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Let me walk you through a recent new build that looked amazing on the surface and turned into a master class in what builders do when they get nervous.
The cast:
- Brad, my buyer
- Lulu, the builder’s sales rep
We walk into this model and we actually like the house. Not the fake “it’s fine” you say when you are trying to talk yourself into it. The floorplan works. The finishes are solid. Location is good.
Price is 800K.
The builder is advertising “6 points of finance help” for buyers who use their lender. That is roughly 50K of “value” if you are financing. Brad is paying cash, so that 6 point gift does nothing for him unless we drag it out of the lender column and into the house.
So we do.
We say if you have that much juice in the deal, let us use it where it actually helps the buyer.
By the time we are done, we have
- Full front yard and back yard landscaping
- All window treatments
- Extended warranty
- Premium washer, dryer, and fridge package
- Every upgrade at the top of the menu
On their paperwork, they price that package at about 50K. In reality there is a lot of margin built into those numbers, so it is probably closer to 20K out of their pocket. But that is the point. The only reason they can throw that much at the wall is because they built that much room into the deal in the first place.
Then the 160 page contract hits our inbox.
“Good for 24 hours,” they say.
We say no.
“Okay, 48 hours,” they say.
We say still no.
Here is why.
As we dig into the contract, the rot starts to show.
First, the solar story.
We are sitting there and Lulu tells us the municipality requires solar. Your options, as she presents them, are
- Commit for 25 years at 81 a month
- Or bring an extra 34K cash at closing
Huh.
This was never mentioned in any of our three previous conversations with her. Suddenly it is “by the way, you are in for another 34K unless you sign up for a 25 year payment you did not know existed.”
Brad goes home and does the homework. The municipality does not require full solar. They require the home to be wired for solar. Huge difference. That 34K goes from “this is just how it is” to “this is a very expensive upsell” in about five minutes of reading.
Second, the contract itself.
Every single clause in that 160 page beast gives the builder an out and leaves the buyer holding the bag. Delays, builder covered. Material substitutions, builder covered. Changes to plans, timelines, features, amenities, builder covered. Earnest money, also tilted their way. They wanted 20K down, hard at deposit, non refundable, with no real way out and your only recourse if something went sideways was arbitration on their terms.
The buyer, faccockt.
Every time we raise a question, the answer is some version of “that is just how it is, everyone signs this.”
And then there is the HOA. Or so we think.
Buried in the contract it literally says, in all caps, “DO NOT SIGN THIS UNTIL YOU HAVE READ THE HOA DOCUMENTS.”
Small issue. We do not have the HOA docs. Lulu has not given them to us.
When we finally ask for them and read the first paragraph, it opens with this exact line
“There is no HOA. This is a metro taxing district.”
That is not a technicality. That is a completely different structure. Different governance, different control, different long term monthly cost. Calling that an HOA in conversation is sloppy, and calling it an HOA in the 160 page bible is fugazy.
Now, a word about Lulu.
I actually like her. She is pleasant and does not get rattled by a sometimes overbearing New York “why did you not tell us this” tone. But it is clear she is kind of like the guy across the desk at the car dealer.
“I need to check with my manager.”
Not to get real clarity, but to get the answer she is supposed to give us from the manual. She cannot really explain the solar setup, the metro district, or what actually happens if something goes wrong. She just keeps coming back to “everyone signs this.” What that really means is most buyers do not know any better.
So we sit with it.
We take a week, think everything through, and ultimately tell them we do not like the way the solar was handled and we are out.
All of this rolled up together. The six point lender help. The quiet 34K solar surprise. The 160 page builder friendly contract. The metro district disguised as an HOA. The fake 24 hour and 48 hour deadline. That raises some hackles for me and for Brad.
I am not saying new construction is bad. In fact I think there are some screaming deals out there in new construction. You just need somebody between you and Lulu who is not afraid to push back on the silly stuff and translate where the builder has all the juice in the deal.
I have to say I got a great education out of this. If you are even thinking about new construction and you do not want to learn all of this the hard way, let me know. I am happy to walk you through the process, translate the fine print, and help you spot the red flags before you sign.
Peace.
