After seeing potential buyers camping out at the opening of new condo complexes in Sunnyvale, CA, O’Brien Homes come to the conclusion that they did not want that trend to continue. Each month, as a new development went under construction, around 50 pre-qualified, down payment-ready buyers would show up at the sales office hoping to nab one of the sites available. O’Brien Homes began to draw numbers similar to Bingo in order to decide who ‘won’ the units. For each available unit, the company drew a winner and a back-up just in case the primary winner fell through.
"Some people would come back month after month," said Frimel. "It got very frustrating for them."
This frustration built up even more as the prices began to rise. Each new home that came on the market saw a steady mark-up. The two-, three- and four-bedroom homes started out between $420,000 and$620,000. The last groupingwent for $555,000 to $815,000, a 32% increase. But the buyers kept flocking. Returners started getting each bingo numbers to increase their chances. Recently, O’Brien Homes ran out of inventory to sell leaving too many disappointed buyers to count.
This lottery option as a means to find a buyer is not unique to O’Brien Homes or even for California alone. Virginia and Florida are seeing similar market conditions and do not know of any other way to work with the high demand and limited supply.
Last weekend, more than 1,000 people showed up for a sale of lots in its Boynton Beach, Fla., community featuring homes ranging from the high $300,000s to the low $600,000s. GL Homes held a lottery in which 75 homebuyers entered to win their first choice of lots.