New Builds and PreApproved w/Lender

[toi34]

Seeking advice here:

New builds require you to get preapproved through THEIR LENDER before you can be put on "the list" to purchase. I was preapproved in April 2021 and placed on the list. My agent and I went to see the models and we were told that the model I liked had 25 people on the list, but not to worry because 50% of buyers usually drop out. It's now Nov/Dec and THAT division is sold out. 

My agent was notified that if I wanted to be considered for the next division that I would need to be re-qualified, and in doing so, I would keep my place on "the list." So I requalified without hesitation.

Here is my concern:

I read three Google comments dated in October from people who said they recently purchased from the division I'm on the list for, after they just happened to see signs while driving by! But wait...I'm on the list!

Question to MyFicoers:

Does anyone know how these "lists" work?

Does anybody have experience with this?

My agent can't get through to a human and said she doesn't understand the process either. Her advice is to move-on and buy a preexisting house before the rates go up.

I'm annoyed and disappointed at the same time. 

[Anonymous]

I'd suggest finding out how many people are on the list in a particular division and on that model first, and compare it with how many units will be built so that you're not simply repeating these steps each time an area sells out. I'd also shy away from builders who "only work with their Lenders", as the deck is always stacked in their favor. Money is Money regardless of which bank it's coming from.

[mike-fico]

Where in the USA are you looking at? 
For our builder in Dakota County, Minnesota it was the first person to put down some money, they got the lot.  Only certain home types could fit on certain lots that they had access to.  The only list was the construction list, and your position on that was based on when the purchase agreement gets signed and the down payment is processed.  They had a lender if we didn't have one, but we had our own.  They were not offering any benefit for going with their lender.

The restrictions you are dealing with sounds like it's adding up to risk for you with no clear benefit for taking the risk. If there are existing homes that are an option, even if you have to do some renovation, that may make more sense, or at least have less risk. 

[TXPocohontas]

I am also buying a new build that will be built 2022.  Before going to American West (now Pulte as they have merged), I went to KB Homes which gave me the same song and dance as you mentioned.  I think it was partly because KB homes are cheaper compared to the others.  Each are national brand builders.  

At American West, when I decided on which model I wanted, I went back and plopped down $5,000 earnest money and my preapproved letter from NFCU to get them to write the agreement.  I picked out my lot and then they sent me an 80 page document to sign via DocuSign (thank goodness).  I have since picked out my options, paid 25% down to the builder on those options.  I flew back out to meet with the flooring company and electrical companies to pick out my flooring and where I wanted my electrical stuff/cable lines, etc.  Yes, I had the pay 25% of the options I picked for those too.  I was offered a incentive to use Pulte mortgage so I am going through both for now and are conditionally approved by both for the house. I tell you all of this so you will have an idea of what to expect if you go with a new build.  The first house I bought in Texas was a new build that was already built so I did not experience this.  I am moving back to Vegas so this is an adventure.  

I say look for a national builder other than who is playing the games with you.  Why should you give up getting a new build?  I love being in a new build house.  A serious builder won't play games, they will welcome your business.

Wishing you the best. 

[nhchen]

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@TXPocohontas wrote:

I was offered a incentive to use Pulte mortgage so I am going through both for now and are conditionally approved by both for the house.

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Did it cost you anything to go through conditional approval with both lenders? When do you plan to choose one over the other?

[Harmony12]

@toi34 

I am building and scheduled to close late winter/early spring 2022.

Here is my advice...visit these builders in person! The sale agents typically have a "preferred" list of those that they know are serious about buying and they just seem to like. 

I visited about 30+ builders and all had the waitlist game. Some I had to be prequalified with their lender and others I didn't. I decided to go with ones that I didn't have to be prequalified by their lender just to get on the waitlist...personal preference and strategy.

The builder I chose...had a waitlist and although I was early I was still near the bottom when you think of the number of lots that were available. I went by the the builder at least 1x per week (they were unable to sell anything b/c price increases at the time) to look at model homes, see progress of builds, and just continue to show general interest. Well, when they finally got approval to start writing  contracts again (about 3-4 months later) I was the very first person they called. In fact, they "held" my home and lot with all of my information in case I was traveling when they made the calls. I made it clear during each visit I was already pre-approved and had money for earnest money immediately.

Lastly, in the end I decided to go with their preferred lender as they had the best communication during the 3-4 months that I was just waiting around. The communication is still great even now during construction.

[toi34]

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@Harmony12 wrote:

@toi34 

I am building and scheduled to close late winter/early spring 2022.

Here is my advice...visit these builders in person! The sale agents typically have a "preferred" list of those that they know are serious about buying and they just seem to like. 

I visited about 30+ builders and all had the waitlist game. Some I had to be prequalified with their lender and others I didn't. I decided to go with ones that I didn't have to be prequalified by their lender just to get on the waitlist...personal preference and strategy.

The builder I chose...had a waitlist and although I was early I was still near the bottom when you think of the number of lots that were available. I went by the the builder at least 1x per week (they were unable to sell anything b/c price increases at the time) to look at model homes, see progress of builds, and just continue to show general interest. Well, when they finally got approval to start writing  contracts again (about 3-4 months later) I was the very first person they called. In fact, they "held" my home and lot with all of my information in case I was traveling when they made the calls. I made it clear during each visit I was already pre-approved and had money for earnest money immediately.

Lastly, in the end I decided to go with their preferred lender as they had the best communication during the 3-4 months that I was just waiting around. The communication is still great even now during construction.

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Thank you for responding.

I'm in the SF Bay Area and the market is crazy competitive! My hunch is that "the list" is being used to see who has the most assests to buy all of their expensive upgrades. It's definatley not first come, first served or else I would have been called by now; it's been 8 months. The home prices and lot premiums have increased every three weeks they have released homes since April, and I'm just about priced-out: the prices in April 2021 for phase 1 were in the $540-$635 range, today phase 2 homes are in the $670-$698 range.

I might try your strategy of stopping by to "look at models".

Thank you. 

[TXPocohontas]

@nhchenNavy Fed made me pay for my credit report in advance.  Like I said Pulte made me put down 25% of the options/upgrades I had chosen along with my $5,000 earnest money but that was to the builder, not Pulte Mortgage.