What could go wrong? Buying new constructn from builder w/ their lender & escrow

[Safire]

Builder is offering a great rate if we used their in-house lender AND their title company. We intend to put down 25%, of which 3% is earnest money.

This is the same builder we were previously in contract with, and then backed out because the agent was sending us docs to sign AFTER we'd put the earnest money down. We ended up walking away and had to get an attorney to get our earnest money back. Yeah.... drama but after talking to their corporate, want to try again with a different agent.

I do worry about the conflict of interest wrt appraisal as we using the builder's lender and the challenges of getting earnest money back if things go wrong AGAIN. Could you tell us if this is the stupidest thing you've ever heard of?

Also, the amount of money (we have been saving this down payment since 2018) we're putting as down payment is giving me anxiety. What should I be wary of? Is this anxiety normal? Home is move-in ready NOW.

TIA.

 

[HarveyS]

Your intuition is telling you this is a bad idea. I agree. You've already had one issue with them. My vote, get your own loan and title search. Personally, I don't see an issue with appraisal since it is new construction and presumably plenty of comps.

 

[DrRoy]

Fool me once, shame on you. Fool me twice . . .

 

[levindb]

I am not sure I understand the previous problem with the builder. The earnest money is used to keep the builder from getting frivolous offers to purchase a home. Because you are also getting the mortgage thru the builder, there will be plenty of papers to sign during the mortgage application and approval process, and you would typically sign these papers AFTER you have selected a home to purchase. Again, I do not know what kind of papers you were asked to signed that upset you.

If you can research the builder, confirm they build a good product, then I see no problem with getting a home and a low cost loan thru them.

 

[Safire]

I am not sure I understand the previous problem with the builder. The earnest money is used to keep the builder from getting frivolous offers to purchase a home. Because you are also getting the mortgage thru the builder, there will be plenty of papers to sign during the mortgage application and approval process, and you would typically sign these papers AFTER you have selected a home to purchase. Again, I do not know what kind of papers you were asked to signed that upset you.

If you can research the builder, confirm they build a good product, then I see no problem with getting a home and a low cost loan thru them.

Had to do with the agent sending us purchase disclosures including docs that said Buyer picked the design specs on the home (we were specifically told IN WRITING via text the home was pre-speced so we could NOT pick design options, so why should we sign this), a Transfer of Property Addendum that said we'd previously been in contract on a different property and were now buying this home so owed them 7k outside of escrow (attorney specifically said not to sign this doc & agent said we'd lose deposit if we did not as it was included "just in case we changed our minds" and "decided to buy a different property" --- er, no). We were also asked to sign off on electric & plumbing codes (we're not in the trades). None of these papers had anything to do with mortgage or closing and should have been disclosed BEFORE buyer puts down earnest money NOT after holding the deposit hostage.

Maybe I should revisit buying from them after all.

 

[OldShooter]

... Maybe I should revisit buying from them after all.

Unless there is something very special about this builder, property, or location, I would agree with others here. You've been through problems with these people and have not enjoyed it. But all the hassles were with items that could be reversed. When a house has been built, many problems will no longer be reversible.

If I went ahead with these guys I would have a detailed legal review and redline as necessary all their paperwork. I would also try to find an independent inspector to visit the site as often as necessary to review workmanship and compliance with all specifications. Unfortunately a distrusting attitude on your part will not make for a great relationship with the builder, another reason to question the wisdom of renewing the relationship.

 

[Badger]

You already had one bad experience with these people and even had to go so far as to hire an attorney to get your earnest money back so why would you think a second time would be any better. It sounds like they want you to buy a "Pig in a Poke".

Cheers!

 

[freedomatlast]

If there's that many problems with just the initial paperwork, I can't even imagine what kind of grief you'd deal with if you went forward with the actual construction. Deal with another builder or buy something fairly new that's already completed and save yourself a lot of money and anxiety.

What's so special about this builder that leads you to consider doing business with them again after a horrible initial experience?

 

[MarieIG]

Why their title company?

What does your lawyer have to say about that?

You can get your own appraisal and contracts can be amended to remove inaccurate information/ language.

Is the house already built? (If not, who holds your downpayment in escrow. What happens with your funds if the builder goes bankrupt?)

 

[Aerides]

I think the OP should be working with a RE attorney of their own, no matter where they buy. As new home buyers it's obvious the OP has some concerns which might come up with any purchase, but they can't discern real problems from annoying normal ones without experience.

Every purchase like this will have some hassles and will have some things the selling agents and lenders push for, but which you don't have to accept, or are no big deal. OP you need help from a pro to determine which issues are problems vs. not, and we can't tell you that from here.

 

[gauss]

Could you buy one of the homes in the development on the secondary market down the line, once someone decides to sell instead?

This would allow you to avoid dealing with the builder directly.

-gauss

 

[tryan]

Sounds like the builder has built in alot of CYA into his sales process. Cookie cutter docs that apply to someone who did a custom build.

Why not by pass his lender and go conventional with a standard home inspection.

 

[tryan]

... market conditions will dictate what the seller can "get away with". I just helped a good friend negotiate his home sale in a HOT market. Buyer was 10k below his strike price and wanted a home inspection. Young buyers living in a small apt .... I advised the seller to sell it "as furnished" (seller was stressed about cleaning out the house ... they are retiring to a vacation condo they own) for 10k more with NO home inspection. SOLD!

Your results may vary.