Purchase contracts from the developers

[SD Realtor]

I am currently reviewing a purchase contract for some clients who are considering purchasing a new home from the developer. These contracts are like boa constrictors, when you sign, there is very little room to wiggle out if you change your mind. Many if not all of you already know this but any purchase contract from a developer is not the same as a CAR residential purchase contract used when buying a resellers property.

The most fundamental difference is simply a lack of contingencies for the buyer. The biggest point in all of these is the loan contingency. While all developers will tell you that you CAN use any lender you like, they obviously incentivize you to use thier preferred lender. Thus if you DO NOT use that preferred lender, you do not get any of the incentives. What is a real downer though is the loan contingency.

Lets investigate. Most new developments have a current lead time of about 7 months right now. So if you DON’T want to use the preferred lender, you can go ahead and select your own lender but how are you going to find a lender who will give you a 7 month loan lock? Good luck. So then you would have to float the loan and wait until 5-6 months before you lock in. If the rates move up and you cannot afford the new payment you are out of luck. If you bail out then the developer WILL keep your deposit. So basically even though they tell you go ahead and use whatever lender you like, you are rolling the dice. I am not advocating using thier lender, I am simply pointing out the facts and possibilities of what can happen.

There are other features of the purchase agreement that I will be pointing out to my client. Again, my point is not to discourage the sale, my job is to be an advocate to my client. It is funny to listen to the salesperson gloss very important facts. They also are none to happy when I am there asking nosy questions that many homebuyers don’t know to ask or are a bit intimidated to ask.

Don’t let them push you around and BE AWARE of what you are signing. Even if you do not have a Realtor with you when you work with the developer don’t be afraid to ask important things or even have a realtor friend or lawyer look at the agreement.

[NewtoSanDiego]

I’m currently scoping out a new SFH property and in process of getting multiple mortgage quotes to pre-qualify, including the builder’s preferred lender.

The house I’m interested in was a nearly complete construction with June or so delivery. Looks like a cancellation from previous buyer.

I’m currently a renter with no house sale contingency and will be financing with 20-30% down. Looking for a 30yr fixed jumbo. Do you folks hear any more news conforming loans >417K. Also, I hear FHA programs are really only for low 3-5% downpayment mortgages. Has anybody been able to get a larger FHA with larger down?

Any suggestions on pro/cons of using the preferred lender? I’ll be trying to compare the values of the preferred lender incentives vs. the lower rate of a competitor lenders.

Any other suggestions for points of negotiation?
– Rate buydown
– Closing costs
– Note, house is nearly complete so only minor upgrades are probably negotiable.
– Need to break my lease, I have 6 months remaining
Others?

Anybody out there have luck putting in other contingencies in event of unforseen events.
e.g. floating the price. Negotiating a change in sale price in event mortgage rates jumping thru the roof before you lock your rate. e.g. $x decrease for every x% increase over some set lock over initial rate quote. Perhaps, provide some protection if you put deposit down with a 6.3% jumbo rate quote……..3 months later the credit markets degrade further and you can only lock it at 8.5%

Any other wiggle room anybody has been able to negotiate, e.g. in event builder exits and sells remaining lots in development, leaving you stranded with a 1/3 completed developement.

Thanks mucho in advance.

Yes, Yes, I know many of you will try to convince me to stay and rent, and watch the property values decline.

[NewtoSanDiego]

I’m currently scoping out a new SFH property and in process of getting multiple mortgage quotes to pre-qualify, including the builder’s preferred lender.

The house I’m interested in was a nearly complete construction with June or so delivery. Looks like a cancellation from previous buyer.

I’m currently a renter with no house sale contingency and will be financing with 20-30% down. Looking for a 30yr fixed jumbo. Do you folks hear any more news conforming loans >417K. Also, I hear FHA programs are really only for low 3-5% downpayment mortgages. Has anybody been able to get a larger FHA with larger down?

Any suggestions on pro/cons of using the preferred lender? I’ll be trying to compare the values of the preferred lender incentives vs. the lower rate of a competitor lenders.

Any other suggestions for points of negotiation?
– Rate buydown
– Closing costs
– Note, house is nearly complete so only minor upgrades are probably negotiable.
– Need to break my lease, I have 6 months remaining
Others?

Anybody out there have luck putting in other contingencies in event of unforseen events.
e.g. floating the price. Negotiating a change in sale price in event mortgage rates jumping thru the roof before you lock your rate. e.g. $x decrease for every x% increase over some set lock over initial rate quote. Perhaps, provide some protection if you put deposit down with a 6.3% jumbo rate quote……..3 months later the credit markets degrade further and you can only lock it at 8.5%

Any other wiggle room anybody has been able to negotiate, e.g. in event builder exits and sells remaining lots in development, leaving you stranded with a 1/3 completed developement.

Thanks mucho in advance.

Yes, Yes, I know many of you will try to convince me to stay and rent, and watch the property values decline.

[NewtoSanDiego]

I’m currently scoping out a new SFH property and in process of getting multiple mortgage quotes to pre-qualify, including the builder’s preferred lender.

The house I’m interested in was a nearly complete construction with June or so delivery. Looks like a cancellation from previous buyer.

I’m currently a renter with no house sale contingency and will be financing with 20-30% down. Looking for a 30yr fixed jumbo. Do you folks hear any more news conforming loans >417K. Also, I hear FHA programs are really only for low 3-5% downpayment mortgages. Has anybody been able to get a larger FHA with larger down?

Any suggestions on pro/cons of using the preferred lender? I’ll be trying to compare the values of the preferred lender incentives vs. the lower rate of a competitor lenders.

Any other suggestions for points of negotiation?
– Rate buydown
– Closing costs
– Note, house is nearly complete so only minor upgrades are probably negotiable.
– Need to break my lease, I have 6 months remaining
Others?

Anybody out there have luck putting in other contingencies in event of unforseen events.
e.g. floating the price. Negotiating a change in sale price in event mortgage rates jumping thru the roof before you lock your rate. e.g. $x decrease for every x% increase over some set lock over initial rate quote. Perhaps, provide some protection if you put deposit down with a 6.3% jumbo rate quote……..3 months later the credit markets degrade further and you can only lock it at 8.5%

Any other wiggle room anybody has been able to negotiate, e.g. in event builder exits and sells remaining lots in development, leaving you stranded with a 1/3 completed developement.

Thanks mucho in advance.

Yes, Yes, I know many of you will try to convince me to stay and rent, and watch the property values decline.

[NewtoSanDiego]

I’m currently scoping out a new SFH property and in process of getting multiple mortgage quotes to pre-qualify, including the builder’s preferred lender.

The house I’m interested in was a nearly complete construction with June or so delivery. Looks like a cancellation from previous buyer.

I’m currently a renter with no house sale contingency and will be financing with 20-30% down. Looking for a 30yr fixed jumbo. Do you folks hear any more news conforming loans >417K. Also, I hear FHA programs are really only for low 3-5% downpayment mortgages. Has anybody been able to get a larger FHA with larger down?

Any suggestions on pro/cons of using the preferred lender? I’ll be trying to compare the values of the preferred lender incentives vs. the lower rate of a competitor lenders.

Any other suggestions for points of negotiation?
– Rate buydown
– Closing costs
– Note, house is nearly complete so only minor upgrades are probably negotiable.
– Need to break my lease, I have 6 months remaining
Others?

Anybody out there have luck putting in other contingencies in event of unforseen events.
e.g. floating the price. Negotiating a change in sale price in event mortgage rates jumping thru the roof before you lock your rate. e.g. $x decrease for every x% increase over some set lock over initial rate quote. Perhaps, provide some protection if you put deposit down with a 6.3% jumbo rate quote……..3 months later the credit markets degrade further and you can only lock it at 8.5%

Any other wiggle room anybody has been able to negotiate, e.g. in event builder exits and sells remaining lots in development, leaving you stranded with a 1/3 completed developement.

Thanks mucho in advance.

Yes, Yes, I know many of you will try to convince me to stay and rent, and watch the property values decline.

[NewtoSanDiego]

I’m currently scoping out a new SFH property and in process of getting multiple mortgage quotes to pre-qualify, including the builder’s preferred lender.

The house I’m interested in was a nearly complete construction with June or so delivery. Looks like a cancellation from previous buyer.

I’m currently a renter with no house sale contingency and will be financing with 20-30% down. Looking for a 30yr fixed jumbo. Do you folks hear any more news conforming loans >417K. Also, I hear FHA programs are really only for low 3-5% downpayment mortgages. Has anybody been able to get a larger FHA with larger down?

Any suggestions on pro/cons of using the preferred lender? I’ll be trying to compare the values of the preferred lender incentives vs. the lower rate of a competitor lenders.

Any other suggestions for points of negotiation?
– Rate buydown
– Closing costs
– Note, house is nearly complete so only minor upgrades are probably negotiable.
– Need to break my lease, I have 6 months remaining
Others?

Anybody out there have luck putting in other contingencies in event of unforseen events.
e.g. floating the price. Negotiating a change in sale price in event mortgage rates jumping thru the roof before you lock your rate. e.g. $x decrease for every x% increase over some set lock over initial rate quote. Perhaps, provide some protection if you put deposit down with a 6.3% jumbo rate quote……..3 months later the credit markets degrade further and you can only lock it at 8.5%

Any other wiggle room anybody has been able to negotiate, e.g. in event builder exits and sells remaining lots in development, leaving you stranded with a 1/3 completed developement.

Thanks mucho in advance.

Yes, Yes, I know many of you will try to convince me to stay and rent, and watch the property values decline.

[Author]

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