Builders raising prices after contracts are signed? (Austin, Leander: new house, buyer)

[chiveone]

Hello,

We have recently signed a contract with a builder for a new house in Leander area, and the construction is yet to begin, almost 6 months after signed the contract and the reason we were given is that they are waiting for permits from the City of Leander.

Meanwhile, I heard from multiple sources that, some builders in the Austin area are going back on signed contracts and increasing the prices and asking customers to cough up additional money, by showing whatever contract clauses they might have included in the contracts. That sounds unbelievable and outright illegal to me.

Our builder has not confirmed it either way - i.e. no guarantee is given that prices won't rise on a signed contract. All they said is that they have not increased the prices on any of the contracts so far. But, holding on to a customer's money as a deposit (Significant amount, six figures) and delaying construction for 6 months, and then coming back after 6 months saying we will raise prices makes my blood boil.

Although our builder hasn't raised the prices yet, it makes me worried that they might get greedy and decide why not do it when others are doing it, in this crazy market.

Did you face this scenario with your builder? What protection does a customer have in such a scenario?

Thanks

[Trainwreck20]

Your protection would be your contract. Read it in great detail. It is possible (although I really don't know) that some contracts have a cost of materials option.

[ScoPro]

Most contractors will have a cost plus clause.
They are not going to take a loss if prices for materials are jacked up.

[rangergrit]

At least the lumber prices are almost back to normal.
https://finviz.com/futures_charts.ashx?t=LB&p=NO

[txtea]

Originally Posted by rangergrit

At least the lumber prices are almost back to normal.
https://finviz.com/futures_charts.ashx?t=LB&p=NO

How do you figure?
Not even close to "back to normal"

[10scoachrick]

Originally Posted by rangergrit

At least the lumber prices are almost back to normal.
https://finviz.com/futures_charts.ashx?t=LB&p=NO

There won't be a "back to normal" for the consumer any time soon(or ever probably).

[zhezhe]

We are building a house in Leander as well. Our builder did execute the clause and added 10% to the contract price. We are waiting for permit from city of Leander and builder can raise price again if the construction’s not begin in two months. We are so worried but can do nothing except waiting for the city permit.

[chiveone]

Very sorry to hear. That is outrageous in my opinion that they can raise prices at will. What is the whole point of signing the contract then. Commitment is only from the buyer perspective?

I just hope that other remaining builders don't catch on to this evil trend.

Originally Posted by zhezhe

We are building a house in Leander as well. Our builder did execute the clause and added 10% to the contract price. We are waiting for permit from city of Leander and builder can raise price again if the construction’s not begin in two months. We are so worried but can do nothing except waiting for the city permit.

[ashbeeigh]

Originally Posted by chiveone

Very sorry to hear. That is outrageous in my opinion that they can raise prices at will. What is the whole point of signing the contract then. Commitment is only from the buyer perspective?

I just hope that other remaining builders don't catch on to this evil trend.

Pretty sure it was a practice to add this type of clause even pre-building material supply chain issues associated with COVID. It's just now that people are actually recognizing the clause is a tough pill to swallow.

[ScoPro]

Originally Posted by ashbeeigh

Pretty sure it was a practice to add this type of clause even pre-building material supply chain issues associated with COVID. It's just now that people are actually recognizing the clause is a tough pill to swallow.

Correct. Such clauses have been a part of building contracts for generations because builders can’t take a loss if costs change in the course of the project. The consumer always has to pay the increase.
Post Katrina & Harvey saw similar problems with increases in costs of materials.