New Home Purchase Questions

[HLAuburn]

We are about to purchase our 4th house, so you would think I'd know all this by now, but this time it seems like things are a little different than what we are used to.

The house is new construction, so we are buying from the builder. We currently have a contract on our house here, and our relocation company will buy out the house, so either way, it's a "done deal". But, we would still like to add that the new contract is contingent on the sale completion of our current house just in case. Our realtor, however, says that they "frown upon" contingencies, even though it's not a true contingency in my mind. So is it unreasonable to ask for that?

Also, they want nearly $10,000 earnest money. Does that seem really high to anyone but us? In the past, we've always put maybe $1000 or $2000 down.

I thought this was a buyer's market, but I feel like the builder is being really hard to work with. Our house is as good as sold, we have financing and a large down payment, but I feel like they're calling all the shots.

Any thoughts? Thanks!

 

[trip]

$10,000 sounds too high to me. I hope the builder isn't having money problems. $1000-2000 should be plenty.

 

[Sarah_Rose]

Do you have any upgrades on the new house? I know our builder in our subdivision asks for $4000 earnest money, plus a prepayment on any upgrades that you added (ie. better carpet or countertops, extra or nicer appliances, a fence, etc.) just in case you pull out, and the builder is left to eat the cost of your preferences.

With the new house that we bought, it worked out really well because the person who built the house pre-paid for $25 000 worth of upgrades and then pulled out of the deal (issue with the HOA over parking a flatbed truck in the backyard ). We ended up getting the house for the base price, but with really nice upgrades!

 

[HLAuburn]

Nope, no upgrades. But trust me, that's all in the contract if we do want to add upgrades later. The contract is 35 pages that's all about them and protecting their rights. I've never seen anything quite like it, but our realtor says this is standard for builders contracts in the area.

 

[The Mystery Machine]

10,000 is nothing out of the ordinary for a new build. It is normal, so don't sweat it. It is called skin in the game on a new build. If it was lower people would abandon their new builds and the builders would be hosed.

 

[golfgal]

We have always put contingent on sale of current home AND contingent on financing in our contracts even if we have signed papers from the bank on both counts just in case. We also always write in the purchase agreement that if for ANY reason the sale of the home doesn't go through, the sellers will refund us any fees we have paid including appraisals, inspections, etc. We have been burned on that before so we always include that. If your Realtor doesn't want to include the contingencies you request, find another Realtor. Sounds like she is more worried about her commission then doing the right thing.

 

[The Mystery Machine]

We have always put contingent on sale of current home AND contingent on financing in our contracts even if we have signed papers from the bank on both counts just in case. We also always write in the purchase agreement that if for ANY reason the sale of the home doesn't go through, the sellers will refund us any fees we have paid including appraisals, inspections, etc. We have been burned on that before so we always include that. If your Realtor doesn't want to include the contingencies you request, find another Realtor. Sounds like she is more worried about her commission then doing the right thing.

They won't let you on a new build. If you are building, you really need to sell your house first. The loss of your earnest money is just not worth the gamble, imo.

Now we bought a model home in a new subdivision this go round (2008). And OP "buyers market" is such baloney. I am sure you are finding that out now.

 

[golfgal]

They won't let you on a new build. If you are building, you really need to sell your house first. The loss of your earnest money is just not worth the gamble, imo.

Now we bought a model home in a new subdivision this go round (2008). And OP "buyers market" is such baloney. I am sure you are finding that out now.

Maybe where you live that is true but not here. You can certainly put in that the sale is contingent on sale of an existing home on a new build. Sometimes a builder will only build out to the point of adding cabinets, carpet and flooring if your house hasn't sold yet.

 

[The Mystery Machine]

Maybe where you live that is true but not here. You can certainly put in that the sale is contingent on sale of an existing home on a new build. Sometimes a builder will only build out to the point of adding cabinets, carpet and flooring if your house hasn't sold yet.

Here they do NOT allow it and since new construction is tanking across the country, I just cannot see it as reality right now. Well, maybe if you put more earnest money down, they might go for it. But why risk it?

Honestly OP needs to have the house sold so she does not lose earnest money and any penalties they have in the contract.

It just makes good sense to do that on new construction.

And frankly as a person sitting in a new build subdivision, I am glad they do not allow it. They would have homes abandoned all over the place.

 

[HLAuburn]

They won't let you on a new build. If you are building, you really need to sell your house first. The loss of your earnest money is just not worth the gamble, imo.

Now we bought a model home in a new subdivision this go round (2008). And OP "buyers market" is such baloney. I am sure you are finding that out now.

Well, I just got an email with the contingency addendum, so I guess it isn't unheard of. They would be ridiculous NOT to give us one - we have 2 buyers on our current house (the buyers and the relo comapny). I think that's absurb to ask someone to close on their current house first before putting a contract on a new one. The new house won't be completed until July, so if we close on our current home now, we'll be homeless for 2 months.

Oh, and the reduced the escrow to $3000. I think they try to get away with whatever they can....until the buyer complains. Nice.

 

[trip]

Good for you!

 

[karajeboo]

WOW! Your situation sounds soooo similar to what we are going through - relo, 4th house, I thought for a minute it was ME as the OP!

And I think that the contingency may be why they are asking for more than usual in earnest money. Although, we got $10K from our buyers when we sold our home.

Now the mortgage process for the new house? Let's just say it's not as easy as it used to be, even though we are using same back, same loan officer, that we have used for last 3 mortgages..... Everything is EXACTLY the same except our income went up more than the higher purchase price, yet BoA is scrutinizing EVERYTHING!!! It is very stressful this time around!

 

[The Mystery Machine]

Well, I just got an email with the contingency addendum, so I guess it isn't unheard of. They would be ridiculous NOT to give us one - we have 2 buyers on our current house (the buyers and the relo comapny). I think that's absurb to ask someone to close on their current house first before putting a contract on a new one. The new house won't be completed until July, so if we close on our current home now, we'll be homeless for 2 months.

Oh, and the reduced the escrow to $3000. I think they try to get away with whatever they can....until the buyer complains. Nice.

Good for you!

Here in MO they are really hurting. Basically they are putting in model homes and people are buying them that way.

They reduced it to 3000? Wow, that would never happen here.

 

[HLAuburn]

WOW! Your situation sounds soooo similar to what we are going through - relo, 4th house, I thought for a minute it was ME as the OP!

And I think that the contingency may be why they are asking for more than usual in earnest money. Although, we got $10K from our buyers when we sold our home.

Now the mortgage process for the new house? Let's just say it's not as easy as it used to be, even though we are using same back, same loan officer, that we have used for last 3 mortgages..... Everything is EXACTLY the same except our income went up more than the higher purchase price, yet BoA is scrutinizing EVERYTHING!!! It is very stressful this time around!

I guess it may depend on the sale price, but our buyers put down $1000 (our current house is about $50K less), so $10,000 earnest seems really high. I think they were just trying to see if they could get it. It makes me a little concerned that they could have some cash flow issues.

Thanks for the heads-up on the mortgage. I sure hope that's not a problem! We are staying with Wells Fargo, and like you, the only changes are income and we bumped up a little on the house. I hope they're not all crazy about it - I can't take much more of this!


Thank you all for the responses.

 

[drag n' fly]

We had to put 10 grand down to build our house so that sounds normal to me