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I’m Looking Into Having A Custom Home Built. Talking W/the Builder He Is Requiring A Large$$ Deposit?

10 Nov

The builder is reputable, I have just not heard of such a large deposit.

 
7 Comments

Posted in Home Buliding and Interior Design

 

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  1. hghjsln

    November 10, 2009 at 7:18 am

    how large? in CA it cannot be no more than 10%, if he does need such a huge payment ask him to supply the names of parties payable ( subcontractors ) so you can pay them DIRECLTY and you keep the reciepts so that they may start there work ( cabinet guys, ect.. all will need the money to buy materials but ideally they should be finacially sound and will only need the 10% deposit in good faith to start your job ).

     

  2. lcarver8

    November 10, 2009 at 8:03 am

    WHAT STATE ARE YOU IN. THE LAWS OF THE STATE DETERMINES A LOT OF WHAT CAN HAPPEN. DOES HE HAVE THE REQUIRED LICENSES AND IS HE BONDED AND IS HE INSURED
    TAKE HIS CONTRACT TO YOUR LAWYER. EVERYTHING MUST BE CONSIDERED BECAUSE-PRETEND HE DIES OR HE GETS INJURED IN AUTO ACCIDENT OR GOES BROKE AND ON AND ON. IT HAPPENS ALL THE TIME. MOST STATE LICENSING LAWS COVER THE MAIN PROBLEMS BUT ALL STATES DON’T EVEN REQUIRE GENERAL CONTRACTORS BE LICENSED AND THEREFOR HE COULD BE UNINSURED AND YOU WOULDN’T KNOW IT UNTIL A BIG PROBLEM ARISES. THE HORROR STORIES ARE PRETTY COMMON.
    ..THE STATE HAS A BOARD THAT IS SUPPOSED TO REGULATE THE BUILDERS. THEY ARE VERY INBRED. THERE IS A CONTROVERSY ABOUT THE MAKEUP OF THE BOARD SO I THINK YOU MUST CHOOSE THE BUILDER CAREFULLY IN CASE THERE IS ANY CONTROVERSY. IF YOU ASK FOR TOO MANY EXPENSIVE OR UNUSUAL THINGS IN A CUSTOM HOUSE THE BUILDER MUST ASK YOU TO PAY FOR THEM UP FRONT BECAUSE HE MAY NOT BE ABLE TO RECOVER THE EXPENSE IF YOU WERE TO NOT BE ABLE TO FINISH BUYING THE HOUSE FOR ANY REASON. IT IS LOGICAL.

     

  3. dragonfi

    November 10, 2009 at 8:11 am

    You usually pay based on milestones like foundation poured, framing done, etc. It is suppose to be a pay as you go deal with just enough extra on each payment to meter out his profit over the life of the project.
    Many times the company providing the building loan will control this.

     

  4. oil field trash

    November 10, 2009 at 8:46 am

    In order to build your home, he needs to buy the supplies to build with. You’re paying for material. What’s left over is labor costs.

     

  5. hotwheel

    November 10, 2009 at 9:05 am

    if you know him a deposit might be ok, but not a very big one. we usualy ask for 3 draws, 1st, 2nd, and final. the final should be the biggest. a house is finished when all building inspectors have sighned off and utillity companies will turn them on, and you are happy with the job, but a big deposit? i dont know. if hes on good terms with his bank they should see him through till his draws if he needs the money

     

  6. wannac

    November 10, 2009 at 9:50 am

    I would use an escrow company for the deposit and you can authorize payments when you see receipts. Generally you have to pay periodic amounts based on a ’schedule’ of completion. The completion schedule is very specific ie studs and foundation, roof, sheet rock, etc. Do not hand over a large down payment without checking with your State Contractor Licensing Dept. and perhaps your county building dept. Further buy a book on contracting your own construction from Home Depot and read it thoroughly. We have contracted many homes and you must do your homework or you will regret it. It doesn’t matter how good, how well known a contractor is. You can be held liable for injuries, theft etc etc. if you do not do your homework.
    It is important to know that changes you make after you sign a contract can be costly. Delay your construction until you understand the rules and the importance of a contract between you and the builder. It takes about a week to become very knowledgeable.
    good luck

     

  7. rancher0

    November 10, 2009 at 10:02 am

    get a owner builder construction loan then get your plans hire a contracter yourself for everything you need done. and get different bids everybody tries to beet the next quote. for your materiles first get a quote from home depot, then go to another lumber store they will beat home depot then go to another one and they will beat that then go back to home depot and they will beat the lowest quote by 10% don’t ever pay up front for contracters. its to easy for them to not do the job right they will work harder if they work before they get paid. does your boss pay you a week before you do your job?