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re: Builder Deposit Question
Posted on 3/8/21 at 7:38 am to Hou_Lawyer
Posted on 3/8/21 at 7:38 am to Hou_Lawyer
4% seems aribtrary - but $30k on a $750k home is really not crazy. Now, maybe (potentially) builders is using your deposit as HIS equity for the bank loan? How long has he been in business? Good reputation? It comes down to a good contract and some trust.
Builders can build their normal plans / spec homes and be confident they will sell it if you walk away. But, you start adding upgrades that may not be typical for the market, and builder ends up with a home with neon green painted rooms and black toilets and then you walk away - that's an issue for the builder to try to sell it to someone else. Hence, the upgrades upfront is very standard.
Instead of letting him finance it, you could finance it yourself - interest only during construction and then convert to permanent. Obviously, your income level would have to support the new construction loan and your existing home loan.
Builders can build their normal plans / spec homes and be confident they will sell it if you walk away. But, you start adding upgrades that may not be typical for the market, and builder ends up with a home with neon green painted rooms and black toilets and then you walk away - that's an issue for the builder to try to sell it to someone else. Hence, the upgrades upfront is very standard.
Instead of letting him finance it, you could finance it yourself - interest only during construction and then convert to permanent. Obviously, your income level would have to support the new construction loan and your existing home loan.
4
Posted on 3/8/21 at 7:41 am to bamaswallows
All depends on the size of the builder and how many homes they are building a year etc etc. Also, is this house in a subdivision or just a one off lot somewhere.
If it's a smaller builder then there's some negotiating room. If it's a large regional or national builder, they aren't going to budge especially in this market.
If it's a smaller builder then there's some negotiating room. If it's a large regional or national builder, they aren't going to budge especially in this market.
Posted on 3/8/21 at 9:15 am to bamaswallows
No respectable builder is going to let an individual finance the project.
Posted on 3/8/21 at 9:49 am to bamaswallows
In business since 2004.
They’re not a national brand. They have about 15-20 homes going up at the moment. All inside the loop or Oak Forest.
Good rep as far as I know. I just thought 4% is too high.
They’re not a national brand. They have about 15-20 homes going up at the moment. All inside the loop or Oak Forest.
Good rep as far as I know. I just thought 4% is too high.
Posted on 3/9/21 at 9:11 am to bamaswallows
quote:My ex-wife was a paralender in construction loans. I can tell you some horror stories concerning people who didn't do due diligence when picking a builder. I wouldn't give a dime to a builder before doing A LOT of homework on him first.
4% seems aribtrary - but $30k on a $750k home is really not crazy. Now, maybe (potentially) builders is using your deposit as HIS equity for the bank loan? How long has he been in business? Good reputation? It comes down to a good contract and some trust.
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