Basically the additional prep work allows the backup lender to step in quickly if the first loan can't fund.
Given the advice provided by my contemporaries, my only thought concerns your relationship with the builder after you close. Their conduct, legal or not, may be an indication of how they handle customers. As said before this is not a time for builders/sellers to be inflexible with such demands. At the sake of sounding like a broken record, make sure your realtor has experience with builders' contracts/negotiations and don't be hesitate to consult a lawyer before you sign (if possible). S/he might be able to make appropriate changes to the contract to protect your interests. What if the builder doesn't perform certain duties causing a delay in construction. How are you compensated? Your realtor might be able to refer you to a good attorney. I might add it is a tough economy and the builder has to take steps that help them guarantee their survival. If shoring up the financing process helps them better forecast their expenses and revenues then it's only smart business. That doesn't mean you have to accept it. Good luck.
I wholeheartedly agree with Kary. There is plenty of inventory and it is a buyer's market. But if the builder is truly infexible and this is truly THE property that you want, $250 may be a small concession to make.
If you don't have one, I highly recommend hiring a good Realtor to look after your interests.
See this for what it's worth. They are trying to corner you by using pressure tactics. If they can convince you to get approval from their lender it will minimize your ability to escape from the agreement based on lack of funding.
As a legal issue, it would be best responded to by an attorney but from a practical point, these are strong arm and controling tactics.
Apparently, there is no legal prohibition on a seller/builder requiring a buyer to use a specific lender as long as lender and seller/builder are not â€œaffiliated businesses.â€ An affiliated businesses arrangement would be where the seller/builder owns part of the lender (more than 1%). Even then, disclosure of this arrangement to the buyer might allow the seller/builder to avoid a RESPA violation. A RESPA violation MIGHT be present if the seller/builder receives a financial incentive to send buyers to lender and charges other buyers a penalty (or holds back an incentive) because they do not go to builderâ€™s lender. There might be an anti-trust problem for the seller/builder in this situation. A â€œtyingâ€ arrangement might exist that would violate state and federal antitrust laws. A â€œtying arrangement is an agreement by a party to sell one product on the condition that the buyer also purchase a different and â€œtiedâ€ product.
Hope that helps......
Is there preferred lender affiliated with the builder (in other words does the builder have a vested interested in the lending company?)........
And to answer your question regarding the fee per day....yes, they can charge a fee of there is a delay in the closing date and it is not uncommon to see this. But the delay must caused by something to your fault (i.e. YOUR lender can't close on time, docs aren't at escrow on time, etc.) but it depends on the language within the contract. Do you have an agent who represented you? Have you signed a contract yet?
Feel free to call me. I have extensive experience in New Construction, work in the Windermere Woodinville Office and am happy to help any way possible. I cannot offer legal advice, obviously....but if you are not yet working with an agent and are seeking representation I would be happy to review the contract or be sure that your interests are well represented through this process.
Also curious, if the builder has an agent who is representing their side of the transaction?