Earnest Money to a Builder (sales, lawyer, house)

[Glorious Houston]

Hello everyone
The builder that I am trying to work with has asked me to give him check for 1% of the base price of the house . We have not agreed on a price yet- but he says he needs it to start negotiations to agree on a price . How common is this ? sounds like a shady deal to me - Thoughts ?????

[Schumacher713]

You should have a contract with a price before you hand over a penny. I would have a lawyer peak over it too.

[cheryjohns]

Some do it that way. They don't deposit the money until the price is agreed upon. Who is the builder?

[hulio82]

We purchased a Village Builder house and the Sales Rep wanted a check with Earnest money before pre-contract signing negotiations, but wasn't going to cash it until the contract was signed. He did it just to make sure we were serious buyers. He said he had tons of instances where he would spends days negotiating a price, get approval from his management only to find out that the buyers changed their mind.

[jasonamd]

I had to do the same thing when buying my house. They required a certain amount of money up front before discussing price and signing the contract.

[chris_ut]

1% is high for up front offer him $1000 earnest money to start the negotiations.

[cheryjohns]

1% is not unusual now - demand is high. I would rather have a 1% check and get a better price - than a $1000 check and have them deal with you as a not-so-serious buyer and counter with a higher price. They don't cash the check anyway, until you have agreed on sales price.

[dd1153]

they are testing you to see if you're serious or not.. if you're serious write the check. no point in negotiating with someone who isn't serious in the first place.