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Is this normal?

Jts_7
New Member

Is this normal?

First time home buyer.

 

I am in the process of working with Lennar to purchase a home that is about half way done.

 

Late this evening the home I had a reservation on was released to be purchased. The agent at Lennar I was working with contacted me, asked me if I was still interested, that if I wanted to proceed I needed to do so today and that the the price would be $1500 more tomorrow. Then forwarded me some documents and also a link to Lennars website for deposit. A few things stood out to me that seemed odd, so I figured I would ask here.

 

First they requested a $5300 deposit on $270k which I thought was quite large, also the link provided for the deposit does not specify what my deposit will be used for since they are covering $11k of closing costs. I would assume my downpayment at closing, just makes me feel uneasy without some sort of designation being attached to my deposit, who knows what they will possibly use that for.

 

 

In addition to that under a document labeled "Rider A" it states:

"I/We hereby waive my/our rights under section 501.1375 of the Florida statues to  have all deposit funds up to 10% of the total purchase price deposited in an escrow account."

 

Is this normal? The box next to that statement is pre-checked in the docusign documents that were sent, and I cannot uncheck it. Furthermore directly above it, it states that as the buyer I have the right to have my deposit of up to 10% held in an escrow, but this can be waived by buyer in writing. What would be the purpose of them ppre-selecting that statement and asking me to sign.

 

 

 

Also, something else that was not said to me in any of our conversations was that a 1% builders fee of the total price of the loan would be added for me to pay at closing and that the closing incentives they are offering cannot cover that. Is this normal? Is this negotiable?

 

Thanks for the help

Message 1 of 4
3 REPLIES 3
seibu027
Established Member

Re: Is this normal?

I am also building a home with Lennar and I'm a little further along in the process than you are.  We have an agent and I made sure to speak with her about all the questions I had.  In a different market, the builder's fee may be negotiable.  Not in today's market.  I knew there would be a builder's fee (ours is 1% of total purchase price), so I wasn't too bothered about that.  
We put 5K down in earnest money on a 244K purchase price, which goes towards your down payment or closing costs.  From what my realtor explained to me, if we backed out or couldn't get financing that money was refundable, though I was also concerned about what it said in the purchase agreement.

From what I understand, the builder feels more comfortable having the money in an escrow account so you don't sign a purchase agreement and then go crazy shopping and spend all the money.  Covid has made them very wary of having too much inventory, so they want to have a buyer lined up for a house before it is completed.  However, with the rates low and supply down, housing markets are going crazy.  I know of others who have had to bid well over asking price for their new Lennar homes.  I'm just happy we haven't had to do that.  
We signed our purchase agreement on 2/2/21 at a price of 244,490.  And now the same model in the same community is priced at 253,990.  I may have equity before the house is even completed!  

hope this info helps.  
Mandi

Message 2 of 4
dmb1
New Contributor

Re: Is this normal?

I never buld, always purchased old homes, but I personally think this situation below is a good reason to have a real estate attorney.  Purchasing a home is a huge life and financial decision, and attorney will make sure you understand everything that is happening and make sure they are not trying to screw you over. My company I work for has a Attorney employee benifit, where I contribute a couple dollars a month and I get to choose a real estate attorney at no cost to me (some have deductables), highly recommend this.

Message 3 of 4
IOBA
Senior Contributor

Re: Is this normal?

In addition to that under a document labeled "Rider A" it states:

"I/We hereby waive my/our rights under section 501.1375 of the Florida statues to  have all deposit funds up to 10% of the total purchase price deposited in an escrow account."

 

In general, the escrow account does not earn interest and the money must remain in the escrow account until the transaction is completed (you are released from the contract OR you close on the house.)

 

It sounds like the builder wants the money to go into the general operating fund, or somewhere else, instead of in escrow like deposits SHOULD go into.  You are giving permission for the builder to do so.

 

Worst case scenario, the builder files BK and the money is lost (becuase it was in the general operating fund or somewhere else instead of escrow.)

 

Giving you just a few hours to act, to make a deposit, and to sign the papers seems VERY unreasonable to me.  You should have at least 24 hours before a deadline is imposed.  The hurry up and pay/lock in so the price doesn't go up is a scare tactic.

Message 4 of 4
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