Last week, we began a two-part series on Builder Contracts. In Part One, we discussed how the builder contracts are not the same as the Colorado Real Estate Commission approved contracts. We also discussed that buyers cannot and should not expect to receive the same protections and contingencies in a builder contract that they receive in a re-sale approved form used by all Realtors. To re-read Part One of this article, visit coloradodreamhouse.com/blog.
In Part Two, I hope to alert consumers to a few did-you-knows when it comes to the builder contracts.
Did you know…
- That the days of just putting $5,000 down on a dirt lot are over for most builders? Today, builders expect around 5% down of the base price of the home, plus the cost of structural improvements, plus upgrades. If those add up to $500,000 then your earnest money due is $25,000.
- That there is a waiting list for most new communities and the people ahead of you waiting for a lot have a priority number better than yours, which gives them first shot at newly released lots?
- That the day the lots are released, you need to be at the sales office at the precise time, ready to write a check for that full 5% down or more?
- That in almost every case, your earnest money is non-refundable NO MATTER WHAT!
- That some builders have clauses in their contract, allowing them to increase the price of the house if a clerical error was made in the original paperwork?
- That some builder will start penalizing you a daily fee if the house is finished early and you are not ready to close?
- That some builders will not test for radon, and if it’s discovered in your home, will not mitigate nor give you a credit to mitigate it?
- That most builders no longer take contingency contracts?
- That builders will require you to put even more money down once all of your upgrades at the design center are complete? This money is non-refundable as well.
I could go on and on with the list, which just once again drives home the importance of reading, understanding, and knowing what you, are getting into on a builder contract. Most professionals like myself and our team have been through this so many times we can advise you on the risks, look out for your best interest, and educate you on the most buyer-friendly builders.