In most sampled Southampton cases, yes, once profitability is measured the way a seller actually experiences it, as net proceeds kept rather than as the highest gross number announced. Builders acquired 13 of 16 sampled older homes in ZIP 11968, a rate of 81.2 percent (Frontier Capitals, 2026), and they did so while paying from land value created by finished prices of 3,500,000 to 8,000,000 dollars for new construction on standard lots (Redfin, 2026). A homebuyer can occasionally post a higher gross price for a house in strong condition, but the listed route then subtracts commission, closing costs, repair concessions, and carrying time. This report builds both ledgers in full, because the profitable route is the one that survives its own deductions.
Key Findings
- Builders won 81.2 percent of sampled purchases, 13 of 16 older homes, indicating their net offers prevailed in most cases (Frontier Capitals, 2026).
- A listed sale surrenders 6 to 8 percent to commission and seller closing costs combined, typically 120,000 to 160,000 dollars on a 2,000,000 dollar sale (National Association of Realtors, 2025).
- Carrying an unsold listed home for a full year at the 2,000,000 dollar level routinely costs 80,000 to 150,000 dollars (Frontier Capitals, 2026).
- The builder residual on the simplified illustration reaches 2,000,000 to 2,300,000 dollars of land value behind a 4,500,000 dollar finished sale (Frontier Capitals, 2026).
- The direct route closes in 7 to 21 days against a full selling season or longer for a listed older home, shortening the period in which costs accumulate (Frontier Capitals, 2026).
How should profitability be defined before the routes are compared?
Profitability for a seller has three components: the price, the deductions taken from that price, and the time and cost consumed before the money arrives. Gross price alone flatters the listed route, because listing is the route with the longest deduction list. A fair test therefore starts both routes at the same house and the same week, applies each route documented deductions, and compares what the seller banks and when. The research supplies the deduction figures at Southampton scale, which is what makes a real comparison possible instead of a debate about impressions.
A worked summary at the reference level shows the shape of the test before the detailed sections. Take a house that might list at 2,000,000 dollars. The listed route surrenders 120,000 to 160,000 dollars to commission and closing costs combined, risks 25,000 to 75,000 dollars of repair credits after inspection, and risks 80,000 to 150,000 dollars of carrying cost if the season is missed (Frontier Capitals, 2026; National Association of Realtors, 2025). A builder route figure does not need to beat the list price to beat that outcome; it needs to beat what remains after the deductions have done their work.
One further definition matters. The builder price is not a discounted version of the homebuyer price; it is a different valuation. The homebuyer values the house as a residence. The builder values the lot by residual from the finished sale, in the simplified illustration a 4,500,000 dollar new build minus roughly 1,600,000 dollars of construction cost and a margin near 20 percent, leaving land value in the neighborhood of 2,000,000 to 2,300,000 dollars before site preparation of 40,000 to 60,000 dollars (Frontier Capitals, 2026). The average older home in the sample achieved 23.3 percent of the new build price on a comparable lot, about 1,049,000 dollars against that same 4,500,000 dollar build. When the residual sits above the home value reference by that kind of margin, the builder route begins the comparison ahead before deductions are even counted. The direct builder test is set out in do builders pay more than traditional buyers, and this report extends it from price to profit.
What does the homebuyer route actually deduct?
Work through the listed ledger at the documented 2,000,000 dollar reference level, the level the research uses for its cost examples. The first deduction is commission, typically 5 to 6 percent in total, or 100,000 to 120,000 dollars on that sale (National Association of Realtors, 2025). Commission research after the national settlement period found the average buyer agent commission at 2.40 percent in early 2025 transactions in related reporting, with total structures remaining in the documented band used here (Redfin, 2025). The second deduction is seller side closing costs, title, transfer, and prorations, commonly 1 to 2 percent, bringing the combined commission and closing cost take to 6 to 8 percent, typically 120,000 to 160,000 dollars on a 2,000,000 dollar sale. New York transfer tax, at 2 dollars per 500 dollars of consideration, is part of the closing picture the seller attorney itemizes (New York State Department of Taxation and Finance, 2026).
The third deduction is condition. Repair credits and post inspection price reductions on 60 year old cottages routinely run 25,000 to 75,000 dollars, and they arrive after the seller has already agreed a price, which makes them feel like a second negotiation conducted under time pressure (Frontier Capitals, 2026). The fourth deduction is time. The Southampton resale market clears overwhelmingly between Memorial Day and Labor Day, so a listed older home that misses the season can sit through winter, and a full year of carrying costs at the 2,000,000 dollar level, mortgage or equity opportunity cost, insurance, utilities, maintenance, and high Southampton property taxes, routinely runs 80,000 to 150,000 dollars. The research adds the sobering summary: a 2,000,000 dollar list price that misses the season can net the seller in the mid 1,700,000s before any price reduction. Against that ledger, a homebuyer gross lead needs to be very large to remain a profit lead at the end.
Household demand itself carries one more uncertainty. National data show roughly 15 percent of pending sales falling out of contract in late 2025, and a median of 51 days on market in the same period (Redfin, 2025). A fallen contract in Southampton does not merely delay proceeds; it can push the house across the seasonal boundary into the carrying cost scenario above. Life events drive many of these sales on both sides, with 78 percent of sellers citing a life event as influencing the decision to sell (Zillow, 2025), and a seller working to a life event deadline prices certainty as part of profit, reasonably.
What does the builder route deduct, and what does it add?
The builder route deduction list is short by design. There is no commission, because there is no listing. There are no seller side closing costs of the 1 to 2 percent kind in the direct structure documented in the research, so the combined 120,000 to 160,000 dollar listed deduction on a 2,000,000 dollar reference sale does not leave the builder price. There is no inspection renegotiation, because the house is bought as it stands, and the documented repair credit exposure of 10,000 to 30,000 dollars that owners commonly face in household negotiations does not arise. Carrying cost exposure shrinks to the chosen closing window, 7 to 21 days for a fast close, because the seller selects the date rather than waiting out a season.
The route also adds two items that are easy to undervalue. The first is renovation avoidance. The research illustration shows a 200,000 dollar update returning 140,000 to 180,000 dollars for a live in buyer and 0 dollars for a redeveloping buyer (Frontier Capitals, 2026). A seller preparing for the homebuyer route often spends into exactly that partial return trap, funding work that the market repays at a discount, while the builder route requires no preparation spend at all. The second addition is tax clarity on timing: the exclusion rules and the two of five year test govern the household seller gain whichever route is chosen (Internal Revenue Service, 2025), and a closing date the seller controls makes it easier to place the sale in the intended tax year under attorney and accountant guidance. New York contracts on either route run through attorney review under state association customs (New York State Association of Realtors, 2026), so the builder route savings do not come from skipping professional protection. The parcel facts behind the builder figure can be checked in the assessor record at any point (Town of Southampton Assessor, 2026), and the step by step ceiling is examined in how much a builder will pay for an older house.
In which cases does the homebuyer route still win on profit?
Three cases deserve honest statement, because this report is a comparison and not a brief for one side. The first is the genuinely strong house: a well maintained, well laid out home that a household buyer can occupy without major work, on a lot where the finished new build would achieve only the low end of the 3,500,000 to 8,000,000 dollar range (Redfin, 2026). There the residual is thin and the residence value is real, so a competitive household result, even after the 6 to 8 percent deduction band, can beat the builder figure. The second case is the small lot near the 10,890 square foot sample minimum (Town of Southampton Assessor, 2026), where the replacement build is constrained and land value compresses toward house value. The third case is the seller with no time pressure and a house presented at the very start of the Memorial Day to Labor Day window, who can hold out for a motivated household buyer without carrying the property through winter.
Even where those conditions line up, a seller serves their own interest by working through the numbers side by side instead of presuming the outcome. The seller needs the builder figure in hand, verified as the next sections describe, before concluding that the household route is the profitable one. In the sample, the builder route prevailed in 13 of 16 cases (Frontier Capitals, 2026), and several of the homes in that count were ordinary, cared for houses whose owners might reasonably have expected the household market to lead. The lot, priced by the street finished evidence, decided otherwise. Sellers who want the net worksheet organized for them can use the methodology page to see how the research figures are assembled before requesting figures.
How is a profitable builder figure verified before it is trusted?
A profitable paper figure that fails to close is the least profitable outcome of all, because it consumes the season the household route needed. Frontier Capitals discloses its position in the transaction: it is a wholesaler that sources off-market deals to builders, and the builder presented is the party who must perform. The verification standard from the research has four elements. Proof of funds in the buyer name, dated within the last 30 days, comes first, with no substitution of a pre-approval or a private lender letter. Recorded deeds in the buyer entity name, checkable through the county clerk, come second, showing completed local closings (Suffolk County Clerk, 2026).
Earnest money of typically 1 percent or more, forfeited if the buyer walks away, comes third, converting the offer into a commitment with a cost for failure. The absence of an assignment clause comes fourth, since the documented signature of a contract never meant to close is an assignment clause paired with a token deposit. Attorney review then confirms the terms under New York practice (New York State Association of Realtors, 2026), including the closing date and any leaseback the seller profit plan depends on. A builder figure that passes all four tests can be entered into the net comparison at face value, which is the standard the homebuyer gross figure, with its deduction ledger and fallout risk (Redfin, 2025), rarely meets.
Methodology and limitations
This comparison uses the sample and cost ledgers compiled for this research: 16 pre-1981 homes in ZIP 11968, 13 acquired by builders, an average older home price of 23.3 percent of the new build price on a comparable lot, repair credits of 25,000 to 75,000 dollars on listed older cottages, and annual carrying costs of 80,000 to 150,000 dollars at the 2,000,000 dollar level (Frontier Capitals, 2026). Commission and closing cost percentages follow the cited commission research (National Association of Realtors, 2025; Redfin, 2025), transfer tax follows the state guidance (New York State Department of Taxation and Finance, 2026), and finished prices follow sold records (Redfin, 2026). The residual land value range is a simplified illustration on a 4,500,000 dollar build and is labeled as such; it demonstrates builder capacity and is not an offer. The research publishes no audited net proceeds dataset for matched pairs of sales, so profitability is assessed by applying the documented deductions to each route rather than by comparing two closed files on the same house. That method limit is stated plainly: for an individual property, both figures must be obtained and netted before the answer is final.
Conclusion
Measured on net proceeds, timing, and preparation spend, the builder route is more profitable in the majority pattern this research documents: builders took 81.2 percent of the sampled homes (Frontier Capitals, 2026), paying from finished prices of 3,500,000 to 8,000,000 dollars (Redfin, 2026), while the homebuyer route subtracts 120,000 to 160,000 dollars of commission and closing costs on a 2,000,000 dollar reference sale before repairs and carrying time are counted. The exceptions are real but specific: strong houses on constrained lots, sold at the top of the season with no deadline pressure. Every other owner should obtain the builder figure before concluding that a household listing is the profitable path.
For a net comparison on a specific Southampton house, call 401-219-4207 or email [email protected]. If the highest price and the highest profit are two different numbers for your house, which one have you been aiming at?
Frequently Asked Questions
Can a homebuyer gross price be higher and still leave the seller with less?
Yes, and at Southampton levels it happens routinely. A listed gain must survive commission of 5 to 6 percent and closing costs of 1 to 2 percent, a combined 120,000 to 160,000 dollars on a 2,000,000 dollar sale (National Association of Realtors, 2025), plus repair credits and carrying costs (Frontier Capitals, 2026). A gross lead inside that combined band produces a net loss against a direct builder figure.
What is the largest single cost of waiting for a homebuyer?
Time, when it crosses a season. The research puts a full year of carrying costs at 80,000 to 150,000 dollars at the 2,000,000 dollar level and notes that a missed season can net a 2,000,000 dollar listing in the mid 1,700,000s before any price reduction (Frontier Capitals, 2026). Closing directly, on a timetable of 7 to 21 days, takes away the bulk of that risk.
Does selling to a builder mean accepting a low price for the house itself?
It means pricing the lot rather than the house. In the simplified illustration, residual land value reaches 2,000,000 to 2,300,000 dollars behind a 4,500,000 dollar finished sale (Frontier Capitals, 2026). Where that residual exceeds the residence value of the cottage, the builder price is the higher valuation, not a discount.
Are taxes different between the two routes?
The capital gain framework is the same, including the exclusion rules and the two of five year test for a principal residence (Internal Revenue Service, 2025). Transfer tax follows New York guidance at 2 dollars per 500 dollars of consideration (New York State Department of Taxation and Finance, 2026). The difference between routes is the deduction ledger and the timing control, not the tax code.
How often did the builder route win in the sample?
In 13 of 16 sampled purchases, or 81.2 percent (Frontier Capitals, 2026). The three remaining cases are the reason this report insists on running both figures for each house, with the lot record checked (Town of Southampton Assessor, 2026) and the builder funds and deeds verified (Suffolk County Clerk, 2026).
Sources
- Frontier Capitals, 2026. 189 neighborhood builder acquisition sample: 16 homes sampled in 11968, 13 acquired by builders, average older home price 23.3 percent of new build. Market data.
- Redfin, 2026. Recently sold homes and new construction, ZIP code 11968, Southampton NY. Market data.
- National Association of Realtors, 2025. Typical seller commission structures, Hamptons market. Industry report.
- Suffolk County Clerk, 2026. Recorded deeds and parcel records, Southampton NY. Official record.
- New York State Department of Taxation and Finance, 2026. Real estate transfer tax and mansion tax guidance. Official record.
- New York State Association of Realtors, 2026. Residential contract customs: attorney review and contingency standards. Industry report.
- Zillow, 2025. Consumer Housing Trends Report: 78 percent of sellers cite a life event as influencing the decision to sell. Market data.
- Internal Revenue Service, 2025. Topic No. 701, Sale of Your Home: exclusion rules and the two-of-five-year test. Government data.
- Redfin, 2025. National market data, late 2025: median days on market 51; roughly 15 percent of pending sales fall out of contract; investors purchased 17 percent of U.S. homes in Q3 2025. Market data.
- Town of Southampton Assessor, 2026. Parcel dimensions, zoning, and assessed land value records. Official record.