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Old 03-27-2008, 10:31 AM
 
27 posts, read 191,557 times
Reputation: 52

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The builder is asking us to pay 10% of the purchase price when the contract is signed. The home is still being built. 10% seems to be excessive at least by the standard of the part of the country where I come from. Am I right? Should I negotiate? What should be the proper percentage? Should I get an agent to represent me?

Giving 50K to a corporation in an industry that is not doing too well right now is a bad idea right?

Last edited by futurenyc; 03-27-2008 at 10:56 AM..
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Old 03-27-2008, 10:48 AM
 
102 posts, read 319,556 times
Reputation: 44
I only had to put down 5% to my builder
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Old 03-27-2008, 10:56 AM
 
27 posts, read 191,557 times
Reputation: 52
They asked for 5% upfront or did you bargain it down?
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Old 03-27-2008, 10:57 AM
 
Location: Houston, Texas
10,427 posts, read 29,987,000 times
Reputation: 9661
With the rate at which builders are going under it is risky to give them any deposit at all. But you have to if you want their house.

If he is properly bonded and licensed then the contractors board will make good on your deposit if the builder bites the dust. Problem is NJ has no contractors board nor does it have any licensing authority for contractors. Strange isnt it since NJ is one of the most government control over the people states there is.

You need to dig deeper then this forum can provide. You can try with your Attorney to make your deposit the actual purchase price of the land only. Get the deed for the lot in your hand. This way if your house dont get built you at least have a deed for the lot. So if the house gets completed then your money becomes just a depost again and the sale proceeds as normal. At the very least have your Attorney put a lean on the land for the value of your deposit. This is commonly NOT done but nothing says you cant do it. In this market....anything goes.

Be careful.........
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Old 03-27-2008, 11:00 AM
 
102 posts, read 319,556 times
Reputation: 44
Actually to be honest with you the builder only wanted 5k.... I only have to put 5% down on the house using the builders lender.
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Old 03-27-2008, 11:24 AM
 
31 posts, read 90,601 times
Reputation: 13
I recently closed on a new spec home and the builder's sales lady took $1000 inital binding deposit and than handed me a unsigned contract to give to my attorney for a review and said come back within 2 weeks with 10% deposit. As first time buyer, I also felt uncomfortable giving a large amount in this kind of market. And if you change your mind......say goodby to your deposit without going into a lengthy litigation and even if you ever get your deposit back, they will subract all kind of fees ( I could be wrong, but that's what I researched being a first time buyer). I asked the sales lady about puting 5% down intead and she right away rejected it and said 10% was standard practice in the industry. Hey, but it's not written on the stone I thought. So anyway, when I faxed over the contract to my attorney ( was a bad attorney..but that's another story) and asked if they can change to 5% in the addendum. They did and when faxed back to the builder they accepted the 5% without any question. So I think builders do realize that if they want to sell they must bend the rules in this kind of market.
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Old 03-27-2008, 12:21 PM
 
Location: Livingston
68 posts, read 211,470 times
Reputation: 36
I only had to put up 5% of the purchase price (before incentives that will kick in at closing) and 10% of upgrades.
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Old 03-27-2008, 01:30 PM
 
9,125 posts, read 23,748,232 times
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As you can probably tell, there's really no "standard". We put down $500 when we wrote our contract, and then had to put down another $1,500 around a month later. The rest of our downpayment and all of our option costs weren't due until closing.
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Old 03-27-2008, 08:09 PM
 
687 posts, read 2,251,149 times
Reputation: 137
We put down 10%, plus 15% of the upgrades up front. We were a nervous wreck about it, as that's a lot of money. We've gotten over it though while watching the house's completion.
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Old 03-27-2008, 08:50 PM
 
516 posts, read 1,229,262 times
Reputation: 566
Default Escrow!

The key here is to make sure the deposit is held in escrow. This way, if something happens with the builder your $ is safe. We did it that way - the attorney had to add the language to the contract. It worked out and we actually closed today. Now if we can just sell our townhouse........!
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