question about making an offer! (agent, price, construction, legal)

[aliska21]

we decided to make an offer on not yet built house and they want us to sign a contract with offer price and also give them earnst check and they would need to have our credit pre approval, but what if we decide not to go with them or other...
did anyone else had to go thru this? Is that how its done in this state?

[LCTMadison]

Once you have a signed offer by both parties, you have a legally binding contract.

You need to be SURE that you indeed want to commit to building this house before presenting an offer to build. If you "change your mind" later, you will be in default of the contract and the seller can sue you for "specific performance". You will, at minimum, forfeit your earnest money.

[rjrcm]

Originally Posted by aliska21

we decided to make an offer on not yet built house and they want us to sign a contract with offer price and also give them earnst check and they would need to have our credit pre approval, but what if we decide not to go with them or other...
did anyone else had to go thru this? Is that how its done in this state?

It's how it's done everywhere. Builders (or anyone) won't sell you a house without a contract and usually earnest money. Doesn't matter if it's built yet or not. The contract will tell you the conditions under which you may be able to get earnest money back. Builder contractors are typically very slanted in their favor, so read it carefully. Be sure you really want this house before you sign.

[middle-aged mom]

Would you incur the expense and build a house for someone if they did not put any skin in the game?

[Lacerta]

Originally Posted by aliska21

we decided to make an offer on not yet built house and they want us to sign a contract with offer price and also give them earnst check and they would need to have our credit pre approval, but what if we decide not to go with them or other...
did anyone else had to go thru this? Is that how its done in this state?

Several things

As others have said, this is normal procedure. You didn't say what state you are in, although from your name, I'm guessing maybe Alaska. Whereever you are, you really should have an agent represent you. In my state, we have a state approved form for this situation that is a neutral form, rather than the builder's contract. I would insist on that if it exists, but here, at least, it can only be used by agents, so if you have no representation and the builder isn't an agent, that isn't a possibility.

You absolutely will have to give them an EM check, and most builders want an additional check at a certain stage of construction. My company asks for an additional $5000 when tar paper goes on the roof. At that point, all EM paid becomes nonrefundable. So if you back out of the deal after that, for any reason, you don't get your money back. You would want to read your contract to see under what circumstances, if any, and until what point, EM is refundable.

You absolutely want to have, as part of your contract, a specification sheet. This is a very detailed list stating exactly what you are getting in the house. So (for one small example) whether the siding is vinyl, masonite, Hardiplank, brick, etc. The sheet we use is usually 3-4 pages long. You may be given budgets on some items. Be aware that if you start picking expensive things and go over budget, that will change your purchase price. Any changes you make during the construction process may change the purchase price. Those things should all be addressed in writing (we call it a "change order form")

If you are having the house built by a production builder, you will have fewer choices, and the paperwork will be simpler, since you aren't really allowed to pick much (usually just colors).