Builder Contracts vs Standard Contracts

2021-11-23T18:27:41-05:00November 11th, 2021|

Make sure you’ve done your homework before you sign on the dotted line for that new construction home


Builder contracts are very different from standard real estate contracts!

Let’s review 4 of the differences:

1️⃣ Builder contracts are much more in-depth than a standard real estate purchase agreement. Why, you ask? Because builder contracts have to detail how the actual home is being built.

Think about it. It has to detail all the options going in your home, timeframe to make changes, timeframe to build, meetings between you and the builder, visiting the job site, plan drawings, materials being used, warranties, and more.

2️⃣There is no Due Diligence period. If you’re buying in NC, the standard real estate contract has a due diligence period that allows you time to do your home inspections and other due diligence. You can get out of the contract for a negotiated fee if you decide to. Builder contracts do allow you to have your own home inspections completed, but they do NOT have the option to cancel your contract.

Buyer’s remorse is not an option.

3️⃣…which means, your earnest money deposit is non-refundable as soon as the contract is signed by all parties!

The good news is that the home is new and comes with warranties. There shouldn’t be anything wrong with it. And you can still get your home inspected. If any items are found, builders will  fix any items that are code violations. 👍🏻

4️⃣The deposit is usually larger. We see them from 1% to 10% of the purchase price. The typical deposit is 3%.

Why is it larger? The builder is taking all the risk and building a home that is very specific to you and your tastes. You don’t have to close and pay for the home until it’s 100% complete. The builder wants you to have some skin in the game

These are just a few of the many differences. I know it can sound overwhelming, but there’s no need for it to.

A good buyer’s agent who has experience in new construction can easily explain and go over any part of a contract you might not be clear on. Your agent should be your front line of defense, not on the sidelines!  😁 😆


Our Team has years of experience working with builder contracts! Here at 9Yards, we understand the types of contracts new home builders use, and can help you navigate sea of documents required for a new construction home purchase. Get in touch and let’s begin this new-home journey!

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