Building a Custom Home - Contract issues

12 years ago

We are going to build a custom home and our builder/developer wants a 6-8% upfront working deposit when we sign the contract. This deposit would be trued up against work actually performed. Our contract would be on a cost + basis. Is this customary? I don't believe the bank handling the construction loan will agree to this.

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Comments (3)

hayleydaniels
12 years ago
What does your attorney say about the contract? I assume you've run it by him........
PRO
Angela Wells Interior Design
12 years ago
Cost + Basis is the best thing you could ask for. This protects you from getting gouged by the builder. 6-8% upfront is pretty standard as well. If you really are not sure about the builder, ask for references & ask around.
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PRO
By Design Custom Home Concierge
12 years ago
I'm not sure I agree that cost+ is best. It may be for some situations but I spend A LOT of time with my custom home clients to find out their needs before I match them with a builder, architect and all the other services and trades that go into building a custom home to make sure they are the best match for THAT client. There are several different pricing models that most custom builders use. Cost+ is one of them - but there is no "one size fits all" answer when it comes to building a custom home - that's the focus of my firm. The 5-8% up front deposit is a reasonable request. Hope this helps. :-)