New build deposit percentage guidance?

dpusaSeptember 25, 2012

All

We are building with a builder - not in a subdivision, but the Company owns the lot and we have worked with them to spec the house plans and details.

As part of the first draft of the contract, they are asking for 10% deposit, however the Company which is the builder is also the selling agent as they have real estate division within them. We are hesitant to put 10% completely down, unless it is in an independent ESCROW -- but want to get everyones thoughts and practices people have used.

Thanks

Dylan

Thank you for reporting this comment. Undo
pbx2_gw

We put down a total of 5% with the builder when all was said & done for the lot & house construction (he owned both).

Includes: lot deposit, design deposit, construction engineering & permiting.

    Bookmark   September 25, 2012 at 12:35PM
Thank you for reporting this comment. Undo
dpusa

pbx2 - Was the 5% put into an ESCROW account or paid directly to the builder? I ask as the builder has drafted the contract and all the exhibits but the building company is also the selling agent too.

    Bookmark   September 25, 2012 at 4:04PM
Thank you for reporting this comment. Undo
dpusa

Any others that can weigh in?

    Bookmark   September 25, 2012 at 9:29PM
Thank you for reporting this comment. Undo
rwiegand

Have a lawyer who is familiar with local law and practice review the contract. It is all but certain that a contract they prepared is biased towards the builder in every possible way. The deposit may be the least of your worries!

    Bookmark   September 26, 2012 at 12:43PM
Thank you for reporting this comment. Undo
dpusa

rwiegand - THanks for the reply. No absolutely, we are having an independent lawyer review both the contract and every exhibit on our behalf.

    Bookmark   September 26, 2012 at 1:41PM
Thank you for reporting this comment. Undo
rwiegand

We're doing a major remodel and addition and only pay for work that has been completed--no upfront money at all. We do pay promptly, every two weeks for the work that has been done. The situation may be very different I suppose if you don't already own the lot or if there is a bank involved.

    Bookmark   September 26, 2012 at 2:29PM
Thank you for reporting this comment. Undo
virgilcarter

Many builders want some up-front money, both as "ernest money" and to defray their start-up expenses. If the contract (and builder's reputation and recommendations appear fine), I wouldn't object to 10% down.

Just remember to hold 10% back at the end to ensure proper and satisfactory close out. If the builder can reasonably ask for 10% up front, every owner can reasonably withold the final 10% until occupancy and resolution of all punch-list work. It's a standard in all AIA contracts.

Best wishes!

    Bookmark   September 26, 2012 at 7:23PM
Thank you for reporting this comment. Undo
PRO
Sophie Wheeler

10% is common and reasonable.

    Bookmark   September 26, 2012 at 8:03PM
Sign Up to comment
More Discussions
building over an old leach field
Perhaps this is county specific, but I was talking...
divine_serenity_gw
It's March 2015: How is your build progressing?
Zorro-anyone can start one. :) Link to It's February...
autumn.4
Need Advice On What To Do Next
My wife and I have our hand drawn plans of our home....
ghjtyubnm
Foundation parging for new house construction
We are getting a new house built for October. The builder...
Kenny LY
Master bath/closet suggestions
My wife and I are planning on building a house. We...
stancial
Sponsored Products
MaxLite MLRP24E4550SMW LED Round Pendant, 5000K
EnvironmentalLights.com
Rubbed Bronze Four-Light Bath Light with Florentine Scavo Glass
$169.90 | Bellacor
Gray & Ivory Zigzag Ella Wool Rug
$34.99 | zulily
New Very Plush Moroccan 8'x10' Grey Veg Dyed HandKnotted Wool Original Rug H5909
BH Sun Inc
Polo Paddock Basket Set of 3
The City Farm
4" Compact Fluorescent Electronic Airtight IC Housing
$54.90 | Lamps Plus
Amalfi Paradise Rug (7'9 x 11')
Overstock.com
Single-Lever One-Hole Sink Mixer With Pull-Out Spray Jet
TheBathOutlet
People viewed this after searching for:
© 2015 Houzz Inc. Houzz® The new way to design your home™