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kdm121

Builder Now Trying to Charge Change Order Fee?

Katherine Dale
10 years ago

We are building our first home and the investor has been a bit of a disaster. They don't really have much experience with this and it has been a somewhat painful experience. We went with this house based on the lot (which unfortunately came with this investor/builder combo), but are somewhat regretting our experience.

Either way, we went under contract a few months ago and the foundation was just poured. The chain of command is quite silly as it goes our agent > their agent > their investor who mulls things over and eventually gets back to us. As a planner, I've sent over my changes (which are pretty minor) well in advance so they have plenty of notice (they are minor changes like upgrading trim, doors, etc.).

About a month ago, they mentioned that they will be instituting a "$150 change order fee" for any change orders- whether or not they are actually actually approved. Our agent said that they cannot do this as it is not in the contract we signed... but she said to lay low with it and see if they actually tried to apply it. Yesterday, I finally got word that they selected the interior designer- I spoke with her and she said they mentioned a $150 change order to her, too.

I asked my agent to address this last night as I don't want to meet with the interior designer until this is resolved. My agent assured me that she would get in touch with their agent. I still haven't heard back and just sent my agent an email about it again as this needs to be resolved. I feel like my agent is playing both sides of the fence, but the overall question is- can the "investor" just start charging us if it is not listed in the contract? Shouldn't this charge have been included when we went under contract?

Comments (10)

  • LOTO
    10 years ago

    whm121,
    You said " Our agent said that they cannot do this as it is not in the contract we signed"
    is it in the contract that they "can't" charge you for changes?....
    Probably not and it sounds like you are wanting to change the terms of the contract but don't feel that the Seller should be able to do this. Many times change orders are a minimum extra charge and do require a "paper trail" which is sometimes time consuming for all parties but is necessary.
    I am sure that others have been through this and will offer advice.

  • User
    10 years ago

    Not sure why an "investor" is in the mix at all. Are they bankrolling the build on spec and have already found a buyer in you? Seems like you could get a construction loan yourself and cut out one layer of overwrought chain of command.

    It IS industry standard to charge a change order fee. But if it didn't make it into the contract to do so, then you are correct, they are not supposed to charge it to you. But, you also have to weigh that with them not making any changes at all, "because it's already spec'd in the contract." You play hardball with them, and they are likely to play it with you and not do any changes. I'd try to come to a negotiated price on change order, but really, $150 isn't so bad as far as change order fees go. Unless you have a LOT of changes that you want done. And then, you picked the wrong house to buy if that's the case.

  • Katherine Dale
    Original Author
    10 years ago

    It is a spectacular lot and unfortunately it came with this investor and builder as part of the deal (he has about 5 lots in all). I'm not sure why the investor is involved either- our agent said he's a control freak and inexperienced (that info came from his agent), which is why this has been such a difficult process.

    Unfortunately, our agent- who we needed to find a house in this crazy market in that area of town as we bought this before it was even on the market- seems to be playing both sides of the fence (she likes to act buddy/buddy with everyone). Initially when they mentioned this change order fee, she acted all dismayed and said she was going to fight this and go to their broker (our agent and theirs are with the same company) if they did not correct this as she said for them to do this, it had to be in the contract. She said she'd never heard of someone randomly trying to charge and I hoped she would be right as she's been doing this for 30 years? Since I told her this needs to be resolved, she has gone completely MIA. I know she's in town and checks her email constantly, which is why all of this is even more weird.

    The builder also does not have their selections yet, so a lot of this is "stuff" I was sending over in advance so they don't have to pull all this together for us. Like I said, they are a new group so they are pulling things together as they go. Ugh. I'm guessing that this will be a painful process.

  • millworkman
    10 years ago

    How do you have a contract with a "builder also does not have their selections yet"? This sounds like the beginning of a messy build to me.

  • Katherine Dale
    Original Author
    10 years ago

    For example, the spec sheet lists "granite countertops in all bathrooms (st. cecelia, uba tuba, etc.)"

    For the brick, their agent told us to send her links to the color family of brick we wanted for the house within 48 hours. My husband and I couldn't decide, so we drove all over town taking pictures of homes we liked. We compile all these colors by her deadline, and then she informs us that the builder JUST chose 9 colors of brick and to stop by and pick one.

    Then last week, I asked when we were going to meet with the Interior Designer to select everything else as I don't feel comfortable randomly selecting colors/cabinets/granite for the entire house without a professional (which is listed in our contract) to help us pull together a cohesive look. Our agent reiterated that they don't have selections done yet and then their agent sent back this BS response:

    "Although our approach may not fit the "normal" mold, we feel as though we are looking out for your clients best interest and providing your clients a higher quality of service. We want them to pick out their finishes in the home, as the home is being built so they can be with a designer, in the space, using the natural light and NOT be in a showroom looking at random swatches trying to imagine what the finish product will look like. Although I don't have an exact date, this will happen at a later date after framing."

    Seriously? This has been ridiculous.

  • methoddesigns
    10 years ago

    It is pretty standard that they charge a change order fee. However they should have had this in their contract, as well as prices, finishes (or allowances for finishes), stage completion dates (doesn't sound like they know when the framing will be finished), and how often meetings would happen. I don't know exactly what they had in their contract, but it sounds like they don't even know what is going on. I have a feeling that they saw the opportunity to make some money with an "investor" and jumped in without planning, or the "investor" didn't do their research in contractors. I don't know how you can pick out finishes as you go considering most of these items require quite a bit of lead time (meaning you order them and they take an extended period of time to receive). I have never done it that way, and I don't know anybody who has. They can't possibly budget, or know what the time to build will be without doing the proper estimating. At this point I would be concerned about the quality of the home itself. I would be there every day taking photos, or hiring third party inspectors along the way. It may cost extra, but can save you a lot in the long run. I would probably not continue along this path, but that is your decision to make and I am sure you will do what you feel is right. Your home is the biggest investment you will ever make, so make sure it is what you want and how you want it.

  • robin0919
    10 years ago

    The upcharge for changes 'should' be in the contract. Allot of this doesn't make any sense. It seems like 'nothing' has been picked out before starting the build. Is this a fixed bid? They quoted you a price and you excepted it. What was their quote based on????? From what I've read so far, you're going to be hit with an upcharge for a change ALL over the place!!

  • Cindy Allison
    3 years ago

    Fight it now

    my builder is trying to charge me for change orders light picking out lights which they told me to do

    we at the beginning of for upgraded ac and he put the wrong one in and is trying to charge me a change order and remove all of the wrong unit the list goes on

    do not use Christopher David homes

  • millworkman
    3 years ago

    "Fight it now"


    The post you're responding to is from 2013.

  • PRO
    Mark Bischak, Architect
    3 years ago

    Better hurry!