Read your contract. It will all be in there. Supply costs have gone up, from what I've read on this forum.

Then don’t agree, and the contract will be cancelled, and you get to stay where you are. And the builder will up the price 60K to the next person in line. He’ll get it too. Demand is high. That still might not be enough of an increase to deal with the materials increases. Lumber has doubled. Everything else is up to way up. Your next contract fit the same thing will easily be 75K more. If that’s a deal breaker, this might not be the right time to build for you.

What else, besides signing a contract? Did builder sign the contract, as well? Did you give the builder a down-payment (earnest money, held in escrow)? Earnest money, I think, means when the seller (builder) accepts an offer to purchase, they are contractually bound to the stated terms.

I don’t know this guy, but I don’t like him. If this were a legally binding contract, he can’t change the rules of the game (even if he is losing.)

Even if you “win”, you may be at his mercy. Move on…my motto? “too may houses and not enough time”.

Yes, the builder should bound by the contract, as are you. So, I would be sure to read it and check whether he is within his rights to increase the price. You might well find that he is.

You cannot force him to do the work but you can bail out if you want and get all your money back.

Unless there is a clause that was agreed to that said material pricing subject to market conditions/escalation.

Here’s the catch. Materials costs have risen dramatically and increases are still happening. Even if the contract doesn’t have an escalations clause (it likely does), and the builder is compelled to construct the house at the original price, it is the customer that will end up paying in the end. An experienced builder knows the cost levers better than you do and the loss of margin from higher materials costs will be mostly made up for by reducing other costs like labor and materials quality. Unfortunately it’s becoming expensive to build now and it’s hard to keep quality at a high level without changing specs or compromising somewhere else.

This is exactly the thread I was looking for. I am reviewing a contract to build a home in an established community, with a builder that also does custom homes. We know we need builders risk, design agreed, etc but the clause about being able to change the price of the contract if their costs go up by 5% has me rethinking this. I am going to review with a lawyer but without even a cap, who is to say they won’t charge tens of thousands more? And is this expected to be paid out of pocket, does it change our loan, etc, etc. I can accept a change we have prompted but not unknown price increases from the builder.

@sbaruth how did this turn out for you?

A neighbor just told us this happened to their son. Building in a development with a production builder and the house is 80% done. The buyers were just told to pay up an extra 35K or walk away. There was a "small" clause buried in the contract that allowed the builder to do this. Luckily the neighbor was able to help the son and they will still be able to buy the house.