Home Buying in Fishers>Question Details

Egare1972, Home Buyer in Fishers, IN

We recently went to Ryland to inquire about building a new home. They are asking for 5000.00 in escrow and an additional amount up to 5% of the final

Asked by Egare1972, Fishers, IN Mon Oct 26, 2009

price of the mortgage. In all, the amount they are asking for at contract signing is in excess of 18,000.00 My question is: Has anyone experienced a job loss during the building process and lost all of the down payment money. Also, is it typical for builders to ask for that much money down before breaking ground? I have built 2 other homes in the past 10 years and I have never paid more than 2500 in escrow when signing a contract, so this seems very excessive to me.

Thank you for the responses and advice.

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UPDATE!!!

Very satisified with the negotiation with Ryland. We have a contingency and will look to take off the contingency on Sunday of next week, I will keep everyone updated of the progress and satisfaction of the building process here in Fishers...
0 votes Thank Flag Link Sat Oct 31, 2009
Thank you to all who answered. I am planning on a Saturday visit with my real estate agent. We will find out just how interested Ryland is in building new homes for qualified buyers. Unfortunatly, the new tax credits being proposed completely circumvent my current circumstance due to the fact I am have neither occupied my precious home 5 consecutive years nor am I a first time homebuyer. Therefore my worry is that in the short term homes coming onto the market may become artifficially inflated thus keeping me out of the market until the tax credit expires.
0 votes Thank Flag Link Thu Oct 29, 2009
Apparently you do not have a real estate agent representing you in the potential transaction. You seldom can negotiate the price on new construction, but you can almost always negotiate the earnest money/down payment (both the initial deposit and the periodic payment schedule). You should visit http://www.NewHomeBuyersCashRebates.com. My last new home construction sale was with Ryland. I was impressed with their professionalism and construction quality (as before). My buyers were and are quite happy with their purchase. I represented them well throughout the entire building process and presented them with a nice rebate check at the closing.
0 votes Thank Flag Link Tue Oct 27, 2009
Your agent should be able to answer that one. Another good reason for buyer representation on a new home. My experience has been that the builder will ask for as much as they think they can get away with. In their eyes, it's more security in case you can't commit to the final purchase. I suspect they also are using it as operating capital. Cash flow until the final job is complete. In years past I ran into a similar situation. I had my buyers lender write up a qualification for 100% financing. This pretty much settled the question and they did not need to submit any more money. What does your contract stipulate? What is your lender saying, or are you a captive customer with the builders lending arm? If you don't have a buyers agent, I am not looking down on this, but there are too many areas of negotiation that you are out gunned on. I think you have a great question that needs more supporting information to give a more accurate answer. It also raises some more questions on my part. Anybody else out there experiencing builders requireing more security? All the best. -Eric
0 votes Thank Flag Link Mon Oct 26, 2009
Great question.

And here's the straight answer. The Builder owns the property and can ask for whatever they want. In these tough times, they're trying to balance their need to sell homes with their risk of starting a new home when people are still losing jobs and incomes are dropping.

Your REALTOR® should be able to assist you in writing and negotiating a deal that's an acceptable balance between what the Builder requires and what you prefer to do.

Here are some things to think about.

http://www.joeshoe.com/blog/2009/10/26/thinking-of-building-…

Good luck!

Joe Shoemaker
Principal Broker, REALTOR®
MacDuff Realty Group, LLC
317 413.8501
joe@joeshoe.com
0 votes Thank Flag Link Mon Oct 26, 2009
That does seem a bit high; I know one of the Ryland reps very well so will ask him to confirm. I do know that Pulte asked for $10,000 prior to breaking ground on a deal I helped to put together recently. The cost of the home was just over $400,000.
If you lose your job, your financing would fall apart and that would release the monies you put down back to you. This does happen from time to time; those homes get completed and then are put on the market.
I recently wrote a post about using a Realtor in a new build, might be worth a read.
http://marchantteam.featuredblog.com/?p=159

If you would like representation, please email me.
Web Reference: http://www.marchantteam.com
0 votes Thank Flag Link Mon Oct 26, 2009
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