deciding whether to talk with a builder now or list first

This guide is general information. It’s not legal or tax advice. For legal questions, talk with a real estate lawyer. For tax questions, talk with a tax pro.

More on sandiego.homes

• New construction: what building new looks like here
• Coastal rules: permits for work near the ocean
• Remodel rules: the City side of remodels
• Historic review: the City’s review for older homes
• Contingencies: conditions that let a buyer back out
• Capital gains: tax on profit when you sell
• Guides · La Jolla

Talk with Weston about a builder offer

Have a builder offer, or think your lot may draw one? Tell me about it. I’ll help you read the terms and compare your options.

Or call (858) 997-8998 · weston@sandiego.homes · Search on Compass

Free seller tools: What is my home worth? · What would I take home? · Real estate words in plain English

Have another question? Quick answers to common questions

Sources

• California Public Resources Code §30600 (coastal development permit)
• California Coastal Commission
• CA DRE — Consumers
• HUD — Fair Housing Act overview