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You keep saying "he" so it sounds like this is a small, local builder and not a "company" or production builder that builders hundreds of homes a year. With a small builder like that, you do not want to close and think he'll come back and fix things. With a big production builder, you would have more leverage with their customer care department and VP's looking out to make sure things got done...
Demand a relock credit or something else of value that you want from him.
My last two newly built homes had "punch lists" but they were things we had agreed to and documented before the close. The main reason I did was the builder/site manager were still building homes in my neighborhood so I could reach out to them. Not like they were gone.
Correct this is a local builder not some large national outfit. It's his construction company he runs with his brother.
We spoke with the neighbor. He built her home. Her only complaint is that they were supposed to install an island in her kitchen and it has taken quite a long time to get that installed. Still not done yet. Exactly the type of situation I'm concerned about.
Anyhow I'm heavily leaning towards digging my heels in and insisting on the home being done before closing on it. I do wonder. If he refuses to do any type of relock credit or pay the fees and gets pushy about the holdback. I'm basically faced with:
a) walking on the deal, which would really upset my wife, and probably cost me the $500 earnest
b) locking in at the new rate of 4.625 to buy more time, which would **** me off
Hopefully it doesn't come to either of these two options because they both suck from my perspective. Had I realized this had the potential to get drug out like this I would've wrote something into the contract making him responsible to pay any relock fees in the event the home isn't finished in time. Live and elarn.
Is there a liquidated damages clause in your contract? So if the builder doesn't finish by such and such date you get to charge him for every day he is not turning over the house as a complete finish product?
Get a bid from someone independent, not someone who works with your builder, for the job of finishing everything up. Add 20% to that bid, for the things you have not discovered yet. That will be the amount of your holdback.
Type up an agreement and get your builder to sign it, saying if the items on the punch list (which you attach to the agreement) are not finished by X date (sometime before your rate lock runs out) then he will pay the relock fee and have the holdback, or refund your earnest money, your choice at the time.
If you are really wise, get your attorney to draft the agreement.
Do you have a progress payment plan? You can start withholding the money you pay out since he is dragging his feet
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