Home Buying in 32301>Question Details

Jy, Home Buyer in 32301

If we want to build a new house, when do we put a binder down and pay earnest money to the builder, and how much should the earnest money be?

Asked by Jy, 32301 Sat Jan 21, 2012

The builder wants us to put a binder down even before we have an agreed upon floor plan and price. How much percentage should the earnest money be, 1, 2 or 5% of the approximate price? If we put a binder down, do we still have room negotiating the price, upgrade options, etc.

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Thanks, Teresa and John!
The builder is modifying one of the stock plans - so what's the boundary between 'personalizing' and 'customizing'? It is a refundable binder - but does the contigency really favor a home buyer? We are worried if a binder is put down, it will leave us little or no room to negotiate on upgrades and final price. Coz I have heard so many ugly stories about the earnest money.
0 votes Thank Flag Link Mon Jan 23, 2012
Teresa is correct, if he is drawing plans, changes, he is having out of pocket expenses
0 votes Thank Flag Link Sun Jan 22, 2012
It just depends... If it's one of the builder's stock plans that they have built before and you're just personalizing it, then you usually don't put a deposit down until you've finalized the contract. If it's a custom design, there are costs involved in drawing up a set of plans to work from so that the builder can actually price out the house. In this case, an upfront non-refundable deposit would be reasonable. As far as how much deposit, that all depends too on the price point and how many custom changes you are making to the home. Builders will make custom changes, but if you don't close for some reason, they don't want to get stuck with the home and having to redo your custom changes to make it saleable.
0 votes Thank Flag Link Sun Jan 22, 2012
I would put down nothing before price and floor plan is resolved and contract is reviewed and signed.
0 votes Thank Flag Link Sun Jan 22, 2012
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