Builder demand more than earnest money (Converse, Howe: sales, buying a house, neighborhood)

[flexiblepony]

Is it the norm for most builders to require a deposit for 50% of the upgrades in addition to the earnest money? My first builder only required the earnest money upfront and pay the rest at closing. With this builder, they require you to deposit 50% of the agreed upon options/upgrades, 50% on any additional upgrades on top of the agreed upon options, and earnest money. The rest will be paid at closing. I don't think that sounds right. I'm not sure if they're trying to rip me off. I was working with an agent but she was no help at all. Wondering if someone who has recently build a home or in process of building can lend me some help. Thanks!

[nmnita]

Originally Posted by flexiblepony

Is it the norm for most builders to require a deposit for 50% of the upgrades in addition to the earnest money? My first builder only required the earnest money upfront and pay the rest at closing. With this builder, they require you to deposit 50% of the agreed upon options/upgrades, 50% on any additional upgrades on top of the agreed upon options, and earnest money. The rest will be paid at closing. I don't think that sounds right. I'm not sure if they're trying to rip me off. I was working with an agent but she was no help at all. Wondering if someone who has recently build a home or in process of building can lend me some help. Thanks!

I hope someone can help you with this one, it doesn't seem quite fair, but can he request this? My guess is sure, he can require anything. What does your contact say or does it?

NIta

[FalconheadWest]

This is becoming more and more common as many buyers have had to back out of their homes because of lack of financing. It is money they keep in case you pick something that will be hard to resell like blue counters or hot pink carpet. 50% of upgrades is starting to become the norm, but many builders will allow you to pay it in installments if you ask them.

[flexiblepony]

The contract does say 50% of options paid upfront, but the sales rep says i only have to pay 50% upfront if i go beyond the agreed amount upgrades. I think she wrote it somewhere, but she could have thrown the paper away, now that they are changing their tune. As for financing, we provide the approval letter from the lender, so the builder should feel comfortable that we'll be able to purchase the home. Personally, i don't want to pay that much upfront because if they do a bad job or we have issues down the road that they refuse to resolve to our satisfaction, i don't want to lose the 50% that i put down because it's non refundable.

[FL70]

Conversely they don't want to be on the hook for all of your upgrades.

I'm not saying it's right or wrong, but simply seems to be the cost of business.

[loves2read]

I would think that most of your upgrades are in final stages vs initial one -- like piered/beam foundation...
try to negotiate a % per $$$ over the normal incentive prices less than 50% up to certain amount

what do you plan on upgrading???
if it is carpet that is one of the last things to go in...
and carpet is one of the cheapest to replace--would not really worry about upgrading that
but going to wood from carpet is more expensive and sometimes requires changes in the foundation level to make sure the foundation in the wood areas will be poured a little shallower than areas with tile or carpet...

if you have reservations that this company/builder is not going to be able to stand behind the home's construction--then you should not be buying a house from him...
put the money in escrow subject to YOUR acceptance of the work--so that it does not get paid unless you are happy that work was done properly...

[FalconheadWest]

You might have an approval letter right now, but if the house isn't completed for several months, you might not have approval any longer. Long programs change daily and weekly these days. People who thought they could easily get a mortgage, can't.

Unless you're paying cash at closing, you cannot guarantee any financing, hence, the builder wants to make sure they get compensated as well.

[MurphyPl1]

Originally Posted by flexiblepony

The contract does say 50% of options paid upfront, but the sales rep says i only have to pay 50% upfront if i go beyond the agreed amount upgrades. I think she wrote it somewhere, but she could have thrown the paper away, now that they are changing their tune. .

you think?

You are making a substantial purchase and youre doing it via note paper? You should have a copy of any agreements made. To protect yourself. It is irresponsible to assume the builder is going to protect you.

Originally Posted by flexiblepony

As for financing, we provide the approval letter from the lender, so the builder should feel comfortable that we'll be able to purchase the home.

And what if you just flat out change your mind? I've seen that a couple of times in this neighborhood. And then the builder had to deal with someone's structural changes and flooring choices that were not common to the types of homes they build as specs.

[nsumner]

Most builders will require that you put 50% of the upgrade amount at the time you sign the contract in addition to the earnest money. They want you to have some skin into the process so they don't end up with a home to sell. However, you could negotiate to put the upgrade money down at the time of framing so the home has not been over-customized where they would have difficulty selling it.

Your financing situation could change too between now and 6 months from now when you are going to close.

Lastly, no matter what you and the builder agree on, make sure that it is on a change order signed by both parties. No verbal agreements whatsoever.

Naima

[loves2read]

and GET YOUR OWN RE AGENT
you are working with the builder's sales person--NOT a RE agent--
that person is no friend to you...
all kinds of documents can be lost, promises can be made and not lived up to
this is about SALES--which means YOU are on the losing end in most builders' minds