how much money do builders make on an average house that they sold for 500k?

Answer 1

It varies from area to area.

But from the best of my knowledge which isn't perfect.

They make from $50K to 150K that's a wide margin. But there are so many variables. Some could make more and some less.

The more they build the less they have to make on each one. So they can sell them cheaper. The fewer they build they must get more per unit. But of course they have competition just like every other business and many expenses and call backs on the house for years to fullfill the warrantee period.

Their industry is feast or famine. No one worries about the builders and realtors when the market tanks and no one can buy or sell a ding dang thang. So you have to consider they may not make any money for several years when times are tough.

While it always looks good when the times are good. No one is even looking at what they go through when times are tough.

Answer 2

It really depends. Builders purchase large tracts of land and subdivide themselves or purchase from a developer. Since, they are buying these parcels in bulk it lowers their cost per building lot. I am an appraiser and I value subdivisions all the time. Typically, they make about 15%-20% profit off of each sale. It really depends on the area. I value property in the Hamptons, NY and builders buy a plot of land for $3-4 million and put a large10,000sf home and then sell it for 10 million. It costs alot to build because everything is high-end and custom maybe 2.5-3 million and yield about the same when they sell it.

Answer 3

Are you going to become a builder? If not why do you care? You buying a house and want to know how much profit they are making so you can try to get the price down?

Answer 4

There's no way to know. It depends on what they paid for the land, how much the sub-contractors charged, cost of materials, engineering, etc. A good guess would be 10% of the price, but that would be just a guess.