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First Time B…, Home Buyer in Setauket, NY

I'm considering buying new construction. The builder wants 10% at contract and 10% at receipt of mortgage commitment. Is this normal?

Asked by First Time Buyer, Setauket, NY Thu Feb 23, 2012

It's February 2012 and the house won't be finished until December 2012. The builder wants 10% of purchase price at contract (which is normal in my area - Long Island, NY), but also wants another 10% at receipt of mortgage commitment within 30 days of signing contract. That's 9 months before the house is due to be completed! My commitment would expire by then...Is that normal?

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Answers

6
Old Question, Still a fresh topic, so I'm going to chime in.

We don't know the plans or size of the house, or anything about this project, so it is difficult to give a straight yes or no.

You negotiate with your builder what you can both agree upon.

For a high cost property with lots of site work, high cost add-ons and materials, this would not be out of line. The builder will be tying up alot of their resources between draw phases, and they are entitled to asking a buyer to put some 'skin in the game'.

If you don't feel comfortable with that much, then don't do the deal.
0 votes Thank Flag Link Wed Sep 18, 2013
The builder is trying to protect his investment in building your home. Is it normal, no, in today's market I can well understand why a builder may want be secure with your intention and ability to close. The risk is on your shoulders as well as his and you should be guided by your attorney.
0 votes Thank Flag Link Fri Feb 24, 2012
Best to consult with your agent/attorney First time buyer. In my experience less is best on the deposit. Some builders use your deposit to start construction on your home. This is very dangerous! If the builder folds guess what happens to your money? Try and negotiate the least you can, as you will receive very little interest on your deposit money.

Explain you can receive a higher interest rate keeping your money where you currently have it. If the builder will not budge on this issue, you must decide how much you want that property in that community. On new construction in my area of Pennsylvania, builders are accepting 5-10%. 20% sounds excessive to me. I definitely make sure your mortgage commitment does not expire before you close on the property.

Good luck, hope it all works out,

Rob
0 votes Thank Flag Link Fri Feb 24, 2012
Do have an agent or you are going direct to the builder. Try negotiating terms and conditon with builder. Also check with your atty before signing anything.
If you have question or need help, please call. Thanks
Jane Zilpelwar
631-889-2997
0 votes Thank Flag Link Thu Feb 23, 2012
What is your agent advising and have you tried negotiating the terms; also consult with your attorney, he/she can best advise regarding the terms of the contract....
0 votes Thank Flag Link Thu Feb 23, 2012
Hello First Time Buyer,

A contract becomes a binding agreement if the contracting parties agreed to the terms and conditions stipulated therein.

You, as the consumer/buyer, can discuss the terms and conditions with the other party. It should be the meeting of the minds of both parties. If you are not comfortable with his requirement, you are not obligated to agree to his terms.

Again, it is the meeting of the minds of both parties.

Best.

Maria
0 votes Thank Flag Link Thu Feb 23, 2012
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